On December 7 and 8, 2023, the Centre for Democracy and Rule of Law team participated in the International Forum “Financial Monitoring 2023” in Ternopil. The event was co-organized by the Organization for Security and Cooperation in Europe (OSCE), the Partnership for Good Governance (PGG) Regional Programme of the European Union and the Council of Europe, the European Union Anti-Corruption Initiative (EUACI), the State Financial Monitoring Service of Ukraine and the Financial Monitoring Academy.
The forum was marked by lively discussions on implementation of AML/CFT standards, modern financial monitoring tools and general trends in financial investigations and monitoring. Hundreds of specialists, representatives of international and national institutions working in the sphere of national and international legislation aimed at prevention of money laundering, financing of terrorism and financing of proliferation of weapons of mass destruction took part in the forum.
CEDEM representatives Anna Isichko and Mariia Poloz took an active part in various panels of the forum, focusing on topical issues, such as the impact of the financial monitoring system on the activities of non-profit organizations, risks for non-profit organizations (hereinafter referred to as NPOs) and unintended consequences of the implementation of laws in the field of anti-money laundering and counter-terrorism.
Mariia Poloz, CEDEM lawyer, spoke on the topic “National and Global Shifts in the AML/CFT Legal Field” at one of the panels of the forum. Together with Oleksandr Hlushchenko, Director of the Financial Monitoring System Coordination Department of the State Financial Monitoring Service of Ukraine, they discussed the updated FATF Recommendation 8 and noted the opportunities it opens for the non-profit sector.
It should be noted that earlier this year, CEDEM provided its proposals for finalizing Recommendation 8 as part of the public discussions held by the FATF. CEDEM is now planning to work with the State Financial Monitoring Service to prepare Ukraine for the new round of FATF mutual evaluation, which will start in 2025, and is conducting an independent assessment of the riskiness of operations of non-profit organizations. The methodology of this independent assessment was developed by CEDEM with the involvement of international experts, and is agreed upon by the State Financial Monitoring Service.
Thus, Mariia Poloz noted: “According to FATF Recommendation 8 and its Explanatory Note, the vital role of non-profit organizations is recognized…. It also emphasizes the application of a risk-oriented approach and the prevention of interference with the legitimate activities of NPOs. This obliges the state to implement a risk-based approach when assessing and introducing financial monitoring measures. It is also important to clarify that only a small number of NPOs may be high-risk for use for terrorist financing.”
The speaker also expressed hope that the State Financial Monitoring Service will support the recommendation to withdraw think-tank organizations from the FATF definition of NPOs and, accordingly, from the scope of Recommendation 8. Such recommendation is given in the FATF Best Practice Paper to Combat the Abuse of NPOs, which was approved together with amendments to Recommendation 8.
Video of Mariia Poloz’s presentation:
“This document [FATF Recommendation 8] that Mariia presented, I would recommend that everyone read it, thoroughly. Before each next round of national risk assessment, we [State Financial Monitoring Service] update the Methodology. And, clearly, next year, in our Methodology, we will clearly draw the attention of representatives of all sectors to the FATF definition, which is decisive. There can be no interpretations here. A clear distinction must be made here in the context of assessing the risks of the non-profit sector,” said Oleksandr Hlushchenko, Director of the Financial Monitoring System Coordination Department of the State Financial Monitoring Service of Ukraine.
The recording of all forum panels is available here.
This material was prepared by CEDEM as part of the Project Ukraine Civil Society Sectoral Support Activity implemented by the Initiative Center to Support Social Action “Ednannia” in partnership with the Ukrainian Center for Independent Political Research (UCIPR) and Centre for Democracy and Rule of Law (CEDEM).
