Ukraine left behind in FATF blacklist
The Financial Action Task Force on money laundering (FATF) announced in its press release last Friday that it was withdrawing countermeasures with respect to Ukraine after the latter had made last-minute changes to the law on combating “dirty” money laundering. However, Ukraine will remain behind on the FATF blacklist until the new legislation is fully implemented. FATF president Jochen Sanio said “this is a considerable success for the FATF and Ukraine in combating money laundering. Thorough monitoring of the law implementation will be an important factor in determining the date of removing Ukraine from this list.” (The list now includes ten countries: Ukraine, Egypt, Guatemala, Indonesia, Nigeria, the Philippines, Myanmar, Nauru, the Cook Islands, St. Vincent, and the Grenadines.)
So the FATF session that discussed, among other things, the Ukrainian question, ended in Paris on February 14, bringing this country satisfaction, relaxation, and even appeasement. First Vice Premier Mykola Azarov, who headed our delegation in Paris and informed the FATF about legislative amendments and governmental measures to ensure trouble-free functioning of the State Financial Monitoring Department, came back to Kyiv, as the ancients used to say, “holding his shield high.”
Addressing a press conference on February 14, Mr. Azarov said this prompt decision of the FATF is a credit of trust and there are ample grounds for Ukraine to be removed from the blacklist by December.
Yet, it is too early to “provide a feast” in honor of the victor. The FATF report of the same day describes 22 schemes of money laundering and terrorist organization funding, particularly via the securities market; gold, silver, and diamond operations; establishing branches and subsidiaries, etc. An example was quoted of money laundered by carrying out non-licensed banking operations with automobile spare parts. Who can vouch such schemes are not being cooked up in this country?
Incidentally, on February 6 President Leonid Kuchma issued a decree on urgent measures to combat organized crime and corruption. This document affirms that special police and security forces have made inadequate and ineffective efforts to combat organized crime and corruption, while performance of the Coordination Committee for Corruption and Organized Crime Control under the President failed to fulfill the tasks assigned to it. Experts believe the decree will help intensify anti-money laundering activities in Ukraine. Mykola Bilokon, chief of the Presidential Administration’s main department for the judicial reform and supervision over military formations and law enforcement bodies, said the other day that the promulgation of this document will “induce special police and security units, as well as the Prosecutor-General’s Office, to better cope with the tasks assigned.” The decrees prescribes that resolute measures be drawn up and taken to combat organize crime in the field of the economy and finances. In addition, the interior ministry and the security service were instructed to give an unbiased assessment of the officials who bear personal responsibility for combating organized crime and sleaze and conclude whether they are further able to fulfill the assigned tasks. In a word, the law enforcement bodies are in for, or even are under, some kind of purge. The decree says the security service and police must immediately dismiss the officers who betray the interests of service and the state, are insufficiently skilled, and fail to cope with all the tasks assigned to them.
Yet, it would be wrong to hope that the “coercive agencies” will manage to fully achieve the set goal. As Oleksandr Paskhaver, president of the Market Reforms Center, told The Day ’s round table last Thursday, “if power in a country belongs to the bureaucracy, i.e., it is not controlled by democratic institutions, it creates corruptive state technologies and imposes an onerous corruption burden on the country.”
What can really change this situation is a new balance of forces between politics and business, society and the state. There are no grounds so far to claim that something will change otherwise (especially under the FATF pressure).
