Currently, Ukraine is developing measures against income laundering and terrorism support. Some countries refuse to join the Financial Action Task Force on Money Laundering (FATF) and do not resist drug, weapon or people trade laundering. Also, they promote shadow economy and international terrorism. Being included in the FATF denylist, such states are regarded as outcasts without any open international aid. Other unique lists provide thorough checks or even deny working with nations’ companies or their citizens. Thus, residents cannot trade on the international level properly: they face significant trouble opening accounts (most foreign banks refuse to serve them). Besides, payments are often under suspicion, frozen and brought to the blocking state’s budget. Previously treated as a black country in 2002-2004, Ukraine was again included in the FATF list in 2010. Today, the Ukrainian rank is better, but it matches only 11 of 40 FATF requirements. From this perspective, SumDU research topics aim to improve national financial monitoring and money laundering resistance. That is highly relevant to social and economic development.
In 2008, the corresponding school was founded by Olha Kuzmenko (Doctor of Economics, Professor, Head of the Economic Cybernetics Department). She proposed to assess the risks of banks’ financial check violations. Using monthly bank statistics in 2008-2011 (via the Bayesian risk model), the author assessed banks for violating AML laws. In 2012, the National Bank of Ukraine approved this research as an automated program that has been widely applied today.
SumDU scientists co-amended the draft laws “On the National Bureau of Financial Security” and “On Financial Police”, which presupposes the foundation of a single Ukrainian law enforcement agency. The offered methodology is based on Schneider’s modern adaptive modelling, MIMIC modelling, etc. Such an approach defines critical interaction points of money laundering tax and investment channels. It is engaged by the National Bank of Ukraine, the National Securities and Stock Market Commission and the State Financial Monitoring Service of Ukraine.
Implementation of such innovations improves Ukrainian positions in the FATF rank. Subsequently, FATF sanctions may decrease while the investment climate may rise.
Since 2020, many studies against the shadow economy have been funded by the National Research Foundation of Ukraine. Therefore, the research “Optimization and Automatization of Financial Monitoring Processes for Ukrainian Information Security” aims to create a new complex methodology of assessing money laundering risks among Ukrainian banks. It covers modern modelling techniques and can be applied to assess primary money laundering markers and define respective integral indicators. This principle significantly differs from the existing ones: there is a possibility to sort post-Soviet and other states by groups with various bank money laundering risks on the international level.
The research “Quadrocentric Recurrent Model of Ukrainian Economy De-Shadowing for Developing National Macrostability” assesses the actual scope of the shadow economy and its supporting channels. The study models the actual shadow size of Ukraine establishes causes and results (among shadow economy levels, macrostability and investments). Moreover, interconnections between tax gaps, shadow economy and macrostability are determined, and the E-Government Development Index influence on shadowing is analyzed. Ties of shadowing and macrostability with the country’s social growth are interpreted. A detailed plan for the Ukrainian economy de-shadowing to improve macrostability is designed. The National Agency uses the project outcomes on Corruption Prevention to define Ukrainian anti-corruption tools and strategies. Also, they are involved in arranging taxes for the state budget (according to the Strategic Plan of the Ukrainian Ministry of Finance).
Foreseen in 2021-2023, the research “Data Mining against Cybercrimes and Money Laundering within Digitalization of Ukrainian Finance System” will lower the integral index of Ukrainian financial threats. It will raise economic and national security as well as resist urgent IT challenges. Neuronetwork assessment and prediction via programming bank cyber-resistance and money laundering risks will be represented. Associative and intellectual analysis to establish customers’ cybersensitivity in case of their transactions will be observed. An efficient model of national financial monitoring to prevent cybercrimes and money laundering will be introduced.
SumDU researchers were awarded a range of copyright certificates. Many of them concern Ukrainian economy de-shadowing:
– “Intellectual and Bifurcation Analysis of Bank Money Laundering Risks”;
– “Innovative Approach to Improving Transaction Cybersecurity via AML Measures”;
– “Systematization of Existing Money Laundering Schemes”;
– “Assessment of AML Efficiency within Economy Digitalization”.
SumDU research outcomes’ practical significance consists of the following statement: new methodologies, algorithms, and draft laws may be produced. Firstly, Ukraine and other countries will use them to determine strategies of national and local economy security. Secondly, institutional, analytical and legal spheres can be reformed to prevent money laundering. Thirdly, trade unions and branch associations will introduce transparency standards of economic agents. Fourthly, subjects of real and financial economy sectors will adopt new corporate policies and AML rules.
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