APPLICATION OF INFORMATION TECHNOLOGY IN COMBATING MONEY LAUNDERING IN UKRAINE: legal

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1 APPLICATION OF INFORMATION TECHNOLOGY IN COMBATING MONEY LAUNDERING IN UKRAINE: legal aspects Igor Osyka, LL.M, PhD Kharkiv University of Law and Economics Warsaw 2011

2 Legal regulation Council of Europe Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime and on the Financing of Terrorism (ETS 198) by Law of N 2698-VI with number of declarations and reservations (accept requests by electronic means under condition of sending the original; answer only after receiving the paper original of the request) Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime of by Law of N 738/97-ВР UN Convention against transnational organized crime by Law N 1433-IV of

3 Legal regulation (II) Law of Ukraine on prevention and countering money laundering or financing of terrorism of N 249-IV Code of Administrative Procedure Article Violation of legislation on money laundering and financing of terrorism Criminal Code Articles 209 Money Laundering, Intentional violation of the requirements of the law on money laundering or financing of terrorism, 306 Laundering of assets received from narcotic drugs trafficking

4 Legal Regulation (III) Compliance with EU and CoE instruments - Directive 2005/60/EC of the European Parliament and of the Council of 26 October 2005 on the prevention of the use of the financial system for the purpose of money laundering and terrorist financing Ukraine EU Action Plan - adoption of a national strategy for the prevention and fighting of money laundering and financing of terrorism; adoption of a law on the prevention of financing of terrorism - Confiscation, arrest and management of arrested assets regulations Cooperation with European and International institutions and EU member states - memorandums of understanding with 55 FIUs, including those of EU members but not all of them; Moneyval

5 System of financial monitoring Levels of monitoring Initial monitoring (by banks, insurance companies, lawyers, post offices, payment systems, stock markets etc.) - Obligatory monitoring - Internal monitoring State monitoring (by regulators: National Bank, Ministry of Finance, Ministry of Justice, Ministry of Transport and Communication, Ministry of Economy, State Commission on Stocks and Stock Exchange, State Commission on Regulation of Financial Markets)

6 Detection and investigation of money laundering Through financial monitoring (from transaction to crime): - State Service of Financial Monitoring produce generalized material and send it to law enforcement agencies in paper or electronic format - Generalized material is a ground for official checking out of the information and filing criminal case Through criminal investigations (from predicate offence to transaction and money) - Law enforcement can t request any information from SSFM - Searches, seizures, forensic accounting

7 Information flow at national level Subject of initial monitoring (Order of electronic interaction of the subjects to initial monitoring and State Service of Financial Monitoring) Subject of State monitoring provide access to State Service of Financial Monitoring of its information resources State Service of Financial Monitoring (software UNIS- Monitor, UNIS-Info, Sphere-KC, Unified State Information System in the field of combating Money Laundering or Financing Terrorism) Law enforcement agency (generalized materials and additional generalized materials) Prosecution service (criminal case files) Court (criminal case files)

8 Information flow at international level Exchange of information between FIUs on the financial transactions which are subject to monitoring Mutual legal assistance: - Execution of court decisions on the confiscation of illegally gained assets - Procedural actions in the framework of money laundering investigations

9 Information technologies Electronic exchange of files (through protected channels) Automated system of document processing Registration of financial transactions Forming, keeping and using databases Software used internally by the SSFM Software used in investigations, dominantly by forensic scientists

10 Electronic documents in Ukraine Electronic document is regulated in Ukraine: - Law of Ukraine on Electronic Document and Electronic Document Flow of N 851-IV - Law of Ukraine on Electronic Digital Signature of N 852-IV - Law of Ukraine on protection or information in information and telecommunication systems of N 80/94-ВР Currently are used by: Banks (electronic payments) Stock exchange (electronic stocks) Tax Service and Customs Service (electronic declarations) State Service of Financial Monitoring

11 Electronic document vs. paper document Legal features of electronic document: - Created, kept and used in certified electronic document flow system - Signed by certified electronic digital signature - Hard copy has legal force of an original - Used based on contract, agreement or regulations Paper copy of electronic document and electronic copy of paper document - Paper copy of electronic document produced in specific way is an evidence - Electronic copy of paper document data, evidence only if received by forensics

12 Admissibility of electronic document as evidence in criminal proceedings Physical or writing evidence? Is computer Forensic examination necessary? In electronic or paper format?

13 THANK YOU FOR YOUR ATTENTION Igor Osyka LL.M, PhD Kharkiv University of Law and Economics (Ukraine)