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|Issued:||March 6, 2014|
|Subject:||Updated Guidance to Financial Institutions on Recent Events related to the Departure of Victor Yanukovych and Other Ukrainian Officials|
The Financial Crimes Enforcement Network (FinCEN) is updating a previously issued Advisory to provide U.S. financial institutions with current information regarding persons who have been subject to sanctions and asset freezes because of their apparent role in the misappropriation of state assets or instability in Ukraine.
On February 26, 2014 FinCEN issued an advisory1 to remind financial institutions of their responsibility to take reasonable, risk-based steps regarding the potential suspicious movement of assets related to Viktor Yanukovych departing Kyiv and abdicating his responsibilities and other senior officials resigning from their positions or departing Kyiv.2
On March 3, 2014 the government of Ukraine announced that it had initiated criminal proceedings against a number of former Ukrainian officials or close associates of former Ukrainian officials. On March 5, 2014, the European Union, based on information from Ukraine’s Prosecutor General, issued a Council Regulation requiring the European Union to freeze the funds and economic resources of various former Ukrainian officials and their close associates.3 Additionally, the government of Canada has taken similar action against the same individuals.4
The measures being taken against these former Ukrainian officials and their close associates increase the risk that they will seek to move their assets in a deceptive fashion. To help mitigate this risk, this advisory provides the names and identifying information of those that are subject to the mentioned European Union and Canadian sanctions. The list is as follows:
FinCEN is reminding U.S. financial institutions that they are required to apply enhanced scrutiny to private banking accounts held by or on behalf of senior foreign political figures5 and to monitor transactions that could potentially represent misappropriated or diverted state assets, the proceeds of bribery or other illegal payments, or other public corruption proceeds. Financial institutions should be aware of the possible impact that public reports of high-level corruption by senior members of the former Yanukovych administration and other illicit activity by members of that administration may have on patterns of financial activity when assessing risks related to particular customers and transactions. This advisory is focused on potentially suspicious transactions involving senior members of the former Yanukovych administration or those acting for or on their behalf, and is not intended to call into question the maintenance of normal relationships between financial institutions in the United States and Ukraine.
Financial institutions should also be aware that on March 6, 2014, the President of the United States issued an Executive Order authorizing the Secretary of the Treasury, in consultation with the Secretary of State, to designate individuals or entities that contribute to the undermining of Ukraine’s democracy, peace, security, sovereignty or territorial integrity, or responsible for the misappropriation of Ukraine’s state assets.6 This new authority would require U.S. persons, including U.S. financial institutions and any foreign branch, to block assets of any designated individuals or entities that come under U.S. jurisdiction.
If a financial institution knows, suspects, or has reason to suspect that a transaction relating to senior foreign political figures involves funds derived from illicit activity, including money laundering, terrorist financing, or any other violation of law or regulation, or if the transaction appears to have no business or lawful purpose or has a purpose inconsistent with the customer’s known business, the financial institution must file a Suspicious Activity Report (SAR) consistent with FinCEN’s regulations.7 In addition, covered financial institutions are reminded of the regulations implementing section 312 of the USA PATRIOT Act (31 U.S.C. 5318(i)), which require a written due diligence program for private banking accounts held for non-U.S. persons designed to detect and report any known or suspected money laundering or other suspicious activity.8 In instances where senior foreign political figures maintain private banking accounts at a covered institution, those financial institutions are required to apply enhanced scrutiny of such accounts to detect and report transactions that may involve the proceeds of foreign corruption.9
In April 2008, FinCEN issued Guidance to assist financial institutions with reporting suspicious activity regarding proceeds of foreign corruption. That Guidance also discusses potential indicators that transactions may be related to proceeds of foreign corruption.10 Financial institutions may find this Guidance useful in assisting with suspicious activity monitoring and due diligence requirements related to senior foreign political figures.
Additional questions or comments regarding the contents of this Advisory should be addressed to the FinCEN Resource Center at (800) 949-2732. Financial institutions wanting to report suspicious transactions that may relate to terrorist activity should call the Financial Institutions Toll-Free Hotline at (866) 556-3974 (7 days a week, 24 hours a day). The purpose of the hotline is to expedite the delivery of this information to law enforcement. Financial institutions should immediately report any imminent threat to local-area law enforcement officials.