The relevant Regulation was approved by the Resolution of the NBU Board of May 19, 2020 № 65, which entered into force on May 22.

By the end of 2020, banks have time to adjust their financial monitoring processes and procedures accordingly.

Please note that banks will apply the new requirements:

- for new clients - from the date of entry into force of the Law (from April 28);

- for existing customers - during the scheduled verification of their data (KYC procedure - "Know your customer").

What are the features of the bank financial monitoring procedure?

Introduction of remote identification
The main advantage of the new Law is remote identification and verification of the client. From now on, a visit to a branch or a personal meeting with a bank representative is not required to open an account in a new bank.

The National Bank has approved full-fledged and simplified models (in case of compliance with the limits) of remote identification.

Full-fledged models: BankID NBU, qualified electronic signature (QES), video broadcast.

Simplified models: BankID NBU; QES; payment from own account to a separate bank account; reading data from the chip of a biometric document (passport or passport in the format of an ID-card); verification of data from the credit bureau.

How will video verification be managed?

In fact, a bank employee can use video communication to communicate with the client and check his documents:

- for new passports (biometric passport or ID-card) - the bank will remotely read the data from the chip and check the compliance of the person. Another way is visual assessment of the document, security features and logical verification of data;

- for old-style passports ("booklets") - the bank will visually evaluate the document, check the conformity of the person and conduct an additional check with the help of: BankID NBU; QES; additional documents; reconciliation of data with information from the credit bureau.

Updated requirements for identifying ultimate beneficial owners
During the identification and verification of legal entities, banks must understand who is the ultimate beneficial owner of the enterprise. Previously, banks used mainly information from the Unified Register of Legal Entities, Individual Entrepreneurs and Public Associations. From now on, banks must use information not only from this register, but also from other sources.

New approaches in banks to politically significant individuals, their family members and related parties (PEPs)
A risk-oriented approach should be used when servicing PEPs from the category of national public figures. At the same time, during the service of persons from this category it is not necessary to refer to a high risk category. It all depends on the position of the person, the size and type of banking services and the products they receive. For example, when servicing PEPs within a payroll project, the bank is not required to classify the client as high-risk. However, banks must refer PEPs from the category of foreign and international public figures to the category of high-risk, as before.

A list of measures for foreign financial institutions - correspondents
For foreign financial institutions in establishing correspondent relations with Ukrainian banks in Ukraine, the same requirements are defined as for international financial institutions to Ukrainian banks. From now on, this list of measures is detailed, and Ukrainian standards meet international requirements.

Detailed rules for the transfer of funds
The National Bank provided a detailed description of the technical settings during remittances. These are exclusively technological procedures and the application of a risk-oriented approach when monitoring funds transfers.

The procedure of informing about financial monitoring violations (whistle-blowing) has been introduced
The National Bank has introduced an international practice of informing about financial monitoring violations. Banks should create anonymous channels for reporting violations. This procedure can be used by any employee who has identified a violation and must notify the responsible employee of the bank for financial monitoring or the head of the bank about it. This procedure will be introduced by the regulator. This channel can be used not only by bank employees, but also by third parties.

Other conceptual changes to the new Regulation:

- approved three models for determining the employee responsible for financial monitoring;

- the order of freezing / thawing of assets of persons from the list of terrorists is established;

- the basic list of risk criteria and indicators of suspicion of financial transactions is established;

- the laying tool has been introduced. Banks will be able to use the results of identification and verification from obligated third parties and entrust this function to agents;

- signs of inadequate risk management system of the bank are provided.

For reference:

The new provision was developed in connection with the entry into force on April 28, 2020 of the new Law on Financial Monitoring. This Law contains the following updated requirements:

- introduction of a risk-oriented approach in all processes of the subjects of primary financial monitoring;

- focusing the participants of the financial monitoring system on the highest risks and threats;

- reduction from 17 to 4 threshold operations in the list, required for reporting;

- increasing from UAH 150,000 to UAH 400,000 of the threshold amount of financial transactions, about which the subjects of primary financial monitoring are obliged to notify the SCFM;

- transition to case reporting on suspicious transactions of its clients.