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Politically Exposed Persons: new public database will help financial institutions all over the world to identify high-risk clients from Ukraine



Ukrainian activists has announced the launch of publicly available Register of Politically Exposed Persons – pep.org.ua, an exclusive public online database designed to help to withstand money laundering from state Ukrainian budget through international banks.

Register will help international financial institutions to understand whether their current and potential clients from Ukraine are so called politically exposed persons (PEPs) or their close associates whose transactions should be checked with an enhanced due diligence according to Financial Action Task Force Anti-Money Laundering recommendations.

Register is a tool developed by the Anti-corruption Action Centre – NGO which carries out anticorruption investigations of abuses on tender procurement procedures and money laundering schemes of Ukrainian officials. It already contains over 10 000 of records of individuals and and 2,500 of legal entities, among with 2409 – of state Ukrainian enterprises and 172 – private entities, connected with PEPs.
According to the developers of the Register, this will mitigate the risk of providing service for politically exposed persons from Ukraine who launder money using international banking system.
“During the last 2 years after runaway of former president Yanukovych and his team, who are being suspected in hard economic crimes, 64 banks in Ukraine went bankrupt. At least 10 out of these banks were laundering funds through correspondent accounts at Western banks. Due to weak financial due diligence of high risk clients from Ukraine by foreign banks and Financial Intelligence Units Ukraine lost billions of US dollars” – explains Daria Kaleniuk, executive director of AntAC.
The Register contains information about PEPs, their connections with other PEPs, different institutions and relatives. The database contains two types of PEP’s profiles – basic and extended. Both contains documentary confirmed information from authorized sources about PEP – full name and career in basic profile; business, family relations, connections with other PEPs and facts which indicating a reputation of a person – whether it appears in criminal proceedings, has a criminal record, is implicated in high-profile corruption scandals and so on – in extended profile.
The Register already contains 6000 of PEPs records, 81 of PEPs close associates, and 4200 – PEP’s family members.
“Ukrainian corrupt high officials are easily laundering dirty money using international banking system. Judges, prosecutors, officials who have lifestyle which is not commensurates with their asset declarations have no problem with opening accounts in foreign banks personally or through controlled offshore companies and trusts and put their money earned in a corrupt way on there”, – comments Daria Kaleniuk.
According the Financial Monitoring Service of Ukraine (FMSU) data – for the whole time of carrying out an investigations (March 2014 – December 2015) then uncovered financial transactions totalling UAH 163,0 mln that may be related to legalization of proceeds from crime were revealed and the amount of financial transactions which may relate with the commitment of other crime – UAH 16,3 bln.
“There are special rules of PEPs financial transactions control all over the world: each financial institution should establish who is their client and what is the origin of his money. Investigation of the origin of funds of “high risk” clients including PEPs  is an obligation of all the EU Member States in the framework of FATF anti-money laundering standards implemented in the EU Directive 2005/60., – says Daria. – Theses rules do not work properly at present not least because it is really hard to identify PEPs. AntAC launches its Register with the one aim – to name all Ukrainian officials who are politically exposed persons.”
According to the information of the FMSU, the Divisions of financial Intelligence of other countries reported on freezing of former Ukrainian officials’ and their associates’ assets on USD 107,2 mln. EUR 15.9 mln and CHF  135,0 mln. in total.
Developers of the portal reports, that Public Register already contains more than 10 000 records about individuals who fall under the definition of National Politically Exposed Person, which appeared in Ukrainian legislation just a year ago – in November 2015, when Ukrainian Parliament adopted a Law On prevention of legalization of proceeds of crime.
Thus in 2016 the Financial Monitoring Service of Ukraine included the PEP Register to their recommended list of sources for identifying and due diligence of National Public Figures (Domestic Politically Exposed Persons).

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