Remarks by Stuart Levey
United States Under Secretary of the Treasury Department

Roundtable at the U.S. Embassy
June 2, 2005
Kyiv, Ukraine

UNDER SECRETARY LEVEY:  Thank you for coming.  I'm Under Secretary Stuart Levey, Under Secretary for Terrorism and Financial Intelligence at the Treasury Department.  My responsibilities include the fight against money laundering and terrorist financing.  An important part of my job is working with our international partners around the world on money laundering and terrorism issues.  I came to Ukraine to meet with the relevant government officials with responsibilities for fighting financial crime and terrorist financing.

I met with Deputy State Secretary Sobolov, with Head of the Financial Intelligence Unit Mr. Hurzhiy, Central Bank governor Stelmakh, Secretary of the National Security Council Poroshenko, and with Prime Minister Tymoshenko.  Generally, my message was one of partnership and friendship from the United States.  We have the same aspirations for Ukraine as Ukrainians do.  We'd like to see a strong economy in Ukraine, an economy that is integrated into the international community.  In my opinion, one important factor in strengthening the economy of Ukraine is a robust anti-money laundering and terrorist financing regime.  In order to attract international investment, the Ukrainian economy has to have transparency and a reputation for integrity.  

Our partnership with Ukraine on these issues has been a good one.  Ukraine has come a long way on these issues, but it has a long way to go.  Financial crime and money laundering are still a problem in Ukraine.  Combating that problem requires a strong partnership that includes a strong banking regulator, a strong financial intelligence unit, and the active engagement of the private sector, who are the gatekeepers to keep illicit finance out of the system.  One concrete step that I encouraged to all I met with was the passage of a new anti-money laundering law that meets international standards.  We believe that an improved anti-money laundering law would be a very important step for Ukraine.  The reaction I received was very positive; the high-level government officials were in agreement that financial crime remains a problem and that the money laundering regime needs improvement. I'd be happy to take any questions.

QUESTION:  For example, with the Ukrainian anti-money laundering legislation, what exactly needs to be added and what was your advice to the high-level officials of Ukraine that you met with?

UNDER SECRETARY LEVEY:  There are a number of specifics that need to be improved.  One in particular is that there needs to be a separate criminalization of terrorist financing.  But there was a proposed bill that was before the parliament recently that had a number of other, specific provisions.  Despite the support of the President and the Prime Minister, that bill did not pass.

QUESTION:  Since you also deal with anti-terrorism, what do you think about the recent offer by President Yushchenko to create an international center in Kyiv specializing in anti-terrorism, and also for OSCE and other nations to contribute to this center and participate in its work?

UNDER SECRETARY LEVEY:  I must admit that I am not familiar with the specific proposal you are referring to, but the fight against terrorism has to be -- and it is -- an international coalition.  Ukraine has been an important partner in the overall war against terror, and we very much appreciate it.

QUESTION:  If Ukraine were to create such an international center, would the U.S. be interested in providing consultants and advice, and taking an active role in function of that center?

UNDER SECRETARY LEVEY:  Again, I'm not familiar with the specific proposal.  I imagine that the United States would be supportive of counterterrorism initiatives, but I don't know enough about the proposal to promise any particular support.

QUESTION:  There was information that in April the Department of the Treasury made a statement about the possible participation of two Latvian banks in money laundering activities.  Were there any further steps in that direction, and are there any Ukrainian banks that are suspected?

UNDER SECRETARY LEVEY:  Well, you're correct that there was an action taken by the U.S. Treasury against two Latvian banks in April -- in fact, I visited Latvia just before coming here -- where we identified two banks as primary money laundering concerns, and put a proposed rule out that would cut those banks off from the United States' financial system.  The important point, I think, is that that action highlights the central position of financial institutions in fighting money laundering.  Financial institutions are in an excellent position to identify suspicious transactions, and are therefore an important partner in the fight against money laundering.  

QUESTION:  So what about Ukrainian banks?  Are there any Ukrainian banks that are suspected of money laundering?

UNDER SECRETARY LEVEY:  I don't have any particular institutions to identify.  I would say that money laundering is a problem in Ukraine, and it is important for Ukrainian banks to take their responsibility seriously.  

QUESTION:  Would you please estimate the effectiveness of Ukrainian financial intelligence compared with Latvia?

UNDER SECRETARY LEVEY:  I think that I'd rather not make a comparison.  I do think that the financial intelligence unit here in Ukraine is doing a very good job.  They have an ambitious vision for their role, which I think is good, and one of the messages I conveyed to the various people I met with is that I think that a robust, strong financial intelligence unit is critical for Ukraine.   

QUESTION:  What about the actions that were taken regarding the Latvian banks?  Were their U.S. accounts frozen, or any other action?

UNDER SECRETARY LEVEY:  Our action is somewhat complicated, unfortunately.  Our action was to identify these two banks -- Multibanka and VEF Bank -- as primary money laundering concerns.  We then get comments in from the public and make a decision about whether to finalize our action.  If we finalize our action, the effect would be to forbid any U.S. financial institution from holding correspondent accounts -- either directly or indirectly -- with either one of those institutions.

QUESTION:  Is the U.S. monitoring the bank accounts of Ukrainian authorities that are in the U.S.?

UNDER SECRETARY LEVEY:  I don't have any comment on that.

QUESTION:  Also, do you have any information about any accounts owned by former president Kuchma or his family in the U.S. banks?

UNDER SECRETARY LEVEY:  Essentially it's the same answer.  We don't comment about particular accounts or individuals whose activities we might be monitoring.  

QUESTION:  Do you have any data on what amount of money is laundered, generally, throughout the world and in Ukraine?

UNDER SECRETARY LEVEY:  There are estimates out there about how much money is laundered throughout the world.  I don't know that they're that reliable, as it's something that's very, very hard to measure, but it's an enormous amount of money.  There's an enormous drug trade alone that creates an enormous amount of money to be laundered.  

QUESTION:  Do you have any predictions on Lazarenko's case [former Ukrainian Prime Minister]?

UNDER SECRETARY LEVEY:  Even if I did I wouldn't comment on that.

AMBASSADOR HERBST:  We don't talk about legal cases that are currently being looked at by the courts.

QUESTION:  What countries of the former Soviet Union attract the most attention in your department -- where is the highest risk of money laundering?

UNDER SECRETARY LEVEY:  I wouldn't want to specify which countries are the highest risks, but there is a general level of concern that we have in this part of the world.  Not only is there a lot of organized crime that launders its money, but we're starting to see an increased terrorist threat in this part of the world, as well, so it's an area that we do give a lot of attention to.

QUESTION:  I have two questions.  One is, can you name some specific changes in the economy of Ukraine that took place over the last six months?

UNDER SECRETARY LEVEY:  In the economy of Ukraine?

QUESTION: Yes.

UNDER SECRETARY LEVEY:  Well, one of the things that was reported to me in the meetings that I had was that the government revenues for the first part of this year compared to the first part of last year increased dramatically, without a tax increase, and I think that is indicative of strength in the governmental administration of the economy.

QUESTION:  And also, could you estimate the prospective for development of banks in Ukraine, and do you think that an American bank would be interested in entering the Ukrainian banking market?

UNDER SECRETARY LEVEY:  I think this ties back to the point of creating an atmosphere here of transparency and integrity in the marketplace.  While I can't comment on whether an American bank would be interested in coming -- that's a business decision by a bank -- I can say that that type of attraction of international investment is exactly the kind of thing that is promoted by having a robust regime for fighting financial crime and money laundering.  People feel much more comfortable investing in a society where they know that others are playing by the rules.  Thank you very much.

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