RISK MANAGEMENT FOR THE PRIMARY FINANCIAL MONITORING SUBJECT

Abstract

The article highlights functioning features of the domestic financial monitoring system in the context of its subjects. The current state and financial monitoring trends in Ukraine are determined (according to the State Financial Monitoring Service). Special attention is paid to legislation innovation in the field of preventing and countering the legalization  (laundering) of proceeds from crime, financing of terrorism and proliferation financing of mass destruction weapons – the introduction of a risk-based approach for financial monitoring entities. Three levels of its implementation are considered: national, public and private. The results of the National Risk Assessment in 2019 are analyzed and systematized. Threats with high, medium and low levels of risk are identified, which require appropriate measures to minimize them development and adoption. The necessity of implementing risk assessment at the state level is established, that is the starting point for identifying and risks assessing both for state and primary financial monitoring subjects. Types of risks to be identified, evaluated  and further monitored (inherent and residual risks), risks criterias assessing forprimary financial monitoring subjects (geographical location of the state of registration of client, type of client, consumers of products / services of client, type of products / services of client, supply channels), conditions for high and unacceptably high levels of risks establishing are revealed. A negative trend towards «risk avoidance» by primary financial monitoring subject is revealed, which contradicts risk-based approach principles. It leads to the creation of alternative financial systems and increases risks of money laundering and terrorism financing. In connection with the phenomenon of «risk avoidance» spread, it is necessary, first of all: further system of coordination development for actions of state and primary financial monitoring subjects; acquainting such entities with possible risks specific to their activity; methodological recommendations development for a comprehensive assessment of counterparties for «threshold» and «suspicious» financial transactions; operative generalization of effective risk-oriented practices.