scholarly journals Implementation of state financial monitoring based on risk-oriented indicators in the activities of financial institutions

2020 ◽  
Vol 18 (3) ◽  
pp. 55-64
Author(s):  
Zhanna Andriichenko
Keyword(s):  
Monitoring System ◽  
Money Laundering ◽  
Financial Institutions ◽  
Financial Services ◽  
Financial Institution ◽  
Risk Profile ◽  
Weapons Of Mass Destruction ◽  
Mass Destruction ◽  
Financing Of Terrorism ◽  
Financial Monitoring

The article examines the systems of risks of various types of financial institutions and focuses on the absence of the risk of legalization among them. This risk is considered separately within the framework of a special system of relations in the field of combating money laundering, financing of terrorism and financing the proliferation of weapons of mass destruction. The evolution of criteria for assessing the risk of a financial institution to be involved in legalization is analyzed, risk-oriented indicators of the activities of financial institutions used to assess their risk profile are generalized. It is established that one of the regulators in the financial services market, the National Securities and Stock Market Commission, uses outdated, formal, and ineffective criteria for assessing the risks of a financial institution to be involved in money laundering. However, the other regulator, the NBU, has already carried out the process of adapting state financial monitoring to the requirements of FATF and AMLD4 and developed risk-oriented indicators of financial institutions’ activities, used to assess their risk profile. Strengthening the control by the subjects of state financial monitoring over the risk profile of a financial institution and its overall financial monitoring system will help to increase the efficiency of state financial monitoring. It is proposed to unify risk-oriented features and introduce identical financial monitoring mechanisms for all participants in the financial services markets, considering the specifics of their activities, as well as including the risk of legalization in the risk system of a financial institution in order to improve the efficiency of the financial monitoring system.

scholarly journals THE ROLE AND IMPORTANCE OF A COMPLIANCE OFFICER IN THE ACTIVITIES OF A FINANCIAL INSTITUTION IN ORDER TO PREVENT THE LEGALIZATION (LAUNDERING) OF CRIMINALLY ACQUIRED FUNDS AND THE FINANCING OF TERRORISM

2021 ◽  
Vol 1 (91) ◽  
pp. 16-22
Author(s):  
Suzanna Kalinina
Keyword(s):  
Risk Factors ◽  
Monitoring System ◽  
Money Laundering ◽  
Financial Institutions ◽  
Financial Institution ◽  
Terrorism Financing ◽  
Risks Factors ◽  
Financing Of Terrorism ◽  
Financial Monitoring ◽  
Compliance Officer

The relevance of the topic is confirmed by the changes taking place in the financial monitoring system: the complication of procedures aimed at countering money laundering and financing of terrorism, the creation of specialized international and European requirements and the changes of requirements for compliance specialists. Financial institutions more often face the incompetence the incompetence of these employees and their negligence. The author analysed anti money laundering and counter financing of terrorism legal acts, as well as revealed the main recommendations to financial institutions for preventing money laundering and terrorism financing. Based on scientific research, the main risk factors for using financial institutions for money laundering were identified. Based on these risks factors, the author identified the role and importance of a compliance officer in order to prevent the legalization (laundering) of criminally acquired funds and the financing of terrorism.

scholarly journals DEVELOPMENT OF UNIFIED PROCEDURES FOR FINANCIAL INSTITUTIONS IN ORDER TO PREVENT MONEY LAUNDERING AND TERRORISM FINANCING

2019 ◽  
Vol 2 (87) ◽  
pp. 141
Author(s):  
Suzanna Kalinina
Keyword(s):  
Risk Management ◽  
Public Relations ◽  
Money Laundering ◽  
Financial Institutions ◽  
Financial Institution ◽  
Legal Regulation ◽  
Graphical Analysis ◽  
Terrorism Financing ◽  
Financing Of Terrorism ◽  
Financial Monitoring

The relevance of the topic is confirmed by the changes taking place in the financial monitoring system: the expansion of the financial monitoring range of procedures complication´s supervisory bodies aimed at countering money laundering and financing of terrorism, the creation of specialized international and European requirements, which causes changes in the legal regulation of public relations in this area, both at the level of the Estonian Republic, and at international level. Taking into account these changes, financial institutions are a subject to significant legal risks. The purpose of this topic is to improve the financial institution risk management system, in the field of anti-money laundering and countering financing of terrorism. The theoretical and methodological basis of the study are the provisions and conclusions regarding anti-money laundering and countering financing of terrorism risk management issues contained in the research works of different Estonian and Russian authors; as well as the author analysed anti money laundering and counter terrorism financing legal acts and revealed the main recommendations to financial institutions for preventing money laundering and terrorism financing.  The author analyses reasons, which affect licenses withdrawal due to breach of money laundering. The nature of the tasks and the system approach to their solution determined the use of the following research methods in the research: analysis and synthesis, grouping and classification, scientific generalization, expert assessments and graphical analysis.

scholarly journals Improvement of regulatory and legal support of financial monitoring in Ukraine

2021 ◽  
Vol 2021 (7) ◽  
pp. 108-126
Author(s):  
Olga KUZMINSKA ◽  
◽  
Оlena ABESINOVA ◽  
Keyword(s):  
Money Laundering ◽  
National Economy ◽  
Task Force ◽  
Economic Security ◽  
Weapons Of Mass Destruction ◽  
Mass Destruction ◽  
Other Information ◽  
Information Law ◽  
Financing Of Terrorism ◽  
Financial Monitoring

In the publication according to the results of the analysis of the main international and national regulations of financial monitoring on the basis of the historical approach the directions of improvement of normative – legal maintenance in the field of prevention and counteraction to legalization of illegal incomes in Ukraine are outlined. The peculiarities of the main historical stages of the formation of the financial intelligence unit in Ukraine – the national center for analysis of information on suspicious transactions and other information on money laundering, terrorist financing, and financing the proliferation of weapons of mass destruction are discloses. The issues of implementation of the provisions of international normative acts regulating the sphere of counteraction to legalization (laundering) of proceeds from crime, financing of terrorism and financing of proliferation of weapons of mass destruction at the international level are highlighted, in particular, the standards developed by the Financial Action Task Force on Money Laundering (FATF) and the Directives of the European Parliament and the Council of the EU, United Nations documents, international conventions ratified by Ukraine. Considerable attention is paid to the need for further harmonization of national and international legislation in the field of financial monitoring. It is proposed to take into account the conceptual principles of behavioral economics when improving the regulatory and legal support of financial monitoring (bylaws), in particular regarding the application of risk-oriented approach when analyzing and identifying suspicious financial transactions and identifying the ultimate beneficial owner of the client. The necessity of scientific research in the researched field in the traditional professional directions: “Money, finance and credit” and “Administrative law and process; finance law; information law”, and in related scientific specialties: “Economics and management of the national economy” (in the field of “Economic security of the national economy”), and “Accounting, analysis and audit (by type of economic activity)” (in the areas of “Organization of auditing: the specifics of formation and the functioning of audit services”, and “Accounting and analytical operations, their standardization and unification”) is substantiated.

scholarly journals Problematic aspects of financial monitoring by specially designated subjects

2021 ◽  
pp. 9-12
Author(s):  
Serhii IVANYTSKYI
Keyword(s):  
Legal Regulation ◽  
Theoretical Research ◽  
Weapons Of Mass Destruction ◽  
Legal Person ◽  
Practical Implementation ◽  
Mass Destruction ◽  
Or Management ◽  
The Law ◽  
Financing Of Terrorism ◽  
Financial Monitoring

