Ukraine: Guidance On Anti-Money Laundering In Ukraine

Last Updated: 7 August 2019
Article by Sergii Papernyk and Kateryna Breduliak

With the increasing growth of financial services industry countries should be aware of the risks involved in hiding the illegal origin of money. Thus, on the path to association with the European Union, the priority for future development of Ukraine's financial system is to ensure it functions effectively.

Money laundering is highly destructive as it is used in illegal arms and drug trafficking, financing of terrorists and proliferation of weapons of mass destruction. Realizing such activities, criminals receive large profits and aim to divert the attention of interested persons. When fighting against money laundering, experts must carefully study the nature and mechanism of financial transactions.

Since the beginning of 2018 the National Bank of Ukraine (NBU) has applied measures of influence on 12 banks for violating legislation in the sphere of financial monitoring. The largest number of fines for violations in the sphere of financial monitoring was recorded in 2014, when banks received 94 fines. The number of banks that receive fines for violating legislation in the sphere of financial monitoring is falling with every year.

Risk–oriented approach

When using risk-oriented approach banks, as subjects of initial financial monitoring, are obliged to study and clarify information on the client and analyze its financial transactions. The National Bank of Ukraine regularly raises requirements for the identification by banks of operations regarding financial monitoring. The use of a risk-oriented approach is stated in paragraph 72 of the Regulation of NBU No. 417 On Approval of the Regulation On the Implementation by Banks of Financial Monitoring. Such an approach is a common practice in the European Union and is based on international standards in the sphere of anti-money laundering, also implementing an effective system of anti-money laundering and countering funding of terrorism.

The NBU independently determines the factors and the list of clients to which this approach should be applied. It requires supporting documents, and in case the client does not confirm the appropriate use of funds, it can block the transaction and refuse to transfer funds. Articles 15 and 16 of the Law On Prevention and Counteraction of the Legalization (Laundering) of the Proceeds from Crime, Terrorist Financing and Financing of the Proliferation of Weapons of Mass Destruction (the Law) provides a list of operations subject to financial monitoring. This is a transaction for an amount equal to or in excess of UAH 150,000 for credit and transfer of money relating to:

  • an anonymous account abroad or receipt from such an account from abroad, if one of the parties in a financial transaction is registered in the state - an offshore company, or a state that does not comply with the recommendations of international organizations fighting terrorism;
  • the account of a legal entity or private entrepreneur, whose period of activity does not exceed 3 months from the date of registration;
  • under foreign economic contracts;
  • exchange of banknotes for banknotes of another denomination;
  • buying and selling recepts, cash receipts;
  • financial transactions with cash;
  • transactions with promissory notes, bearer securities, non-profit organizations, agreements for which the form of payments is not determined;
  • insurance payment, payment of winnings, payment for the right to participate in gambling;
  • high-risk financial transactions.

A bank is obliged to inform law-enforcement agencies on the day of detection of financial transactions in relation to which there are reasons to suspect that they are related or relevant and foreseen for financial terrorism – have the right to suspend a financial transaction on the client's account.

NBU inspection

For the first time ever, the NBU posted its annual plan of inspections of banks for 2019 on its official web site. Inspections are carried out in accordance with the decision approved by the NBU Board on 22 December 2018 to a plan drawn up on the basis of a risk-oriented approach in accordance with NBU Resolution No. 197 On Approval of the Regulation on the Procedure for the Organization and Conduct of Audits on the Prevention and Counteraction of the Legalization (Laundering) of Proceeds. A risk-based approach takes into account the bank belonging to a certain category, its size in the banking system, the nature and complexity of operations, level of risks corresponding to its activities, as well as on the basis of a general estimate of the SREP (Supervisory Review and Evaluation Process).

During the bank inspections facts have been identified that may indicate that there are signs of risk taking in the following cases:

  • at the stage of clarifying information about the client, the latter provided documents to the bank from other banks, and such information was not confirmed by other banks;
  • in accordance with the terms of the contract, the currency of payment differs from the currency of the price and as a result of the transfer of rates that may differ significantly from the market rates, the amount of payment going abroad increases and indicates the absence of supporting documents.

In the event of violations being detected, a bank was subject to measures of influence stipulated in Article 73 of the Law On Banks and Banking Activity.


The NBU and banks are constantly improving the system for preventing, the legalization of criminal incomes, financing of terrorism by expanding cooperation with leading international organizations.

Among all international organizations involved in the legalization (laundering) of the proceeds of crime, the Financial Action Task Force takes a prominent place. It is an inter-governmental body that implements measures and standards for combating money laundering at national and international levels. Every year, the FATF prepares its Annual Report, which outlines practical recommendations for combating corruption and is recognized by all FATF member countries. This is a standard in the field of anti-money laundering law and counter-terrorist financing law.In turn, the FATF monitors the success of member countries in the fighting of money laundering and promotes the adoption and implementation of the Forty Recommendations by member governments on a global scale.

The main FATF recommendations include the following:

  • сriminalization of money laundering as a result of serious crimes;
  • obligation for financial institutions to identify their clients and keep proper records;
  • a requirement for financial institutions to notify the competent authorities of suspicious transactions;
  • adequate systems for monitoring and overseeing the activities of financial institutions;
  • the need to sign international agreements and the adoption of national legislation that would enable countries to cooperate at all levels.

Ukraine is not part of the FATF at present, so its rules cannot be applied to Ukrainian citizens. Also, participation in the FATF requires the introduction of the CRS standard (the standard of automatic exchange of financial information), which obliges banks, insurance companies and brokers to provide information on their clients.

However, Ukraine has joined the BEPS Plan on 1 January 2017, which confirms its intention to become a member of the FATF regime for the automatic exchange of tax information between European countries.

New draft AML-law

In order to implement the provisions of the Directive (EC) 2015/849 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing, as well as in accordance with the Association Agreement signed between Ukraine and the European Union, it is necessary to implement the international standards set out by the FATF. Thus, a Draft law No. 9417 was submitted with the participation of international experts which proposes to improve the national legislation and for entities of initial financial monitoring (banks, insurers, credit unions, pawnshops, payment organizations and other financial institutions) to:

  • increase the threshold of the financial transaction and reduce the number of signs for mandatory reporting to the State Financial Monitoring Service to more than UAH 300,000(currently UAH 150,000);
  • expand the range of parties and include persons providing information and consulting services on taxation issues;
  • improve the procedure on disclosure by business entities of their final beneficial owners;
  • introduce international tools on asset freezing.

For payment systems, the draft introduces:

  • support of money transfers with information on payer and recipient;
  • the availability and completeness of information on the payer and recipient of the payment;
  • pre-trial restriction aimed against manipulations with money.

Thus, money laundering, tax avoidance and illegal economic activity (fake entrepreneurship and fraud) are a permanent phenomenon. Thus, the main task of the regulator and the banking community is to prevent a return of fraudulent transactions to the banking sector. Consequently, the NBU pays special attention to ensuring that banks understand the nature of transactions and obtain significant amounts of information on banks in order to identify money laundering risks. The efforts of banks should be aimed specifically against money laundering rather than low risk customers.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions