Implementation of the international standard for the automatic exchange of information on financial accounts: implications for financial monitoring entities

Abstract

Problem setting. From July 1, 2023, in accordance with the Law of Ukraine "On Amendments to the Tax Code of Ukraine and other legislative acts of Ukraine regarding the implementation of the international standard of automatic exchange of information on financial accounts" dated March 20, 2023 No. 2970-IX financial institutions of Ukraine, including subjects of primary financial monitoring, are obliged to carry out due diligence measures on financial accounts to determine whether such accounts are accountable, and subsequently submit a report to the State Tax Service of Ukraine on accountable accounts. Тhe introduction by Law No. 2970-IX of amendments to the Tax Code of Ukraine and other legislative acts of Ukraine provides for the implementation of the specified standards, the transformation of national legislation for their application, etc.

Purpose of research is determining the consequences of such implementation on the financial monitoring system in Ukraine in general and on the activities of primary financial monitoring entities in particular.

Аnalysis of recent researches and publications. The issue of financial monitoring is studied by scientists of various fields, both science (legal, economic, criminological) and law, from financial, tax, economic to administrative, criminal and criminal procedural law. Such a discrepancy is caused by the broad subject (object) of relations, the number of subjects of these relations, and the method of their regulation (imperative). Financial monitoring is studied both as an activity of state authorities (subjects of state financial monitoring) along with the activities of private organizations/institutions (subjects of primary financial monitoring), and as a way of combating crime.

Аrticle’s main body. The article is devoted to the study of the reasons and prerequisites for Ukraine's implementation of the international standard for the exchange of information on financial accounts. The author uses classical empirical (description), general logical (analysis and synthesis) methods of scientific knowledge and special methods of studying law (formal legal and logical legal methods). This study chronologically traces Ukraine's path to the implementation of the international standard for the exchange of information on financial accounts. In addition, the literature of other scholars on the issue of financial monitoring and the international standard for the exchange of information on financial accounts was analyzed. The authors have analyzed legislative changes to the Tax Code of Ukraine and other legislative acts on the implementation of the international standard for the exchange of information on financial accounts.

In the process of analyzing and synthesizing legislative changes regarding the implementation of the international standard for the exchange of information on financial accounts, the researchers identified the most significant ones and briefly noted them. The highlighted legislative innovations were aimed at illustrating the role of primary financial monitoring entities in the process of such automatic exchange of information on financial accounts between the competent authorities.

Conclusions and prospects for the development. An important outcome of this article is the establishment of consequences for the subjects of primary financial monitoring. These are an increase in the scope of functions of the primary financial monitoring entities and a slight expansion of the subject composition of the primary financial monitoring entities. In addition, it is worth paying attention to the allocation of a new separate object of financial monitoring - accountable financial accounts.

Ukraine's implementation of the international standard for the automatic exchange of information on financial accounts entails a number of consequences: legislative changes, including the issuance of subordinate regulatory legal acts for the implementation of amended laws; preparation of executive authorities for the practical application of such changes (organization of conducting and monitoring the results of audits of financial accounts, submission of reports and, accordingly, further exchange of such information by the State Tax Service of Ukraine with foreign tax authorities, etc.); practical implementation of the specified changes by the State Tax Service of Ukraine, financial agents, including subjects of primary financial monitoring; analysis of the first practical results, etc.