Introduction. The paper stated that in the new Law of Ukraine “On preventing and countering the legalization (laundering) of proceeds from crime, the financing of terrorism and the financing of the proliferation of weapons of mass destruction”, the domestic legislator used a number of general formulations with a broad and vague content, which may complicate its practical implementation and necessitates the theoretical research of these issues within the framework of this paper. The purpose of the paper is to analyze the state of legal regulation of the implementation by certain specially defined subjects of primary financial monitoring of obligations to prevent and counteract the legalization (laundering) of proceeds from crime, the financing of terrorism and the proliferation of weapons of mass destruction, as well as to formulate recommendations for making appropriate changes to the legislation. Results. In paragraph 1 of part 1 of art. 10 of the Law of Ukraine “On preventing and countering the legalization (laundering) of proceeds from crime, the financing of terrorism and the financing of the proliferation of weapons of mass destruction” does not disclose the content of the terminology turnover “creation, operation or management of legal persons”. Conclusion. In order to clarify the terminology in paragraph 1 of part 1 of article 10 of the Law of Ukraine “On preventing and countering the legalization (laundering) of proceeds from crime, the financing of terrorism and the financing of the proliferation of weapons of mass destruction”, it is advisable to amend it by adding after the words “other similar legal entities” the words “including, performing the functions of a director or secretary of a legal person, its trustee/owner/manager, nominee shareholder/owner/holder”.

scholarly journals Features of legal regulation of the implementation of primary financial monitoring by attorney offices and attorney associations

2021 ◽  
pp. 104-110
Author(s):  
Igor Tovkun ◽  
Viktoriya Slivnaya
Keyword(s):  
Large Scale ◽  
Legal Regulation ◽  
Weapons Of Mass Destruction ◽  
Main Body ◽  
Mass Destruction ◽  
Basic Law ◽  
The Law ◽  
Financing Of Terrorism ◽  
Broad Interpretation ◽  
Financial Monitoring

Problem setting. According to the current Law of Ukraine «On Prevention and Counteraction to Legalization (Laundering) of Proceeds from Crime, Financing of Terrorism and Financing of Proliferation of Weapons of Mass Destruction», attorney offices and attorney associations are also included in the system of primary financial monitoring entities. However, with the entry into force on April 28, 2020, the updated version of the Law changed the procedure and conditions for financial monitoring, assigning a broader list of responsibilities, a number of grounds for prosecution for violating the Law, increased threshold transactions and more. The analysis of such innovations raised the question of the legal certainty and indisputability of some of these provisions. Therefore, the relevance of this work is to determine how successful the provisions of the new version of this Law have been in practice and how they have affected the implementation of primary financial monitoring by attorney offices and attorney associations over the past year. Target research. The purpose of the work is to analyze the provisions of the current Law, which have become novelties in the process of financial monitoring by attorney offices and attorney associations, to identify their problems that arise in practice and arise due to legislative inaccuracies or gaps, and to suggest solutions. Analysis of recent research and publication. The issue of changes for attorney offices and attorney associations as subjects of primary financial monitoring has become an active focus of many lawyers. Examples of authors who pay attention to this problem are Bilousov A.I., Panchyshyn A.D., Andrusyak V.V., Gaivoronskaya V.V., Pavlunenko K.L., Nechiporuk S.I., Onishchenko V.S., Bets N.P., Drozdov O.O., Drozdova O.G. and other. Article’s main body. One of the primary responsibilities of primary financial monitoring entities is to register. The Law does not contain more specific provisions on the terms of such duty and other conditions of registration. This issue was partially resolved by the adoption of the Resolution «Some issues of the organization of financial monitoring» of September 9, 2020. However, since it came into force only on January 1, 2021, the question arises as to the registration of those lawyers whose relations with clients were subject to financial monitoring and arose from the entry into force of the Basic Law. In addition, the question arose as to whether those attorney offices and attorney associations whose activities were aimed exclusively at providing protection, representing clients or advising them were obliged to register with a specially authorized body. After all, among the actions that the law allows not to perform in the case of providing such services, there is no exemption from the obligation to register. A topical issue for advocacy during the initial financial monitoring of their clients is the preservation of legal secrecy in this process. Lawyers see some uncertainty in national law in the possibility of a broad interpretation of the concept of «advising on the protection and representation of the client», as this is the basis that frees attorney offices and attorney associations from the obligations of primary financial monitoring of their clients. A similar generality is characteristic of the definition of «suspicion» in the Law, the existence of which the subjects of primary financial monitoring are obliged to report. As a result, attorney offices and attorney associations are effectively responsible for gathering information against their clients on a large scale. Conclusions and prospect of development. Adoption in 2019 of a new version of the Law «On Prevention and Counteraction to Legalization (Laundering) of Proceeds from Crime, Financing of Terrorism and Financing of Proliferation of Weapons of Mass Destruction» was aimed at a correct and useful goal. However, the legislator did not take into account all the issues that may arise in practice in the process of carrying out such activities. Some norms of the updated legislation also turned out to be imperfect. Based on this, it is necessary to define at the regulatory level all the requirements for registration of special financial monitoring entities by a special authorized body, to establish clearer rules for notification of suspicion by attorney offices and attorney associations and conditions for exemption from this obligation.

