Which Transactions Are Subject to Financial Monitoring?

Today, the phrase “financial monitoring” is often associated with unexpected bank card blocks or piles of documents requested by banks. However, the reality is broader, while everything is actually quite simple and understandable. Let’s take a look at how the State Financial Monitoring Service of Ukraine works and whether a law-abiding citizen should be afraid of it.

Financial monitoring is a set of measures taken by the state and financial institutions to detect, prevent and combat money laundering, terrorist financing and the proliferation of weapons of mass destruction.

The main purposes of financial monitoring are:

• combating crime;
• fulfilling international obligations and FATF recommendations;
• increasing budget revenues, as it helps identify and legalise “suspicious” funds;
• national and financial security.

Currently, entities subject to primary financial monitoring must verify their customers, carry out their identification and analyse incoming and outgoing funds.

Financial monitoring is regulated by Law of Ukraine No. 361-IX dated 06.12.2019 “On Prevention and Counteraction to Legalization (Laundering) of Proceeds of Crime, Terrorist Financing and Proliferation of Weapons of Mass Destruction”.

It has been in force since April 2020 and is the key regulatory act introducing a risk-based approach in line with international FATF standards.

The Financial Monitoring Law regulates:

• identifies entities subject to primary financial monitoring;
• establishes customer identification requirements (KYC);
• defines threshold transactions and suspicious activity;
• regulates the submission of reports to the State Financial Monitoring Service of Ukraine;
• establishes liability measures and cooperation with other authorities (State Tax Service, Bureau of Economic Security, National Bank of Ukraine).

Other important regulations include resolutions and orders of the Ministry of Finance, which directly regulate the reporting procedures for entities subject to primary financial monitoring. For the banking sector, the key regulations remain those issued by the National Bank of Ukraine, including Resolution No. 65 and its updates during 2025–2026.

The main purpose of financial monitoring is not to “pressure” customers or put pressure on law-abiding citizens, but to identify fraudulent schemes.

Legal requirements for bank customers.

It is all quite simple and requires minimal effort from a law-abiding citizen. Data updates or customer identification are carried out only at the request of the financial institution. You simply need to visit the nearest branch, and a bank employee will help you complete the procedure.

Legal transactions involving large amounts are always supported by contracts, invoices, primary documentation and other relevant documents.

Financial monitoring may apply both to threshold transactions defined by law and to transactions that a bank considers suspicious based on a risk-based approach. Let’s look at what may raise concerns for the bank’s monitoring systems.

Let’s start with threshold transactions. Financial transactions of UAH 400,000 or more may be subject to mandatory financial monitoring if they also meet the criteria specified by law. The bank may request documents confirming the legal source of the funds, such as a contract, tax return, income statement, documents confirming the sale of property, etc.

Now let’s look at suspicious transactions.

The bank may be interested in regular large transfers between individuals made without the involvement of business accounts. Banks may also pay more attention to transactions involving newly registered individual entrepreneurs, especially when there is a sharp increase in turnover. In other words, most ordinary transactions — salary payments, purchases and utility bills — do not raise any questions.

A bank’s request to confirm the source of funds is not a whim, but a legal requirement under financial monitoring legislation. A financial institution may request proof of the source of funds for the following reasons:

• the transaction amount exceeds UAH 400,000 (or the equivalent in another currency);
• the transaction appears suspicious or is unusual compared with normal activity;
• there is a sharp increase in account turnover;
• there are frequent card-to-card transfers between individuals, cash deposits or large cash withdrawals;
• transfers to or from countries on the FATF “grey” or “black” lists;
• you are a well-known person, politician or a close relative of one;
• the bank cannot understand the economic purpose of the transaction, for example, a large amount is credited to an individual entrepreneur’s account without supporting contracts.

The institution is required to make sure that the funds are legal and are not connected with money laundering, tax evasion or the financing of illegal activities. To be honest, banks also have a strong reason to carry out these checks, as they may face significant fines and other measures from the National Bank of Ukraine for violating financial monitoring requirements.

Documents that a financial institution may ask you to provide:

• sale and purchase agreement, work completion certificate;
• salary certificate, tax return;
• loan agreement, inheritance or gift documents;
• bank statement from another bank, etc.

The completion of a bank’s review will always have some consequences for you: from giving the “green light” to the transfer to blocking the account. The bank’s systems may either approve the transaction or send the relevant information to the State Financial Monitoring Service.

There are currently two possible outcomes:

1. First (no risks identified). The money is credited to or debited from the account as usual. If no risks are identified, the transaction is processed normally.
2. Second (suspicion or risk identified). The bank may suspend the transaction, request additional documents confirming the source of the funds and the purpose of the payment, or conduct an enhanced review.

A bank may temporarily suspend a financial transaction in cases provided for by law. The period may subsequently be extended by the State Financial Monitoring Service or by a decision of authorised authorities in accordance with the law. However, if the State Financial Monitoring Service becomes involved, this period may be extended by another 7 business days, while a court or authorised authorities acting within a criminal investigation may extend it for up to 30 days or longer.

After receiving the documents, the bank analyses the information. If everything is in order, the transaction is unblocked. If not, the bank refuses to process it. The bank must then send a notification to the State Financial Monitoring Service, and other government authorities may become involved.

The best option is to operate in a way that does not raise questions for bank employees. But if something does go wrong, you should act consistently and be as honest as possible. The recommended steps, along with my comments, are provided in the table.

Do not ignore the bank’s requests, as this may be considered a refusal to cooperate and may lead to your account being closed. Stay calm and polite in your correspondence.

What is financial monitoring in Ukraine in 2026? It is a risk-based approach aimed at combating money laundering. To avoid problems, operate transparently, keep your primary documents and respond promptly to requests from the bank.


Translation into English was created with the help of artificial intelligence.