Improvement of the System of Financial Monitoring in Banks of Ukraine and Assessment of Compliance Risks

Abstract

The aim of the article is to study the problems/shortcomings, current challenges and opportunities in order to ensure an efficient and comprehensive approach to improving the system of financial monitoring in Ukrainian banks and, further on, assessing compliance risks. Based on the carried out analysis of scientific works of a number of scholars, normative legal acts of the National Bank of Ukraine, taking into account international practice, ways to improve the system of financial monitoring in Ukrainian banks, and assessment of compliance risks were considered. The article identifies the prerequisites that are of driving nature and require continuous improvement of the system of financial monitoring and compliance risks; the problems of prevention and counteraction to legalization (laundering) of proceeds from crime, financing of terrorism and financing of proliferation of weapons of mass destruction are analyzed, its difficulties and shortcomings are identified; the importance of effective interaction between the State bodies is emphasized; the measures of the State regulator – the National Bank of Ukraine – in the sphere of financial monitoring are analyzed; the principles that should be followed in the assessment of compliance risks are described; the external and internal factors that determine the efficiency of compliance are indicated. The necessity of improving the system of financial monitoring in the banks of Ukraine along with assessment of compliance risks is substantiated. Measures to improve the system of financial monitoring, including the assessment of compliance risks, are proposed, recommendations for the regulatory activities of the National Bank of Ukraine are presented. Prospects for further research in this direction are the improvement of: the system of financial monitoring and assessment of compliance risks, which can occur by amending the regulations in force in Ukraine, while taking into account international practice; the internal banking system for preventing and combating legalization (laundering) of proceeds from crime, financing of terrorism and financing of proliferation of weapons of mass destruction in banks.

Keywords

• financial monitoring
• compliance risks
• legalization
• laundering
• terrorist financing
• banks
• assessment principles
• the nbu measures