From September 24 to 27, 2018, the representatives of the State Financial Monitoring Service of Ukraine (hereinafter – the SFMS) took part in a regular 25th Plenary meeting of the Egmont Group of Financial Intelligence Units* held in Sydney, Australia. The meeting involved more than 400 delegates from 155 Financial Intelligence Units (FIUs) of the world countries.
Traditionally, in the course of the Plenary meeting the results of the "Best Egmont Case Award" (BECA) competition were presented as an exceptional case demonstrating multilateral cooperation in the case of corruption, which led to the successful assets recovery. As a result of the careful case selection that preceded the Plenary meeting, among the participants, Ukrainian case became a finalist for the first time.
During the voting of the Egmont Group FIUs, the SFMS’s investigation was recognized as the winner of the competition.
The case concerned a multistage and unprecedented by its complexity investigation of corruption and money laundering by former high-ranking officials of Ukraine.
Thus, at the beginning of the mentioned case, the SFMS has conducted several separate, not related to each other investigations based on SARs involving both national and foreign companies. The analysis of the mentioned reports revealed that a part of the suspicious companies were related to former Ukrainian high-ranking officials.
At the same time, the Prosecutor General’s Office of Ukraine initiated the criminal proceeding on numerous facts of acquisition by the founders and heads of a large number of legal entities with the assistance of top officials of the country by prior agreement of a group of persons through the abuse of office of state property in especially large amount and legalization (laundering) of the proceeds from crime.
The SFMS has established that assets obtained as a result of committed crimes, have been legalized, both in Ukraine and abroad. Therefore, an extremely important task was to conduct a successful financial investigation, to find out all the details of the case, identify the suspects and establish the amount of legalized assets for their further arrest and confiscation (recovery).
During the conducted financial investigation, the SFMS has analyzed more than 600 statements of bank accounts (among which more than 300 bank accounts had been opened abroad) and information received from 12 foreign FIUs (in particular, under the auspices of World Bank StAR Initiative).
Following the results of the analysis, it was established the global money legalization scheme involving more than 1000 business entities.
As a result of analysis of STRs received from the financial sector, additional statements on accounts, additional identification information and data from law enforcement and other state authorities, a list of foreign companies controlled by different Ukrainian citizens, who had one common thing - they all work in Ukraine together with one former high-ranking official was detected. Financial transactions, conducted with the participation of a number of such companies, were the final stage of the scheme, which consisted of investing a significant amount of funds (about USD 1.4 billion) in Ukraine through the purchase of debt, depositing funds, and also the purchase of shares in Ukrainian enterprises.
At the beginning of the investigation Ukrainian companies were detected which transferred funds in favour of non-resident companies, that «invested» in Ukraine.
More than 20 Ukrainian companies also were related to the other former official through the citizens of Ukraine, many of whom also acted as controllers of non-resident companies which “invested” in Ukraine.
Analysis of constituent-official links and registration addresses of a part of Ukrainian enterprises confirmed that incorporation and adjustment of these companies’ activity were made by the same persons (both individual and legal) that related to PEP, and joint registration addresses and managing the flow of funds on accounts of the same IP addresses show the link between these companies.
In 2014, the SFMS decided to suspend debit transactions on Ukrainian accounts of non-resident companies. As a result, on the accounts of non-resident companies in bank institutions of Ukraine more than USD 1,4 billion were frozen.
Alongside this, during parallel investigations, separate chains of the assets movement were detected, which were controlled by ex-high-ranking officials.
In particular, it was established that the primary source from which the first chain of funds withdrawal from Ukraine began were funds received by Ukrainian companies as a result of the operation and implementation of criminal schemes associated with former officials and citizens of Ukraine, namely:
1) embezzlement of funds of state companies;
2) embezzlement of NBU’s refinancing;
3) sale of contraband imported petroleum products at market prices;
4) selling of gas at market prices, which should had to be sold at a cut reduced price;
5) getting «rollbacks»;
6) activity of professional launderers - conversion centres, etc.
Thanks to the active interagency and international cooperation of the FIU of Ukraine it has been established that the process of withdrawal of funds from Ukraine and their “investing” in Ukraine, were managed from a single management centre with the assistance of a large number of shell companies. The signs of the functioning of the international professional “platform” for money laundering with billions of turnover, which provided services to other entities were also revealed.
Currently, a part of these companies was eliminated, some of them have improper legal status and were registered by suspicious legal persons.
Thus, the scheme of money laundering has been disclosed.
Within the framework of criminal proceedings, according to the submission of the Prosecutor General’s Office of Ukraine, in 2014, funds in the amount of equivalent to USD 1.45 billion were seized, a part of which became the object of confiscation to the State’s revenue in 2017.
In addition, the Plenary meeting considered issues of adopting operational decisions based on the Egmont Group and working group recommendations concerning the launched projects on human trafficking and corruption, information exchange between FIUs, provision of technical assistance and trainings.
* The Egmont Group of Financial Intelligence Units is a united body of 155 Financial Intelligence Units (FIUs) from around the world. The Egmont Group Committee serves as a consultation and coordination mechanism for the Headsof FIUs and Working groups. The Egmont Group members have the opportunity to exchange information on financial investigations, experience, and opportunities to combat legalisation (laundering) of the proceeds from crime, terrorist financing, and the financing of proliferation of weapons of mass destruction.