scholarly journals MONITORING SISTEM BERBASIS WEB KEAMANAN TRANSAKSI PENGIRIMAN UANG PADA PENYELENGGARA TRANSFER DANA DENGAN MENGGUNAKAN PERATURAN BANK INDONESIA ANTI PENCUCIAN UANG & PENCEGAHAN PENDANAAN TERORISME

Petir ◽  
2019 ◽  
Vol 12 (1) ◽  
Author(s):  
Rahmat Rian Hidayat ◽  
Dwiki Jatikusumo
Keyword(s):  
Money Laundering ◽  
Foreign Currency ◽  
Service Providers ◽  
Weapons Of Mass Destruction ◽  
Mass Destruction ◽  
Currency Exchange ◽  
System Service ◽  
Suspicious Transaction ◽  
Analysis Center ◽  
Financing Of Terrorism

PT BETANET as Non-Bank Fund Transfer Provider has an obligation to comply the provisions of 19/10 / PBI / 2017 concerning about  Anti-Money Laundering and Combating the Financing of Terrorism and the Proliferation of Weapons of Mass Destruction. (AML/CFTWMD) for Non-Bank Payment System Service Providers and Non-Bank Foreign Currency Exchange Business Operators. Having Remittance partners abroad and Domestic transactions with an average of 50 thousand transactions per month, BETANET must have a special AML & CFT unit to ensure that fund transfer activities are complies with the PBI about AML & CFT. The duties of the AML & CFT Unit are routinely ensure that funds transfer transactions which are deemed suspicious or not. The parameter of suspicious transaction has been set out in the policy. However, the current conditions of BETANET, it does not have a monitoring system which is integrated with the Host Remittance System. It means that the AML & CFT activities are still carried out manually every day, so that it will create several risks such as Operational risk, Reputation risk, Legal risk. Judging from these conditions and problems, this study will propose to build a security system for web-based fund transfer transactions. Based on the results of system monitoring, there is no need to do manual checking for suspicious transactions. The AML & CFT Officer will get an Alert or Notification to the Email automatically every day. So they can run the next process such as Enhanced Due Diligenced (EDD) to partners if any suspicious transaction found. It helps Financial Transaction Reporting and Analysis Center (FTRAC) for transactions of Suspected Terrorist Lists and Terrorist Organizations (STLTO), as well as the List of Anti-Money Laundering and Combating the Financing of Terrorism and the Proliferation of Weapons of Mass Destruction. (AML/CFTWMD)

scholarly journals Determining the level of bank connectivity for combating money laundering, terrorist financing and proliferation of weapons of mass destruction

2019 ◽  
Vol 14 (4) ◽  
pp. 42-54
Author(s):  
Nataliya Vnukova ◽  
Sergii Kavun ◽  
Oleh Kolodiziev ◽  
Svіtlana Achkasova ◽  
Daria Hontar
Keyword(s):  
Money Laundering ◽  
Financial Institutions ◽  
Banking System ◽  
Weapons Of Mass Destruction ◽  
Mass Destruction ◽  
Terrorist Financing ◽  
Average Proportion ◽  
Binary Matrices ◽  
The Impact ◽  
Oriented Approach

