FINANCIAL MONITORING SYSTEM IN UKRAINIAN BANKS: STRUCTURAL MODEL AND MECHANISMS FOR IMPLEMENTING A RISK-BASED APPROACH

Abstract

The article explores the system of financial monitoring in banking institutions of Ukraine within the framework of implementing the risk-based approach. In the context of regulatory transformation, European integration processes, and increased financial security challenges, financial monitoring is shifting from a formally procedural reporting function to an integrated component of bank risk management and corporate governance. Despite significant regulatory development and harmonization with international standards, the structural organization of financial monitoring in Ukrainian banks remains insufficiently systematized in academic research. Existing studies predominantly focus on legal aspects or separate procedural elements, while the institutional architecture of financial monitoring as a unified organizational and analytical model requires further conceptualization. The purpose of the study is to substantiate a comprehensive structural model of the financial monitoring system in banks of Ukraine and to determine the mechanisms for implementing the risk-based approach through the integration of internal control, compliance function, and banking risk management. The research proposes a multi-level structural model consisting of five interrelated subsystems: regulatory, organizational, analytical-risk, information-technological, and control-audit. The study demonstrates that effective implementation of the risk-based approach depends on the coordinated interaction of these subsystems and their integration into the overall system of compliance, operational, and reputational risk management. Particular emphasis is placed on mechanisms of risk identification and assessment, differentiated customer due diligence, continuous transaction monitoring, automation of analytical processes, and independent internal audit. The findings indicate that the effectiveness of financial monitoring is determined not only by regulatory compliance but primarily by the institutional maturity of banks, the level of digitalization, and the strategic integration of monitoring procedures into decision-making processes. The scientific novelty lies in the development of a structured institutional model that systematizes the internal architecture of financial monitoring and conceptualizes its integration into bank-wide risk management. The practical significance of the results consists in the possibility of applying the proposed model to enhance the efficiency of procedures aimed at preventing money laundering and terrorist financing within banking institutions. Further research should focus on developing quantitative indicators for assessing the effectiveness of primary financial monitoring systems and expanding the application of digital analytical tools in risk detection.