Publication date: 09.07.2024
Legal regulation of financial monitoring in Ukraine
Introduction.
Financial monitoring is an important tool in the fight against money laundering, terrorist financing and other financial crimes. It ensures transparency of financial transactions and protects the financial system from abuse. The legal regulation of financial monitoring in Ukraine is aimed at creating an effective system for detecting and preventing illegal financial transactions. In this article, we will consider the main principles, regulations and authorities that regulate financial monitoring in Ukraine, as well as the rights and obligations of financial monitoring subjects.
Basic principles of legal regulation of financial monitoring
The legal regulation of financial monitoring in Ukraine is based on several basic principles that ensure the effectiveness and stability of the financial monitoring system:
Theprinciple of legality. All financial monitoring activities must be carried out in accordance with the legislation of Ukraine, respecting the rights and freedoms of citizens.
Theprinciple of proportionality. Financial monitoring measures should be proportionate to the risks of money laundering and terrorist financing, without creating an excessive burden on business entities.
Theprinciple of confidentiality. Information obtained in the framework of financial monitoring should remain confidential and be used exclusively for the purposes of preventing and combating financial crimes.
Theprinciple of international cooperation. Financial monitoring in Ukraine is carried out in accordance with international standards and cooperation with international organizations in the field of combating money laundering and terrorist financing.
Main regulatory acts
The legal regulation of financial monitoring in Ukraine is based on a number of regulations, among which the key ones are:
TheLaw of Ukraine "On Prevention and Counteraction to Legalization (Laundering) of Proceeds of Crime, Terrorist Financing and Financing of Proliferation of Weapons of Mass Destruction". This law establishes the legal and organizational framework for financial monitoring, defines the rights and obligations of financial monitoring entities, customer identification procedures, reporting requirements, and other important provisions.
TheCivil Code of Ukraine. The Civil Code contains general provisions on contractual relations and obligations that affect financial monitoring.
The CommercialCode of Ukraine. The Commercial Code defines the legal framework for conducting business activities, including financial monitoring.
TheLaw of Ukraine "On Banks and Banking Activities". The Law regulates the activities of banks, including requirements for financial monitoring and reporting of banking institutions.
International standards. Ukraine is obliged to comply with international standards in the field of financial monitoring, in particular the recommendations of the FATF (Financial Action Task Force on Money Laundering).
State regulatory authorities
The main state authorities that regulate and supervise financial monitoring in Ukraine are:
TheState Financial Monitoring Service of Ukraine (SFMS). The SFMS is the main body responsible for state supervision of compliance with the legislation in the field of financial monitoring, analysis of financial transactions and cooperation with international organizations.
National Bank of Ukraine (NBU). The NBU supervises banks' compliance with financial monitoring requirements, develops regulations and guidelines for banking institutions.
National Securities and Stock Market Commission (NSSMC). The NSSMC supervises compliance with financial monitoring requirements by stock market participants, including brokers, dealers and other financial institutions.
Ministry of Finance of Ukraine. The Ministry of Finance develops regulations in the area of financial monitoring, coordinates the activities of state authorities and monitors compliance with the requirements of the law.
Rights and obligations of financial monitoring subjects
Financial monitoring entities, including banks, financial institutions and other organizations, have a number of rights and obligations in relation to financial monitoring. The main rights and obligations include:
Rights of financial monitoring subjects
Theright to access information. Subjects of financial monitoring have the right to access the information necessary for financial monitoring, including customer identification data and information on their financial transactions.
Theright to cooperate with state authorities. Subjects of financial monitoring have the right to cooperate with state authorities in the field of financial monitoring, provide them with information and receive consultations.
Theright to protect interests. Subjects of financial monitoring have the right to protect their interests in case of violation of their rights or abuse by clients or state authorities.
Responsibilities of financial monitoring entities
Obligation toidentify clients. Financial monitoring entities are obliged to identify clients and verify their data in accordance with the requirements of the law.
Obligation tomonitor financial transactions. Financial monitoring entities are obliged to continuously monitor clients' financial transactions, identify suspicious transactions and report them to the SFMSU.
Duty tomaintain confidentiality. The financial monitoring entities are obliged to keep the information obtained during the financial monitoring confidential and not to disclose it without the client's consent, except as provided by law.
Reporting obligation. Subjects of financial monitoring are obliged to submit reports to state authorities in accordance with the requirements of the law, including reports on suspicious financial transactions.
Procedure for financial monitoring
The financial monitoring procedure in Ukraine includes several main stages:
Customer identification. Financial monitoring entities identify clients when opening accounts, entering into contracts and conducting financial transactions. This includes the collection and verification of customer identification data, such as passport data, residential address, income information, and other data.
Analysis of financial transactions. Financial monitoring entities analyze customers' financial transactions to identify suspicious transactions. This may include analysis of the amounts, frequency and nature of transactions, comparison with typical customer activity and other factors.
Identification of suspicious transactions. In case of detection of suspicious transactions, financial monitoring entities are obliged to report them to the State Financial Monitoring Service of Ukraine. Suspicious transactions may include large money transfers, transactions with unknown counterparties, frequent transactions abroad, and other atypical transactions.
Reporting of suspicious transactions. Financial monitoring entities are obliged to submit reports on suspicious financial transactions to the SFMS. The reports must contain detailed information on transactions, customer identification data and reasons for suspicion.
Cooperation with state authorities. Financial monitoring entities are obliged to cooperate with state authorities in the field of financial monitoring, provide them with the necessary information and fulfill their requirements.
Protection of rights in the field of financial monitoring
The protection of rights in the field of financial monitoring is carried out through various legal mechanisms that ensure the proper implementation of the legislation on financial monitoring. The main ways to protect rights include:
Administrative protection. It is carried out by applying to public authorities, in particular to the State Financial Monitoring Service of Ukraine, the National Bank of Ukraine or the National Securities and Stock Market Commission.
Civil remedies. This includes filing lawsuits for recognition of rights, compensation for damages, recovery of compensation for violation of rights in the field of financial monitoring, cessation of actions that violate rights, and other claims.
Criminal law protection. Criminal liability is provided for certain types of violations of rights in the field of financial monitoring, including money laundering or terrorist financing.
Administrative sanctions. Administrative fines and other sanctions may be imposed for violations of rights in the field of financial monitoring in accordance with the laws of Ukraine.
International aspects of financial monitoring
Financial monitoring is international in nature, and many Ukrainian financial institutions use international standards and best practices in their activities. The main international aspects of financial monitoring include:
International standards of financial monitoring. Ukraine is obliged to comply with international standards in the field of financial monitoring, in particular the recommendations of the FATF (Financial Action Task Force on Money Laundering), which ensure high quality and transparency of financial monitoring.
International cooperation. Ukrainian financial institutions can cooperate with foreign partners, use international standards and best practices in the field of financial monitoring.
Resolution of international disputes. International disputes in the field of financial monitoring may be resolved through international arbitration or the judicial authorities of the countries that are parties to the dispute.
Conclusion.
The legal regulation of financial monitoring in Ukraine is an important tool for ensuring transparency of financial transactions, preventing money laundering and terrorist financing. It includes the regulatory framework, the activities of state regulatory and supervisory authorities, the rights and obligations of financial monitoring entities, as well as mechanisms for protecting rights in this area. Effective legal regulation contributes to the development of the economy, increases confidence in financial institutions and ensures a stable legal environment in Ukraine.
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