Why is financial monitoring needed and who is at risk?

Financial monitoring is a system of collecting, analyzing and controlling financial transactions to prevent money laundering, terrorist financing and other crimes. In Ukraine, financial monitoring is regulated by the Law "On Prevention and Counteraction to Legalization (Laundering) of the Proceeds of Crime".

What is financial monitoring for?

Main objectives of financial monitoring:

• Preventing money laundering - Identification of transactions that may be related to criminal activity.

• Combating the financing of terrorism - controlling the movement of funds that may be used to support terrorist organizations.

• Ensuring transparency of financial flows - control over the sources and destination of funds.

• Increasing confidence in the financial system - ensuring that financial institutions comply with the law.

Who carries out financial monitoring?

Financial monitoring is carried out:

• banks and non-bank financial institutions;

• insurance companies;

• leasing companies;

• audit firms and lawyers (within the scope of their activities);

• government agencies (National Bank, State Financial Monitoring Service, law enforcement agencies).

All of these entities are required to analyze customer transactions and report suspicious transactions.

Who is threatened by financial monitoring?

Financial monitoring does not pose a threat to legitimate taxpayers or honest businessmen. Its main goal is to detect and stop illegal financial transactions.

However, certain categories of individuals and legal entities should be especially careful:

• persons engaged in large cash transactions;

• companies operating in "risky" industries (foreign exchange market, gambling, precious metals trading);

• non-public structures with a complex ownership scheme;

• companies that frequently change bank accounts;

• clients conducting transactions with offshore zones.

In case of suspicion, financial institutions may block transactions or contact the relevant authorities.

How to avoid problems with financial monitoring?

• transparently document the origin of funds;

• conduct honest business and do not hide information;

• for large transactions, notify the bank in advance;

• Keep in constant contact with a financial advisor or attorney;

• avoid "gray" schemes and transactions with dubious counterparties.

Liability for violation of financial monitoring requirements

Administrative and criminal sanctions are provided for violations of financial monitoring legislation:

• fines for companies and officials;

• criminal liability for facilitating money laundering;

• blocking of accounts and seizure of assets.

Conclusion.

Financial monitoring is an important mechanism for protecting the country's economy and security. Legitimate businesses have nothing to fear if they operate transparently and comply with the law. At the same time, compliance with financial monitoring requirements helps to avoid the risks associated with illegal transactions.

To protect your rights in this area, you should cooperate with qualified lawyers who will help you to properly draw up documents and advise on legal procedures.