Draft Law of Ukraine

"On Prevention and Counteraction to Legalization (Laundering) of Money Obtained in a Criminal Way"

During the course of preparation for the second reading the draft has sustained some serious changes. For example, a new concept - "predicate crime" – has appeared in this draft law. This term means an illegal act that, according to the Criminal Code of Ukraine, shall entail such sentence as imprisonment for the term of three years or more (except for the articles 207, 212 of the Criminal Code of Ukraine), or is recognized as the crime, pursuant criminal laws of a foreign country, taking into account that in the result of such crime money or property has been obtained illegally.

According to this law financial transaction is understood as an agreement or other deed of a legal entity or a natural person (resident or non-resident), the object of which is money or other property, and that is aimed at establishing, changing or terminating civil rights and obligations relating thereto. In particular, such actions include:

- deposit or withdraw (contribution, deposition);

- transfer of money from one bank account to another;

- currency exchange;

- emission, purchase or sale of securities and other financial assets;

- granting or drawing up of a credit or a loan;

- insurance (re-insurance);

- trust management by property;

- financial leasing.

Actions, referred to as legalization, include actions directed at concealing or masking funds or other property gained illegally or those in possession, rights/titles to such funds or property, sources of their origin, location, movement, the same way as acquirement, possession and use of funds or other property got in the result of a predicate crime.

The draft law defines the following features that may evidence the fact of money legalization (laundering):

- unmotivated person’s (client’s) refusal to provide additional information on financial transaction that may be recognized as a doubtful, provided such information is requested by the subject of the primary financial monitoring;

- when the client insists on unjustified urgency while executing cash transactions;

- clear discrepancy between settlement transactions, carried out by the person with participation of the subject of primary financial monitoring, and the market practice commonly accepted in execution of such transactions;

- considerable increase of cash received by the person provided that such person usually makes cashless settlements;

- repayment to the person of lottery, casino or other gambling winnings;

- entering money in a new (just opened) account.