😱 Ukraine 🇺🇦: new financial monitoring measures challenge the concept of banking secrecy

😱 Ukraine 🇺🇦: new financial monitoring measures challenge the concept of banking secrecy

The Verkhovna Rada Committee on EU integration (❕) is set to review a controversial draft law that introduces significant changes to the country’s financial supervision system.
On the one hand, the initiative provides for the creation of a Register of bank accounts and individual safe deposit boxes. On the other hand, it envisages expanding access to this information for multiple state authorities.

➡️ The register itself does not disclose balances or the contents of safe deposit boxes; however, personal data will serve as reference points for requests from the tax authority (GNS), financial intelligence (Gosfinmonitoring), NABU, DBR, SBU, National Police, prosecutor’s office, enforcement service and private bailiffs. Requests will be processed automatically.

➡️ Amendments are also introduced to the Labor Code and administrative and civil procedure codes. A new concept of a “anti-money laundering whistleblower” is introduced, granting enhanced legal protections.

➡️ Banks will be required to provide the Ministry of Finance with data on accounts, transactions and balances of individuals applying for or receiving state benefits.

➡️ A Register of ultimate beneficial owners of trusts and similar entities is also introduced, bringing Ukraine closer to FATF standards.

➡️ Providing false information about beneficial owners (UBO) may result in fines of 510,000 UAH, while late submission may lead to 170,000 UAH penalties. Passport copies must be certified no earlier than 3 months before submission.

➡️ These measures are being developed in the context of a potential Ukraine’s accession to SEPA.

👀 Regulatory considerations:

👉 The draft proposes storing data for 5 years, with possible extension, which conflicts with existing law requiring indefinite retention.

👉 The tax authority’s right to request “additional information” to identify trust owners is not clearly defined, creating potential discretionary risks.

👉 There is an inconsistency in whistleblower protection: anti-corruption whistleblowers receive financial incentives and procedural status, while financial whistleblowers do not.

Additionally, Mastercard and the National Bank of Ukraine signed a “Memorandum of Understanding” to enhance cybersecurity in the financial sector.

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