The study aims at developing an approach to determining the bank connectivity level. This will contribute to implementing a risk-oriented approach to counteracting money laundering, terrorist financing and the proliferation of mass destruction weapons. The article proposes to assess the degree of bank connectivity and determine the impact of these circumstances on money laundering risk using banks from foreign banking groups, whose capital share in the Ukrainian banking system amounts to more than 40 percent. Using the resulting correlation dependencies, two-dimensional binary matrices were constructed, which became the basis for creating graphs of links between banks. The institutions under study are found to be predominantly connected in terms of their sets (varieties), since the average proportion of banks with close direct links is over half, and the non-connectivity coefficient for them is about 40%. Each surveyed bank, on average, has direct links with eight other banks and inverse links with four other banks. Considering banks as tops of the graph, one can assume that there is a hidden relationship between some banks. This approach allows calculating all existing relationships between banks to assess risk. Transforming the graph from non-oriented to oriented made it possible to identify and clearly demonstrate possible directions of links between the investigated financial institutions, which should be further verified to determine the risk of money laundering, terrorist financing, etc.

scholarly journals Features of the Newest Methods of Money Laundering Using Financial Institutions

2021 ◽  
Vol 3 (518) ◽  
pp. 132-140
Author(s):  
V. V. Rysin ◽  
◽  
A. R. Karpets ◽  
Keyword(s):  
Money Laundering ◽  
Financial Institutions ◽  
Public Awareness ◽  
Legal Aspects ◽  
The State ◽  
Online Gambling ◽  
Financial Infrastructure ◽  
Financing Of Terrorism ◽  
Financial Monitoring ◽  
High Level

Activities to counter laundering the money, obtained by criminal means, require constant monitoring of the market, monitoring the activities of financial and non-financial institutions in order to prevent capital loss and financing of terrorism, as methods of money laundering are gaining new features every year. The article is aimed at systematizing the latest money laundering schemes appearing in the financial market and developing measures to prevent the implementation of such schemes through financial institutions. An analysis of data by the State Financial Monitoring Service of Ukraine (SFMS) on the number of detected suspicious financial operations showed that the large majority of reports concerning such operations comes from banks. In view of this, the role of banks in countering the legalization of criminal income in Ukraine remains decisive today. The expansion of the range of financial instruments led to the emergence of new money laundering schemes. Such schemes can be based on P2P technologies, implemented through crowdfunding platforms, in particular through crowdinvestment. The authors also focused on the possibilities of using cryptocurrencies and online gambling tools for the purposes of legalizing criminal revenues. The peculiarities of applying the risk-oriented approach in the process of due diligent verification of clients of financial institutions and the operations they carry out, as well as the list of threats to financial institutions in case of their joining the money laundering activities, are determined. Such threats are manifested in reputational and legal aspects, and in the future inevitably lead to financial losses. The use of the latest technologies for the legalization of criminal income requires banks and non-bank institutions to improve the software used to detect and register suspicious transactions, improve cybersecurity, as well as maintain a high level of qualification of employees. The State own regulators should ensure proper control over the activities of highly risky financial infrastructure entities, as well as raise public awareness of the risks and consequences of criminal capital legalization.

scholarly journals Towards New Sharia Governance for Islamic Financial Institutions

2021 ◽  
Vol 18 (1) ◽  
pp. 39-58
Author(s):  
Abdulazeem Abozaid
Keyword(s):  
Financial Institutions ◽  
Financial Services ◽  
Financial Institution ◽  
Islamic Banking ◽  
Banking And Finance ◽  
Finance Industry ◽  
Regulatory Authorities ◽  
Governance Model ◽  
Islamic Financial Institutions ◽  
Shariah Governance

