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Report of Council of Europe experts Corruption and shadow economy “wash away” money from Ukraine

The Ukrainian authorities must more actively and severely punish officials involved in money-laundering crimes, experts of the Council of Europe insist.

Symbolbild Geldwäsche (Imago/Westend61)

Due to corruption and illegal economic activities, in particular fictitious entrepreneurship, tax evasion and fraud, in Ukraine today there are significant risks of money laundering. This conclusion was reached by members of the Council of Europe’s Committee of Experts on the Evaluation of Anti-Money Laundering Measures (MONEYVAL) in a report on Ukraine and released on Tuesday, January 30, in Strasbourg. Last time MONEYVAL experts assessed the situation in Ukraine in 2009.

To punish more rigidly
“A significant share of the shadow economy, fertilized by the massive use of cash, makes the country particularly vulnerable,” the report said. The main mechanisms of money laundering in Ukraine remain “so-called conversion centers through which funds flow from the real to the informal sector of the economy, and which are used to convert funds into cash and withdraw it outside the country.”
The report notes that money laundering in the country is still viewed as a “secondary” crime, only complements the predicate offense (the crime that resulted in the receipt of proceeds that become the subject of money laundering.) – Ed.). “Every time a sentence for money laundering is passed, it is almost always mild than for a predicate offense,” the report states. But the punishment for money laundering should be more stringent, experts are convinced. They recommend introducing a provision in the Penal Code that clearly states that “a person may be convicted of money laundering even if there is no conviction for a predicate offense.”

Money was laundered not only for Yanukovych
By 2014, only small officials, mostly local officials, were involved in money laundering cases in Ukraine, and not those who held high positions. The report notes that since March 2014 Ukrainian law enforcement agencies have begun to actively investigate the activities of representatives of the regime of ex-president Viktor Yanukovych. “Difficult investigations led to two judicial sentences, one of which was made in the case of money laundering in significant amounts,” the document says, but it does not specify what kind of case it is.

MONEYVAL experts believe that Ukraine should conduct more investigations and take more sentences in “cases involving high-level corruption and theft of state property and assets, not only by persons associated with the former regime, but also with existing officials and their partners.” In addition, despite the fact that the Ukrainian government began to actively apply the procedure of confiscating funds in high-profile corruption cases, the document notes that “the confiscation regime is applied inconsistently.”
The report also assesses the measures that Ukraine uses to combat the financing of terrorism. The matter is that Kiev has identified the financing of terrorism as a separate offense and introduces a system to combat it. But in it there are still technical shortcomings, the elimination of which must be worked to bring the system of combating the financing of terrorism in Ukraine in line with international standards.

Successes? also

All in all, MONEYVAL acknowledged that the Ukrainian authorities demonstrate “strong political will” in countering and combating money laundering and the financing of terrorism. Those measures that were adopted, “have already shown a positive result,” the experts of the Council of Europe say. “However, it is necessary to introduce new legal norms that will allow making more severe sentences for these crimes,” the experts concluded, noting that the Ukrainian authorities “are more active in investigating and passing verdicts on high-level cases.”

The fight against money laundering in Ukraine was facilitated by the creation of the National Anti-Corruption Bureau and the Specialized Anti-corruption Prosecutor’s Office. The experts also praised the National Bank of Ukraine for “very tangible efforts” aimed at “eliminating criminal elements from controlling banks” and “successfully developing complex money laundering cases.”
In the report, compliments were also sent to the Financial Intelligence Unit for “qualitative operational analysis, development of collection mechanisms and data breakdown,” which resulted in a significant number of cases being transferred to law enforcement agencies. However, experts draw attention to the fact that financial intelligence in Ukraine lacks modern software, and the staff of its employees is not enough to cope “with the amount of work that grows.”

Now the Ukrainian authorities should study the recommendations of MONEYVAL experts and report on their implementation at the first session of the commission in 2019.

Information taken from: http://www.dw.com/uk/звіт-експертів-ради-європи-корупція-та-тіньова-економіка-вимивають-гроші-з-україни/a-42358471?maca=ukr-rss-ukrnet-ukr-all-3816-xml