Financial sector news

The Verkhovna Rada has registered draft law No. 14161, which will allow banks and other payment institutions to exercise more targeted control over suspicious customer transactions. The document provides for the creation by the National Bank of Ukraine of a special register of persons whose payment transactions will be subject to enhanced monitoring.

The bill was initiated by MPs Yaroslav Zheleznyak, Danylo Getmantsev, Oleg Bondarenko, Oleksiy Ustenko, and Galina Vasylchenko.

According to Yaroslav Zheleznyak, “drops” have become the main channel for money laundering in the shadow sector — up to UAH 200 billion passes through them annually, and the losses to the state budget are estimated at tens of billions of hryvnia. Such schemes are used to pay for illegal alcohol, gambling, tobacco products, as well as criminal operations of call centers and drug dealers.

What the bill proposes:

The National Bank is creating a register of persons whose transactions are subject to enhanced control.

• Banks and other payment service providers will add identified “drops” and companies that have used miscoding to it.
  
• Such persons will be subject to transaction limits and restrictions on the number of cards (for individuals).
  
• Financial institutions must regularly check whether their customers are in the register.
  
• The initiators emphasize that the document is conservative in nature and does not provide for automatic account blocking.

“Despite the myths, we deliberately chose a very conservative version for the first reading. No one will close any accounts immediately. On the contrary, they will help people obtain information that their card is being used by criminals,” explained Yaroslav Zheleznyak.

The bill opens up the possibility for banks to move from general restrictions, such as limits on p2p transfers, to a more targeted approach that will allow them to focus specifically on risky customers.