Combating Money Laundering in Ukraine: Evolution of the National System and Its Components

Abstract

Combating money laundering, understood as a countermeasure to the attempts of offenders to conceal the illicit origin of proceeds and integrate them into the legal economy and financial system, has become one of the central priorities of national policy in the majority of states worldwide.

The subject of the present study is the national system for combating money laundering in Ukraine (hereinafter – the AML system), with particular emphasis on its formation, development, and defining features.

The analysis centres on the preconditions prevailing at the initial stage of the AML system’s establishment, the phases of its institutional and regulatory evolution, the development and consolidation of both criminal law and preventive mechanisms, as well as an assessment of their functioning.

The research identifies the principal drivers of the AML system’s transformation and development: international legal commitments, external political and economic pressures, institutional reforms, European integration processes, and internal socio-economic challenges.

Methodologically, the study relies on an integrated approach that combines regulatory, institutional, and statistical analysis of the AML system through the prism of criminal law and preventive legal mechanisms.

The domains of countering terrorist financing and the proliferation of weapons of mass destruction are deliberately excluded – not due to their secondary importance, but in order to maintain analytical focus on the central subject, AML. This delimitation ensures conceptual clarity while leaving scope for future research in adjacent areas.

Since the FATF Recommendations establish international standards for states and stipulate their implementation in criminal law, AML regulatory frameworks, supervisory mechanisms for financial and non-financial sectors, and provisions on international cooperation [1, p. xviii], the national AML system is examined within this multidimensional methodological framework.

The study summarises more than three decades of AML system evolution, during which it has become a significant factor in Ukraine’s integration into the global economic space. This evolution encompasses the harmonisation of national legislation with international standards, the institutional consolidation of the system, and the gradual strengthening of international trust.

The purpose of the research is to conduct a comprehensive analysis of Ukraine’s AML system and its regulatory and institutional foundations through the prism of two principal components: criminal law and preventive (financial and administrative) mechanisms.

Special attention is devoted to the stages of development of the Ukrainian AML system, its alignment with FATF international standards, MONEYVAL requirements, EU directives, and domestic challenges in the sphere of financial security.

The study employs a set of methods: regulatory-legal analysis to identify the relevant provisions of national legislation, and historical-legal analysis to clarify the causes and features of the formation and development of the two core components of the Ukrainian AML system – criminal law and preventive (financial and administrative).

The value of the research resides in the application of a systematic approach to analysing the Ukrainian AML system as an integral phenomenon that combines criminal law and preventive mechanisms, while also assessing their effectiveness.