On July 30, 2020, Resolution No. 107 recently adopted by the National Bank of Ukraine became effective, by which the Resolution “On Carrying out Financial Monitoring by Non-Bank Financial Institutions” was approved.
This Resolution was adopted in pursuance of the new legislative requirements on financial monitoring, which were enacted on April 28, 2020. The general concept of financial monitoring carried out by non-bank institutions is based on the main financial monitoring principles for banks. Thus, the Regulations provide for applying a risk-oriented approach, including to politically exposed persons, their family members and associates, set a list of risk criteria and risk exposure criteria, set a remote client identification.
At the same time, Regulations on carrying out financial monitoring by non-bank institutions are rather simplified in comparison with the regulations, which govern carrying out financial monitoring by banks. In particular, the financial monitoring system for non-bank institutions should be automated. Furthermore, non-bank institutions shall be allowed to assess client risk by following simplified methods. In particular, the institutions are able to assess the risk not by each client separately, but simultaneously by a group of clients by separating such clients into relevant categories based on criteria clearly determined and enshrined in internal documents (social status criteria, criteria of using similar types of services, the total scope of financial transactions).
By Iryna Kalnytska, Partner, and Viktoriia Bublichenko, Associate, GOLAW