Since its inception a few decades ago, the industry of Islamic banking and finance has been regulating itself in terms of Sharia governance. Although some regulatory authorities from within the industry, such as Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) and Islamic Financial Services Board (IFSB), the Islamic banking and finance industry remains to a great extent self-regulated. This is because none of the resolutions or the regulatory authorities' standards are binding on the Islamic financial institution except when the institution itself willingly chooses to bind itself by them. Few countries have enforced some Sharia-governance-related regulations on their Islamic banks. However, in most cases, these regulations do not go beyond the requirement to formulate some Sharia controlling bodies, which are practically left to the same operating banks. Furthermore, some of the few existing regulatory authorities' standards and resolutions are conflicted with other resolutions issued by Fiqh academies. The paper addresses those issues by highlighting the shortcomings and then proposing the necessary reforms to help reach effective Shariah governance that would protect the industry from within and help it achieve its goals. The paper concludes by proposing a Shariah governance model that should overcome the challenges addressed in the study.Pada awal berdiri, Lembaga Keuangan Syariah merupakan lembaga keuangan yang menerapkan Hukum Syariah secara mandiri dalam sistem operasionalnya. Ia tidak tunduk pada peraturan lembaga keuangan konvensional, sehingga dapat terus berkomiten dalam menerapkan Hukum Syariah secara benar. Selanjutnya, muncullah beberapa otoritas peraturan yang berasal dari pengembangan Lembaga Keuangan Syariah. Diantaranya adalah Islamic Financial Services Board (IFSB) dan Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI). Hal ini tidak menyimpang dari kerangka peraturan Hukum Syariah, sebab standar peraturan dan keputusan yang dikeluarkan ditujukan khusus untuk Lembaga Keuangan Syariah saja. Beberapa Negara telah menerapkan peraturan tata kelola Hukum Syariah pada Bank Syariah mereka. Namun dalam banyak kasus, peraturan yang diterapkan tidak mampu mengontrol Lembaga Keuangan Syariah tersebut secara penuh. Sehingga, secara praktis proses pengawasan diserahkan kepada lembaga keuangan yang beroperasi. Akan tetapi, beberapa standar dan keputusan yang dikeluarkan oleh sebagian pemangku kebijakan bertentangan dengan keputusan yang dikeluarkan oleh beberapa akademi Fiqh. Artikel ini ditulis untuk menyoroti permasalahan yang timbul pada tata kelola Lembaga Keuangan Syariah, khususnya kekurangan yang tampak pada sistem tata kelola. Kemudian, penulis akan mengajukan usulan tentang efektifitas tata kelola Lembaga Keuangan Syariah yang bebas dari permasalahan.

scholarly journals Organization and Methodological Support of Financial Monitoring in an Auditing Firm: New Requirements

2020 ◽  
pp. 55-69
Author(s):  
О. LUBENCHENKO
Keyword(s):  
Asset Management ◽  
Weapons Of Mass Destruction ◽  
Regulatory Requirements ◽  
Corporate Rights ◽  
Previous Edition ◽  
Regulatory Bodies ◽  
The Law ◽  
Financing Of Terrorism ◽  
Financial Monitoring ◽  
Responsible Person

The requirements to implementation of financial monitoring by auditing entities, as specified by the Law of Ukraine “On prevention and counteraction to legalization (laundering) of proceeds from crime, financing of terrorism and financing of proliferation of weapons of mass destruction” from 06.12.2019 No 361-ІХ, enforced on 28.04.2020, are analyzed. The existence of unclear interpretations of some notions in the this Law of Ukraine or heavy financial sanctions that may be imposed on auditing entities call for elaboration and introduction of internal firm documents concerned with financial monitoring. While in the previous edition of the above Law of Ukraine the features of financial monitoring organization were specified for auditing entities in case of rendering certain categories of services to a client (realty transactions; asset management; raising funds to establish legal entities, support to their operation and management, buying and selling of corporate rights), they are not found in the updated edition of this Law of Ukraine. Therefore, auditing entities need to rely upon general norms of the Law of Ukraine in organizing financial monitoring. A series of administrative documents were elaborated for this purpose: the order on assignment of a person responsible for carrying out financial monitoring; the conclusion of business character test for the candidate on the position of the responsible person, the Rules for financial monitoring of an auditing entity, and the monthly fact sheet of the responsible person about the results of carried out measures on financial monitoring.    The developed Rules of financial monitoring cover all the regulatory requirements for the implementation of financial monitoring, with the possibility of making change in case of need. The Rules must be informed to the staff of an auditing entity, engaged in rendering auditing and non-auditing services, through the involvement in internal training on financial monitoring issues. Apart from the Rules, it is proposed to supplement the working documents supporting the financial monitoring procedures by the following sections: (i) “Documentary support to financial monitoring of auditing entities”; (ii) “Personnel and personnel training on financial monitoring issues”; (iii) “Documentary support to interactions with the State Service of Financial Monitoring of Ukraine, ministries and administrative departments”, which are supposed to help auditing entities to fully observe the regulatory requirements and avoid heavy financial sanctions on the part of controlling and regulatory bodies.  

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