On September 15, 2022, as part of the II Forum of Legal Reforms for Civil Society: New Challenges and Achievements in the Context of War, an expert discussion “National Risk Assessment 2022 – Challenges and Opportunities” was held, which was organized by the Centre for Democracy and Rule of Law.
Mariia Heletii, Deputy Head of the Project “Ukraine Civil Society Sectoral Support Activity”, Initiative Center to Support Social Action “Ednannia”, Yurii Karpets, Head of the Department for the Prevention of Financial Transactions Related to the Legalization of Proceeds of Crime, State Tax Service of Ukraine; Serhii Rybchenko, representative of the Council of Europe in Ukraine, “Combating Money Laundering and Terrorist Financing” Project Manager joined the discussion as speakers.
During the discussion, they discussed:
- Why Ukraine should comply with FATF requirements on anti-money laundering and counter-terrorist financing and how FATF responded to Russian military aggression.
- Evaluation of Ukraine and recommendations of the Council of Europe Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism (MONEYVAL).
- Significance of a high-quality National Risk Assessment 2022 for Ukraine in general and the public sector in particular.
- The importance of involving representatives of CSOs in the work on the National Risk Assessment.
- The degree of risks in the public sector in the context of money laundering and terrorism financing.
- Prospects for sectoral risk assessment by CSOs themselves.
As a result of the discussion, the participants noted:
- Ukraine’s success in implementing the FATF and MONEYVAL recommendations, particularly in engaging the public in a dialog.
- The importance of using a risk-oriented approach when creating National Risk Assessment, and the inadmissibility of identifying all organizations in a certain sector as equally risky.
- The Ukrainian public sector cannot be unambiguously defined as high-risk. It is necessary to carry out a qualitative sectoral assessment, taking into account the peculiarities of the CSO’s operation.
FATF is an organization which:
- Develops international standards to combati money laundering and terrorist financing;
- Monitors compliance with these standards, inc particular compiles “gray” and “black” lists of countries that serve as “red flags” for investors;
- Provides methodological assistance, expands cooperation with the relevant international organizations and develops regional structures (regional structure in Europe is the MONEYVAL Committee of Experts) which evaluate Ukraine for compliance with international standards.
Ukraine, an EU candidate, has to ensure that its national legislation complies with FATF standards.
National risk assessment (conducted every 3 years in Ukraine) is also a requirement of international standards and is stipulated by Law of Ukraine No. 361-IX and Resolution of the CMU/NBU No. 690.
Mariia Heletii: The activities of the CSO sector are not clear to both authorities and banks, because our banking transactions are not standard. And here the task for our sector is to start working with government authorities, with banks, in order to explain our role. So that there is more understanding that this sector works well and helps the country in the war, so that we become understandable and there are no questions to us.
We are very grateful to have been included in the National Risk Assessment. We really want this process of our inclusion to be as beneficial as possible for all parties. Because we realize that the better the sectoral risk assessment is, the more we will benefit from it. The state will benefit from this, and NGOs and charitable organizations will benefit from this, which today are helping the state a lot in the humanitarian crisis.
Yurii Karpets: If we compare the sphere of non-governmental organizations with other sectors of the economy that are in our field of vision, my personal opinion is that based on the available information we can state that the sphere is not in the “red” sector, but is somewhere below average when it comes to the use of tax evasion schemes.
Serhii Rybchenko: I am pleased that thanks to our active involvement it was possible to open the door to the dialog between the State Financial Monitoring Service and nonprofit organizations. This is one of the areas requiring improvement based on the results of an independent review of Ukraine’s compliance with FATF Recommendation 8 performed by our expert.
The sector risk assessment should include more information on the qualitative data that will support the assessment’s conclusions. In addition, it is necessary to involve a wider range of stakeholders in the risk assessment. The assessment of the non-profit organizations sector should clearly identify those organizations that, by their nature or characteristics, may be in the zone of suspected terrorism financing. That is, it is not necessary to define the entire sector as risky. It is for this purpose that the national risk assessment is carried out, to highlight the criteria that will distinguish NPOs with higher risk from less risky ones.
The expert discussion was organized 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) with the sincere support of the American people through United States Agency for International Development.