Financial Sharks Want to Do Some Scouting

“The agency monitoring howclean of money turnover in Ukraine is must be independent of the authorities directly involved in finance; it must be officially organized at the earliest possible date,” said National Bank (SBU) President Volodymyr Stelmakh at a November 29 press conference. A bill to this effect is awaiting its second reading in parliament. The need to have such a statute is mentioned in forty Financial Action Task Force on Money Laundering (FATF) recommendations. The said bill envisions receiving information on any dubious financial transactions from Ukraine’s banks and other financial institutions.

Mr. Stelmakh told The Day that protracting the establishment of a financial intelligence service could entail penalties from FATF countries, affecting “about 40% of Ukraine’s exports.” The prospect of playing first fiddle in reassuring this large international organization, while making an impact on the money-laundering process, has raised noticeable interest in all prestigious Ukrainian financial institutions, among them the Finance Ministry, State Tax Administration (STA), and NBU. Remarkably, every such institution appears to have convincing arguments pointing to its own prime importance in the course of the strenuous campaign for the legalization of illicit capital. Deputy STA Director Viktor Zhvaliuk told The Day earlier, “Over 80% of the money being laundered in Ukraine was made through tax evasion.” He believes that this is reason enough to subordinate financial intelligence to his agency. Mr. Stelmakh adamantly opposes this, saying that localizing financial intelligence at a single financial institution “will allow it to influence others.” Meaning precisely that it would be able to collect compromising information, a most unwelcome prospect, considering that practically all ranking officials are engrossed in the election campaign.

Russian experience (its financial monitoring committee is subordinated to the Finance Ministry) shows that FATF officials are not overly enthusiastic about cooperation. Considering this and a number of other factors, Mr. Stelmakh proposes a “competent authority under the NSDC, empowered to receive information from financial institutions, process it, and make recommendations.”