Ukrainian legislation defines financial monitoring as a set of measures implemented by financial monitoring entities in the field of prevention and counteraction, including both state financial monitoring and primary financial monitoring.
The key regulatory acts governing financial monitoring in Ukraine include:
In simple terms, financial monitoring is a system of control and analysis of financial transactions designed to ensure the transparency and security of the financial system.
The financial monitoring process includes measures aimed at tracking the movement of funds and ensuring compliance with financial legislation and international standards. Financial monitoring has been implemented in Ukraine as part of its European integration commitments.
In 2024, the National Bank of Ukraine, together with leading banks, signed a Memorandum on ensuring transparency in the payment services market. The Memorandum regulates interaction between banks, payment service providers, and clients, and standardizes approaches to transaction monitoring based on a risk-based approach. This initiative is intended to eliminate unfair competition practices.
According to the National Bank of Ukraine, this initiative by the banking sector is aimed at reducing the shadow economy, as well as counteracting terrorist and subversive activities financed through the use of so-called “money mules” (“drops”). It also seeks to prevent the misuse of payment cards and payment infrastructure by fraudsters and other malicious actors.
The Memorandum further contributes to aligning banking practices with European Union standards and legal requirements. It was developed by National Anti-Corruption Bureau of Ukraine and Association of Ukrainian Banks (AUB) with the support of the National Bank of Ukraine, and remains open for accession by all Ukrainian banks.
In March 2026, the National Bank of Ukraine approved a new internal Action Plan for the implementation of European integration measures. This document consolidates all EU integration tasks of the central bank aimed at implementing EU acquis in the financial sector, including banking, insurance, and digital finance (virtual assets and digital operational resilience).
The financial monitoring system consists of two levels: primary and state-level monitoring.
Primary financial monitoring entities include:
Law firms, bar associations, and attorneys engaged in individual legal practice are classified as specially designated non-financial businesses and professions (DNFBPs) and act as primary financial monitoring entities in certain cases.
Specially designated entities are a separate category of persons and organizations that are not financial institutions but are required to conduct financial monitoring in cases provided by law. Accordingly, attorneys are obliged to perform primary financial monitoring when advising on or supporting certain types of client activities.
Such entities also include:
Thus, financial monitoring is not limited to the review of payment transactions by banks — it is a comprehensive, state-level system covering both financial institutions and designated non-financial entities.
Its purpose is the timely detection and prevention of the use of financial mechanisms for money laundering, terrorist financing, and other unlawful activities.
Primary financial monitoring entities are required to report detected violations, suspicious transactions, activities, or attempts thereof to the specially authorized state authority.
Financial monitoring measures apply to all participants in economic relations conducting transactions involving funds or other assets within Ukraine. This includes:
When analyzing transactions involving individuals, particular attention is paid to the source of funds and compliance with tax obligations.
For individual entrepreneurs and legal entities, a more comprehensive and in-depth review is conducted, which may include:
This list is not exhaustive. Banks, applying a risk-based approach, international standards, and internal policies, may independently determine indicators of suspicious transactions and adapt monitoring criteria to specific cases.
Our firm successfully supported a client’s foreign economic (cross-border) project involving the purchase of goods and procurement of services from a foreign counterparty.
Given that the transaction fell within financial monitoring criteria, specific requirements related to foreign currency payments under martial law were taken into account at the contract drafting stage.
To ensure successful execution of the payment, full transparency was maintained at all stages:
It is not possible to completely avoid being subject to financial monitoring procedures. However, certain measures can significantly reduce the risk of transaction blocking.
To minimize risks, it is recommended to:
Compliance with these principles substantially facilitates the financial monitoring process and reduces potential risks.