THE ROLE OF BANKING INSTITUTIONS IN THE SYSTEM OF ANTI-LAUNDERING AND LAUNDERING OF INCOME OBTAINED BY CRIMINAL WAYS

Abstract

Combating money laundering is a necessary condition for ensuring a country's economic security. Money laundering negatively impacts a nation's status, fiscal capacity, and adversely affects the functioning of economic entities. Banking institutions play a pivotal role in implementing the state's anti-money laundering policy. The National Bank of Ukraine, as the subject of state financial monitoring, regulates financial monitoring by banking institutions. Banking institutions, as primary subjects of financial monitoring, undertake measures to combat the legalization of «dirty money» and identify clients associated with terrorist activities. An internal in-bank system for countering money laundering and terrorist financing is established to conduct financial monitoring within the bank. It is established that the level of money laundering risk in Ukraine significantly influences the risk of involving the banking sector in illegal operations. The Basel AML Index is applied to assess the level of money laundering risk, which does not measure the actual volume of money laundering but is designed to assess the risk of such activity. It is noted that Ukraine exhibits a substantial level of money laundering risk. The most vulnerable sectors contributing to the spread of money laundering in Ukraine include the military aggression of the Russian Federation, corruption, bribery, issues related to political and civil rights, restrictions on freedom of the press, and judicial independence. The significant level of money laundering risk in Ukraine points to real and potential opportunities for individuals to engage in illicit financial transactions, primarily through the participation of banks. It is established that joint efforts in countering money laundering are of paramount importance to prevent negative consequences of the money laundering processes. Such collaborative endeavors are crucial for both banks and authorized state and international bodies. This will primarily contribute to enhancing the profitability of banks, increasing the volume of financial assets, improving the business reputation of banks, and elevating the level of financial stability of both individual banks and the banking system as a whole.