The National Bank introduced eased financial monitoring rules for Ukrainian politicians and officials

The National Bank of Ukraine has eased financial monitoring requirements for the country’s elite — those who, under current legislation, fall into the category of politically exposed persons (PEPs). This group includes members of parliament, party leaders, judges, ministers, and heads of agencies ranging from the Tax Administration to the State Customs Service.

In letter No. 25-0010/33646, signed by Deputy Chairman of the regulator Dmytro Oleinyk, the NBU provided clarification stating that banks are allowed not to verify the source of a PEP’s wealth if three conditions are met simultaneously:

• There is a low level of risk in the business relationship with the client or in a one-time large financial transaction. This means the bank considers the transaction non-problematic — for example, transfers to state organizations or individuals with an impeccable reputation, with no violations of the banking agreement by the client and no suspicions of money laundering or other illegal activity.
• The bank has no suspicions of money laundering or terrorist financing.
• The politically exposed person uses accounts opened at the bank mainly to receive salary and social payments. Alternatively, the total volume of transactions across all of the PEP’s accounts at the bank does not exceed 400,000 hryvnias (or the equivalent) per month.

If these conditions are met, an influential client may be exempted from having to document the origin of their funds. At the same time, financial monitoring requiring such paperwork remains in force for all other ordinary Ukrainians.

Another important point in the National Bank’s letter is the regulator’s permission for banks to move a PEP onto the standard financial monitoring system — meaning the person would be checked in the same way as an ordinary citizen without special status, rather than more closely, as is normally required. This is allowed in two cases:

• if the politically exposed person has lost their powers, meaning they have left office;
• if the person has never once been suspected of violating financial monitoring rules and has been assigned a low-risk rating.

This approach is to be applied even though PEP status in Ukraine is still assigned for life and continues to apply to both the individual and their relatives even after resignation.

“High-ranking officials often complain that banks pick on them, constantly request additional income certificates, block their transfers, and impose all sorts of restrictions. This really does happen. There is tougher bureaucracy for them because current legislation requires it, and the NBU fines us if we fail to comply. But now the National Bank has decided to ease its pressure in this area. There are rumors that this was done at the request of someone higher up,” a deputy chairman of the board of one large bank told Strana.

As a reminder, it was recently reported that the Verkhovna Rada wanted to weaken the financial monitoring of politically exposed persons through a bill on raising taxes on parcels.

However, it later became known that the parliamentary committee on finance, taxation, and customs policy removed that provision from the bill.