Ukraine has made tangible progress in its commitment to combating money laundering, but needs to introduce tougher legislation on corruption, according to a report by Council of Europe.
In the report, MONEYVAL (Measures against Money Laundering and the Financing of Terrorism Special Committee) acknowledged that there is “a strong political commitment in Ukraine to prevent and combat money laundering and terrorism financing (ML/FT), and the measures undertaken have already had a positive effect.”
However, the Committee of Experts, who produced the report, warned that despite these successes, “new legal provisions are required to render more dissuasive sentences for the crimes, more resources are needed, and high-level cases are to be investigated and prosecuted more actively.”
“Ukraine faces considerable money laundering risks due to corruption and illegal economic activities, including fictitious entrepreneurship, tax evasion and fraud. The sheer size of the shadow economy exacerbated by the widespread use of cash makes the country especially vulnerable,” the report said.
The Committee highlighted the need to address the prevalence of so-called “conversions centres” which operate by siphoning funds from the real to the shadow economy before being transferred out of the country, draining the government’s coffers of much-needed tax revenue.
MONEYVAL also points out the need for more severe punishments in cases of money laundering and corruption, including at the highest political level.
“More prosecutions and convictions are required in cases involving high-level corruption, theft and embezzlement of state assets not only by persons connected with the former regime, but also by current state officials and their associates,” the Committee said in a press release accompanying the report.
The Experts note that money laundering is still considered a “secondary level” crime in Ukraine, and as such it is necessary for the government to enact stricter legislation and more severe punishments for the crime.
The MONEYVAL report follows within a week of another largely complimentary assessment from the Parliamentary Assembly of the Council of Europe welcoming Ukraine’s “ambitious reform programme put in place after the “Revolution of Dignity” despite the challenging environment as a result of the Russian aggression in eastern Ukraine and the illegal annexation of Crimea.”
However, this report too came with caveats. According to the Assembly “the hardening of political discourse following the Euromaidan events and the Russian aggression in eastern Ukraine,” has polarised the media environment, “leading to unacceptable attacks on journalists and media outlets.” The Assembly especially urged Kiev to redress the imbalance between the official language and those of minorities in Ukraine’s controversial new Education law, saying that this has resulted in “a reduction in rights in comparison to previous legislation.”