Banking Sector as an Element of the System to Counteract the Legalization and Laundering of the Proceeds from Crime Cover Image

Банківський сектор як елемент системи протидії легалізації та відмивання доходів, отриманих злочинним шляхом
Banking Sector as an Element of the System to Counteract the Legalization and Laundering of the Proceeds from Crime

Author(s): Olha Kotsiurba
Subject(s): Politics / Political Sciences, Economy, National Economy, Economic policy, Financial Markets, Public Finances, Socio-Economic Research, Corruption - Transparency - Anti-Corruption
Published by: Центральноукраїнський національний технічний університет
Keywords: system of counteraction and legalization of criminal incomes; bank; proceeds from crime; laundering; model; money

Summary/Abstract: The article notes that the legal basis of the anti-money laundering and laundering system is the law enforcement block and the financial monitoring unit, which includes banking institutions, and defined the role and place of the banking sector in it. Banking institutions are the leaders in the number of reports of dubious financial transactions to the State Financial Monitoring Service, which determines their central role in the counteraction to the legalization and laundering of proceeds from crime.Criminal proceeds in cash form are a result of unlawful activities, while criminal proceeds in non-cash form are obtained because of legitimate activities, in which fraud, theft of budget funds or abuse of official duties were committed. Taking into account the forms of obtaining illegal proceeds, criminals choose different methods and ways of incomes legalization. Thus, cash proceeds are placed in the banking system by intermediaries through the structuring of cash transactions, falsification of documents, the creation of collective accounts, money swaps and other, and cashless by conversion centers through the conclusion of fictitious contracts, the use of schemes with "garbage" securities, services «pseudo-insurance» are transformed into cash.Further, as a rule, in order to break the connection between criminals and the crime, the money is withdrawn abroad and returned to the economy in the legal form.According to the analysis, it was determined that the greatest risks for banking institutions in servicing legal entities are transactions in money transfer, non-equity securities transactions and cash servicing; in the service of individuals - transactions for the transfer of funds, including foreign currency, transactions with bankcards and accounts. Recommendations on the creation of a mechanism for internal control to counteract the legalization of criminal incomes through taking into account recognized intrabank tools "know about the client everything" and "know your employees", will reduce the risks of using the banking sector to legalize the proceeds from crime.

  • Issue Year: 2018
  • Issue No: 1 (34)
  • Page Range: 172-180
  • Page Count: 9
  • Language: Ukrainian