(BILLING CODE 4810-02-P)

DEPARTMENT OF THE TREASURY

Revocation of Designation of Ukraine as Primary Money Laundering Concern

AGENCY: Financial Crimes Enforcement Network (FinCEN), Treasury.

ACTION: Revocation of Designation.

SUMMARY: This notice revokes the Department of the Treasury’s December 20, 2002, 

designation of Ukraine as a primary money laundering concern pursuant to section 

5318A of title 31, United States Code, as added by section 311 of the Uniting and 

Strengthening America by Providing Appropriate Tools Required to Intercept and 

Obstruct Terrorism (USA PATRIOT ACT) Act of 2001(Public Law 107-56).

DATES: The revocation of the designation is effective [INSERT DATE OF 

PUBLICATION IN THE FEDERAL REGISTER].

FOR FURTHER INFORMATION CONTACT: Office of Chief Counsel (FinCEN), 

(703) 905-3590; Executive Office for Terrorist Financing and Financial Crimes, (202) 

622-0400; Office of the General Counsel (Treasury), (202) 622-1927 (not toll-free 

numbers).

SUPPLEMENTARY INFORMATION:

On December 20, 2002, Treasury designated Ukraine as a primary money 

laundering concern under 31 U.S.C. 5318A, as added by section 311(a) of the USA 

PATRIOT Act. In a notice published in the Federal Register on December 26, 2002,1 the 

various factors supporting the designation were outlined. Of particular importance to the 

decision to designate was the fact that while Ukraine had recently enacted anti-money 
2

laundering legislation, it was deficient in several material respects.2 As noted in the 

designation, among other things, Ukraine’s system for reporting suspicious transactions 

remained so constrained as to be virtually ineffective, and the ability of its financial 

intelligence unit to share information with law enforcement and function appropriately 

was in doubt. Having analyzed the legislation, the Financial Action Task Force (FATF) 

likewise concluded that the new legislation was inadequate and called on FATF members 

to take appropriate counter-measures against Ukraine. In the designation, Treasury 

specifically warned Ukraine that unless it took steps to address the concerns giving rise to 

its designation, Treasury anticipated imposing one or more special measures that would 

require U.S. financial institutions to obtain nominal and beneficial ownership information 

on certain accounts and transactions involving Ukraine.

Since Treasury’s designation of Ukraine under section 5318A, Ukraine has taken 

steps to address the deficiencies. First, Ukraine amended its anti-money laundering law 

clearly to allow the Ukrainian financial intelligence unit to share information with law 

enforcement and to lower the suspicious transaction reporting thresholds. Second, the 

Ukrainian criminal code was amended to criminalize money laundering, the failure to file 

suspicious transaction reports, and tipping off the subjects of such reports. Finally, the 

Ukrainian banking and financial services laws were amended to require the full 

disclosure of beneficial ownership at account opening for all legal entities and natural 

persons. These new provisions are scheduled to come into force as of June 7, 2003.

 

1

 67 FR 78859 (December 26, 2002). In that same Notice, Treasury also designated Nauru as a primary 

money laundering concern. Published elsewhere in this issue of the Federal Register is FinCEN’s notice of 

proposed rulemaking seeking to impose counter-measures against Nauru.

2

 On November 28, 2002, Ukraine's Supreme Council (Parliament) passed a Law on Prevention and 

Counteraction of the Legalization (Laundering) of the Proceeds from Crime, and the President of Ukraine 

signed the Law on December 7.
3

As a result of these further legislative enhancements, along with the pledge of 

aggressive implementation, on February 14, 2003, the FATF rescinded its call for 

counter-measures against Ukraine.

In light of the further legislative enhancements, the commitment of Ukraine to 

further efforts to implement its anti-money laundering legislation, and the FATF’s 

decision to rescind the call for counter-measures, Treasury has decided to revoke the 

designation of Ukraine as a primary money laundering concern under section 5318A.

Significantly, Treasury’s revocation of the primary money laundering concern 

designation should not be construed as an indication that financial transactions involving 

Ukraine do not continue to present a heightened risk of money laundering. To the 

contrary, Ukraine’s recent legislative enactments are not yet in force and much work 

remains. Ukraine is still on the FATF’s Non-Cooperative Countries and Territories 

(NCCT) list due to its inadequate anti-money laundering regime. The FATF will require 

additional progress and effective implementation of the anti-money laundering legislation 

before considering removing Ukraine from the NCCT list.

Moreover, U.S. financial institutions are reminded that the revocation of the 

designation does not affect existing guidance issued by FinCEN or obligations arising 

under the Bank Secrecy Act with respect to accounts and transactions involving Ukraine. 

For example, the April 2002 FinCEN advisory on trans actions involving Ukraine remains 

in effect, and, due to Ukraine’s status as an NCCT jurisdiction, U.S. financial institutions 

are or will be required by 31 U.S.C. 5318(i), as added by section 312 of the USA 
4

PATRIOT Act, to conduct enhanced scrutiny on any correspondent accounts maintained 

for a foreign bank operating under a license issued by Ukraine.3

Revocation of the Designation of Ukraine as a Primary Money Laundering Concern

For the foregoing reasons, the designation of the country of Ukraine as a primary 

money laundering concern for purposes of section 5318A of title 31, United States Code, 

is hereby revoked.

Dated: ________________________

________________________

James F. Sloan

Director

Financial Crimes Enforcement Network

 

3

 Section 5318(i) requires U.S. financial institutions to conduct enhanced scrutiny when opening or 

maintaining a correspondent account for a foreign bank operating, among other things, under a banking 

license issued by a foreign country designated as non-cooperative with international anti-money laundering 

principles or procedures by an intergovernmental group or organization of which the United States is a 

member and with which designation the U.S. representative concurs. Jurisdictions placed on the FATF 

NCCT list fall into this category.

By its own terms, section 5318(i) became effective on July 23, 2002. On May 30, 2002, FinCEN 

issued a proposed rule implementing the various provisions of section 5318(i). 67 FR 37736 (May 30, 

2002). On July 23, 2002, FinCEN issued an interim rule that temporarily deferred application of section 

5318(i) to certain financial institutions, and provided guidance to those subject to the provision pending 

FinCEN’s issuance of a final rule. 67 FR 48348 (July 23, 2002). FinCEN expects that the final rule 

implementing section 5318(i) will be issued shortly. In the meantime, only U.S. depository institutions 

must comply with the enhanced scrutiny provisions in the manner set forth in the interim guidance.