THE INSTITUTIONAL ROLE OF BANKS IN TRANSFORMING FINANCIAL FLOWS UNDER SANCTIONS

Abstract

The article examines the role of banks as institutional intermediaries in the transformation of financial flows under the sanction’s regime. The theoretical and methodological foundations of the institutional approach to the study of financial monitoring and sanctions policy are analyzed, which made it possible to reveal the dual function of banks as control instruments and intermediaries in the redistribution of financial flows at the same time. The institutional architecture of the financial monitoring system of Ukraine, which includes regulatory, analytical and law enforcement bodies, is studied, and the network nature of their interaction is established. It is substantiated that the effectiveness of the implementation of sanctions policy is determined not by individual subjects, but by the level of their coordination and integration of information processes. Based on empirical analysis, the main mechanisms of financial flow transformation have been identified the use of third jurisdictions, intermediary structures, financial platforms and cryptocurrency instruments. It has been proven that banks, while carrying out formal legal transactions, can objectively act as elements of complex chains of sanctions evasion. It has been substantiated that the use of a risk-based approach and financial monitoring measures contributes to increasing the transparency of the banking system but may cause the effect of redirecting financial flows to less controlled segments. The role of the National Bank of Ukraine as a macro-regulator is assessed and its institutional effectiveness, which is manifested in the implementation of systemic supervision and the application of influence measures, is substantiated. At the same time, the presence of structural limitations to such effectiveness is established, due to information asymmetry, the cross-border nature of financial transactions and the heterogeneity of the institutional capacity of banking institutions. It is determined that the multi-level nature of the financial monitoring system ensures its institutional stability, while at the same time causing the risks of fragmentation. The conclusion is about the need to strengthen inter-institutional coordination and integration of analytical tools to increase the effectiveness of the policy of countering the circumvention of sanctions. Prospects for further research are related to the development of integrated inter-institutional data exchange models and analytical systems for early detection of sanctions circumvention schemes, as well as an in-depth analysis of the transformative role of banks in the redistribution of financial flows in the face of global restrictions.