FINTECH TOOLS TO REGULATE GRAY EXPORTS OF MILITARY AND DUAL USE GOODS AND TECHNOLOGIES

Abstract

This article reviews challenges of monitoring and regulation of military and dual use goods and technologies in Ukraine. These challenges are not new; their different aspects have been analyzed previously by many Ukrainian researchers, such as G. Androshchuk, O. Fradynskyi, I. Anokhin, V. Davydovskyy and more, but all earlier analyses, while looking into theoretical and practical aspects of military and dual use goods and technologies export per se, left aside economic and financial aspects of this problem, which are in the focus of our investigation. The object of the study is the export of military and dual use goods and technologies. The subject of the study is the FinTech tools that can be applied to analysis of export of military and dual use goods and technologies. The aim of the research is to analyze the current situation in export of military and dual use goods and technologies and based on results of analysis to outline the FinTech tools that will be useful to evaluate and regulate gray exports of military and dual use goods and technologies. The methodology of research is based on economic analysis in which we have applied an alternative approach to assessing key indicators. Firstly, we determined government budget military expenditure and then compared it with the scope of relevant exports. Further, we analyzed the black market of military and dual use goods and technologies based on the data obtained from the Ministry of Internal Affairs. This analysis demonstrated that official numbers represent only 10% of the total expected amount of military and dual use goods and technologies export; the balance is shared between the domestic black market and gray exports. As result of the research we propose modern FinTech tools, including financial markers and the BlockChain technology, as instruments to detect such gray exports. Financial markers are specific FinTech indicators making banks aware that a transaction involves transfer of military or dual use goods or technologies and therefore requires special attention (to verify whether the company has an appropriate license or whether a license is needed for the transaction etc.) BlockChain is the best solution for tracking the financial marker information since it supports storage of information about the whole transaction chain and analysis of this information on any transaction stage. BlockChain technology can generate information on possible gray exports automatically and chain breaks (where the end user does not typically use or sell military or dual use goods or technologies but is a vendor of conventional goods or technologies).