April in Kyiv was an intense month, not only because of the globally challenging coronavirus crisis, the new land and medical reforms but also due to the new National Bank of Ukraine (NBU) regulations. The recently adopted, by 246 deputies of Ukraine, AML-Law №2179 is designed to control all financial operations within the country.
From now on, banks, payment processors, audit, tax consultancy companies and all legal entities active in the financial market are obliged to report on ‘suspicious transactions‘. Furthermore, banks and the Financial monitoring department of the NBU are entitled to freeze transactions and ask for approval documents. The National Bank is convinced that the clear requirements will allow for the simplification of banking and the harmonization of financial monitoring standards with the global standards (FATF recommendations, EU Regulation 2015/847 on transfers).
The key aspect of the Law is mandatory customer identification. Cash transactions between private entities exceeding UAH 5,000 as well as all non-cash transactions exceeding UAH 30,000 are in the scope of the Anti-Money Laundering Law. In addition to the above, the following aspects have been clarified and improved with the new regulations:
• The AML Law describes the possibility of remote customer verification;
• The number of reporting items has decreased from 17 to 4;
• The provisions show a clear transition towards a risk-based approach;
• Distinct measures have been put in place for violators (ranging from warnings to significant fines);
• The range of subjects of primary financial monitoring has been extended;
• The defining procedure for beneficial owners has been improved.
The AML Law includes into the scope not only physical but legal entities as well. For companies, the National Bank has defined the following requirements of ‘suspicious transaction’ reporting:
- The transaction (or sum or transactions) is higher than UAH 400,000.00.
- One of the following is met:
a. The participant/bank is from a country which does not follow FATF recommendations;
b. The transaction is made by a public person;
c. All transfers are made abroad;
d. The transaction(s) are in cash.
Overall, these actions are a part of Ukraine’s international obligations under the Association Agreement with the EU. They present both new challenges as well as opportunities for you and your business. Eurofast will be here to support you every step of the way. Get in touch with our consultants to get a personal investment plan, support and guidance now!
Oleksii (Alex) Maistrenko
Kyiv Tax and Legal Associate