«The EU-integration transformation of Ukraine’s financial monitoring system amid the war: strengthening efforts to combat terrorist financing», state registration number: 0126U000869, 2026-2028

The project is aimed at achieving a number of important outcomes in the field of functioning of a financial monitoring system adapted to the specifics of wartime conditions, ensuring effective counteraction to terrorism financing. A key expected result is a ranking of the effectiveness of institutional financial monitoring models in different countries worldwide, the results of which may be used by the State Financial Monitoring Service of Ukraine to select the optimal institutional model for countering terrorism financing. Another expected outcome is a scientific and methodological approach for the early warning and detection of terrorism financing threats in Ukraine under wartime conditions, which may be used by the State Financial Monitoring Service of Ukraine and the Security Service of Ukraine (SBU) to optimize the time required for threat identification and improve the effectiveness of threat detection.

In addition, the project will produce a classification of virtual assets according to their potential use in terrorism financing in Ukraine during wartime, as well as the identification of channels for their use. These results may serve as a basis for maintaining Ukraine’s national security during the implementation by the National Bank of Ukraine of mechanisms for the legalization of cryptocurrency circulation. Another important result is the development of a hybrid financial monitoring model for countering terrorism financing under wartime conditions, which will serve as a foundation for Ukraine’s European integration processes in terms of harmonizing legislation with EU principles, norms, and standards.

Taken together, these results form a new scientific paradigm for the functioning of the financial monitoring system under wartime conditions. The project not only proposes practical solutions but also establishes a theoretical and methodological foundation for further interdisciplinary research in the fields of financial security, public administration, international law, and digital finance. Thus, the expected results are systemic in nature, combining scientific novelty, practical orientation, and strategic importance for ensuring Ukraine’s national and financial security.

At the same time, the economic impact of the project results will be reflected in the optimization of the financial monitoring system through the implementation of a hybrid model, potentially reducing the costs incurred by law enforcement agencies in identifying terrorist threats, as well as the expenses of financial institutions and the state associated with mitigating their consequences. The mechanism of “wartime exemptions” will accelerate the processing of humanitarian aid and the financing of critical infrastructure, thereby increasing the speed of operations. The implementation of recommendations regarding FATF compliance will improve Ukraine’s rating in the Mutual Evaluation process, enhancing access to international financial markets and reducing the cost of attracting capital for Ukrainian companies. A roadmap with an assessment of economic consequences will make it possible to adopt informed decisions regarding the timing of the implementation of EU Directives, avoiding shock therapy for the financial sector, as occurred in Estonia, where 40% of international connections were temporarily suspended due to partners’ non-compliance with GDPR standards.

The social impact of the project results will be multidimensional, primarily manifested through strengthening protection, trust, and civic resilience. The implementation of the proposed solutions will directly enhance the physical security of citizens by making it more difficult to finance terrorist acts and sabotage activities through more effective detection of russian financing schemes. At the same time, public trust will be strengthened through the introduction of transparent mechanisms for monitoring the targeted use of international financial assistance based on a risk-oriented approach, which will reduce corruption risks and increase trust among both international donors and Ukrainian citizens. A critically important social effect will be the protection of civil society functioning under martial law through the introduction of a “wartime exemptions” mechanism, which will preserve the operational capacity of volunteer organizations without risks of disclosing confidential information. Furthermore, public access to anonymized typologies of financial threats will contribute to improving the financial literacy of the population by teaching citizens to recognize fraudulent schemes.

The impact of the project results on security and defense capability will be manifested through strengthening the state’s capacity to detect and block financial flows supporting hostile agent networks, sabotage groups, and russian information operations. The implementation of FATF standards and EU directives will integrate Ukraine into global financial intelligence exchange mechanisms, which is critically important for countering transnational terrorism financing schemes and sanctions evasion. In addition, the “wartime exemptions” mechanism will ensure a balance between control over financial flows and the efficiency of financing defense needs. This will help avoid delays in weapons procurement and payments to military personnel, ensuring the necessary speed of decision-making that directly affects the state’s defense capability.