HARMONISATION OF UKRAINIAN LEGISLATION ON FINANCIAL MONITORING OF PEPs WITH INTERNATIONAL STANDARDS: BANKING ASPECT

Introduction. On its way to European integration, Ukraine has certain obligations that are necessary for accession to the EU, in particular in the area of corruption prevention. In October 2023, Law No. 3419-IX was adopted to strengthen the financial monitoring of politically exposed persons (PEPs), which is part of the efforts to harmonise Ukrainian anti-money laundering and counter-terrorist financing standards with international requirements, in particular FATF standards and EU Directive 2015/849. One of the key aspects of this process is to ensure effective financial monitoring of PEPs by banks, which is challenging due to the complexity and variability of financial transactions of PEPs and related parties. Thus, the issue of implementing effective financial monitoring tools for PEPs by banks is relevant and requires research. Purpose. The purpose of the article is a comprehensive study of national legislation for harmonisation with international standards on financial monitoring of politically exposed persons, and in particular the process of implementing these practices in the internal policies of banks, which are the main subject of financial monitoring of PEPs. Materials and Methods. The article analyses the steps being taken to harmonise Ukrainian standards with international ones, as well as the challenges faced by Ukrainian banks in implementing these standards. The article considers the amendments made to the AML/CFT Law by the Law of 17.10.2023 No. 3419-IX, the NBU's recommendations on the application of a risk-based approach and the need to modernise banks' internal procedures, as well as regulations and resolutions relating to interaction with banks in the performance of the financial monitoring function. Results and discussion. Banks in Ukraine face a number of challenges in implementing international standards for financial monitoring of PEPs. In particular, banks are required to comply with international risk management standards, including the implementation of dynamic risk management systems and updating internal policies to identify and monitor PEPs. The main problem is excessive formalism and insufficient adaptation to a risk-based approach, which creates difficulties for effective financial monitoring. The NBU actively encourages banks to improve their scoring procedures and conduct staff training. Prospects for further research include the modernisation of banking procedures and the integration of modern technologies to effectively identify and assess risks associated with PEPs. Achieving harmonisation with international standards requires systematic work by all financial market participants, including the regulator, banks and their employees. Joint efforts will help to improve the effectiveness of financial monitoring and countering financial crimes.