Tom Keatinge is the director of the Centre for Financial Crime and Security Studies at RUSI.
Since 2017, Ukraine’s allies have regularly gathered to support the advancement of reforms in the country. And Russia’s full-scale invasion in February 2022 has added an urgency and focus to these gatherings.
Now renamed the Ukraine Recovery Conference, this year’s meeting is co-hosted by the United Kingdom alongside Ukraine, and it will focus on “mobilizing international support for Ukraine’s economic and social stabilization and recovery from the effects of war, including through emergency assistance for immediate needs and financing private sector participation in the reconstruction process.”
Here, both Ukraine and its co-host will be hoping to hear vocal condemnation of Russia’s aggression, as well as see support of Kyiv’s war effort turn into real financial commitments that can support the monumental task of rebuilding the country’s infrastructure, industry and housing, and restoring its citizens’ livelihoods when hostilities cease.
Central to consolidating the confidence required to secure these financial commitments, however, is the need to ensure that Ukraine’s financial system has integrity and resilience — that it is secured against abuse by those who might seek to take advantage of the reconstruction process to enrich themselves, and steal from the Ukrainian people.
In this area, the Financial Action Task Force (FATF) has led the global fight against financial crime and illicit finance for over 30 years. It provides standards that countries should follow, publishes guidance and typologies to inform countries of developing financial crime risks and new methods of responding to them, and — importantly — it evaluates the progress countries are making in securing the integrity of their financial systems.
Supplementing the FATF, which has 39 members representing the larger global economies, are also a series of regional bodies, and of these, Ukraine belongs to MONEYVAL — comprised of members of the European Council that aren’t part of the FATF itself. Ukraine’s last evaluation by MONEYVAL was published back in 2017, and it revealed that “Corruption poses an overarching money laundering risk in Ukraine . . . generat[ing] substantial amounts of criminal proceeds and seriously undermin[ing] the effective functioning of certain state institutions and the criminal justice system.”
This isn’t necessarily surprising, as Ukraine has, indeed, had an unhappy history with corruption — but since 2014, significant progress has been made in addressing these challenges, and much work is currently being done to ensure that reconstruction funding is handled with integrity. Just consider the wide range of NGOs, including the RISE Ukraine coalition, that are committed to this mission.
But while we may know this, the question is whether right people in donor governments, the private sector and international financial institutions know about this progress and these financial integrity initiatives.
Earlier this year, the Centre for Financial Crime and Security Studies at RUSI, which I am a part of, organized a study tour to London and Brussels for a cohort of journalists and anti-corruption activists. In meeting after meeting, it became clear that knowledge of the steps Ukraine has taken to strengthen its financial integrity and resilience — both by the government and civil society — is thin. And what knowledge there is, is based on outdated information, such as the 2017 MONEYVAL evaluation, or the 2021 European Court of Auditors report.
It is now critical that we expand and update knowledge of Ukraine’s progress, ensure it is widely understood and make sure that the plan for addressing remaining challenges, as well as strengthening the integrity of financial system oversight, supervision and enforcement is clearly articulated.
So, how might this be done?
While there are many NGO-led initiatives devoted to developing transparent procurement and accountability mechanisms, ensuring donors and private sector investors have the confidence needed to commit the billions of dollars essential for reconstruction funding, an independent assessment of Ukraine’s progress will be central to resetting international perceptions.
This is why MONEYVAL will be key to achieving this ambition. As the relevant FATF regional body, its assessments carry international recognition, and its recently adopted “Declaration of Ministers and high-level delegates of the member states and territories of MONEYVAL” highlighted the threat illicit finance poses.
Additionally, the European Union’s “Commission Opinion on Ukraine’s application for membership of the European Union” contains specific guidance on FATF-related areas that require Ukraine’s attention. These include issues related to virtual assets; transparency of company ownership; the supervision of non-banking businesses and professions; advancing the investigation and prosecution of major money-laundering schemes; and, more broadly, establishing a comprehensive framework for the fight against financial crime and money laundering, then ensuring its effective implementation.
As MONEYVAL’s ministerial declaration notes, “when implemented correctly and effectively, [anti-money laundering measures] are an important defence against threats to the rule of law, to democratic governance and to the integrity of financial systems.” There is plenty that needs to be done here, and it is all activity that MONEYVAL is well placed to audit and assess.
While this “outside in” assessment will be key, however, so too will the activity of civil society.
A vibrant civil society, a free press and a public and private sector community that’s willing to engage with good ideas are all important. By supporting and promoting improvements, identifying international best practices and monitoring policymakers’ progress in implementing remediation, an active civil society can assist policymakers to prioritize actions and create the circumstances for positive change.
Much work lies ahead.
Ukraine must win this war — but it must also win the peace. All the while, the integrity and resilience of its financial system will be central to ensuring that once there is peace — and Ukraine’s territory is restored — donors and investors can commit their financial support with confidence.