Explain please where are you got the money?

The rules of financial monitoring established by the new Law “On Prevention and Counteraction to Legalization (Laundering) of Proceeds from Crime, Financing of Terrorism and Financing of the Proliferation of Weapons of Mass Destruction” have raised many questions. After all, now they control bank transfers, which are almost equal to the amount of the minimum wage – 4723 UAH. And they track transfers from 5 thousand hryvnias. Promote Ukraine asked experts how this law will affect ordinary Ukrainians.

Olexandr Khmelevsky, Candidate of Economic Sciences, Independent Expert

Of course, such measures do not create any obstacles for criminals. However, they can cause problems for law-abiding citizens. The hryvnia occupies a rather modest place in the economy of Ukraine. Many significant transactions are carried out in foreign currency or cryptocurrency, using various international systems that the Ukrainian government cannot control. Such restrictions will further narrow the scope of the hryvnia. Unfortunately, financial monitoring is based mostly on quantitative criteria, rather than on the analysis of the nature of transactions and relationships of counterparties. Therefore, it is ineffective. The financial monitoring system itself needs to be completely overhauled.

Natalia Alyab’eva, lawyer, NAAU

It is declared that the changes are positive: the amount of transactions subject to monitoring is increasing, the procedure for disclosing information about final beneficiaries and other innovations is changing.

The requirements of the Law do not apply to:

• payment of housing and communal services, payment of taxes, fines, other mandatory fees and charges (regardless of the amount);
• loan repayment in the amount of up to UAH 30,000;
• transfers for payment of goods and services made by the payer using a payment card (or other electronic means of payment), if its number accompanies the transfer (regardless of the amount);
• all-cash transfers within Ukraine in the amount of up to 5 thousand UAH;
• withdrawal of funds from your own account.

Therefore, this law imposes a number of restrictions on certain monetary transactions. When carrying out operations in the amount of more than 5 thousand hryvnias at the cash desks of banks and post offices, it will be necessary, first of all, to have with you and present an identity document (passport, driver’s license). Secondly, you need to think about whether can you prove the legality of the funds? For example, your salary is 5,000 hryvnias, and you transfer funds to your relative in the same amount. Maybe there are questions from state regulatory authorities to you? You need to be prepared to provide an explanation and, of course, it is better to have evidence of receipt of these funds.

Mykhailo Honcharuk, Managing Partner of JSB Honcharuk and Partners

The state seeks to control the movement of funds of unknown origin, as they may be, in particular, an instrument of crime. The law is generally aimed at implementing one principle: the person carrying out a financial transaction must explain the source of the funds.

If the client refuses to provide information about himself, the bank will simply refuse to carry out such an operation. This is not difficult to implement both directly in the bank and at the level of payment terminals and so on.

Will this have consequences for citizens? I’m sure so. The number of remittances, which were essentially settlements in economic activity, will definitely decrease. Part of such calculations will be purely cash, the other part, one way or another, will move to the legal plane.

Natalia Tolub