In order for Ukraine to make the transition to the free movement of capital investment, the NBU allowed each entity to open an account in the Ukrainian financial market. Subjects include:
- non-resident legal entity;
- foreign funds specializing in investment;
- a company that manages assets acting on behalf of a foreign investment fund.
Client account opening procedure
The rights to open accounts in a Ukrainian banking institution, to perform foreign exchange transactions by legal entities are provided for by the Law of Ukraine “On currencies and foreign exchange transactions”.
The Law of Ukraine “On Amendments to Certain Laws Regarding the Promotion of Attraction of Foreign Contribution” and the Association Agreement between the countries of the European Union and Ukraine.
For the same purpose, the National Bank updated the instruction on the procedure for opening and closing client and correspondent accounts in the bank. We are talking about residents and non-residents. This instruction plays the role of regulating the order of opening and closing by a particular bank:
- client account of both an individual and a legal entity;
- correspondent bank account, resident and non-resident;
- accounts of an international financial organization, including managers by agreement of the management of the enterprise.
In addition, thanks to the simplified procedure for opening bank client accounts provided for in the instructions, a positive impact is created on the conditions for doing Ukrainian business. This is due to such innovations as:
- bank customers during the opening of bank accounts must not present a card with a sample signature. Now the management of accounts is carried out on the basis of the list of individuals and legal entities who have full right to do so, which means there is no need for notarization;
- changes in the name of legal entities does not mean that the current accounts of the entity will be closed.
About the regulations and updated instructions
There are no client account modes in the provisions of the documents. This means that there is no limit on the number of transactions on the account, but only a number of features are determined for the performance of transactions on the account of a separate client series.
On April 4, 2019, an updated instruction came into force, which was approved on the basis of the resolution on the NBU Board of April 1, 2019 under number 56 “On amendments to some regulatory legal acts in the National Bank of Ukraine.”
It should be noted that the Law of Ukraine “On Currency and Currency Transactions” declares the principle of freedom to carry out any currency transaction.
This suggests that the NBU refused to restrict the use of funds on client accounts due to the stable functioning of the financial and economic system of Ukraine.
The NBU has the full right to impose restrictions and apply additional security measures, but this is possible only on the basis of the rights specified in this law.
What is the new foreign exchange supervision system
The new system in charge of foreign exchange supervision is based on a risk-based approach, so it introduced a completely new approach. It is based on the principle: “The less risk, the less attention is attracted” and vice versa – “The more risk, the more attention is drawn.”
The expansion of the rights for monetary transactions from a non-resident creates a high risk of using banking systems by a company that may be a participant in fraud aimed at money laundering.
It is worth noting that many steps have been taken by the banking sector to build effective systems that counter money laundering and financing of terrorist groups.
In order to further develop in this direction, one must understand the level of risk and have the skills to counteract them in the framework of a risk-oriented approach.
Purpose of the change
Amendments to the Regulation on the implementation of financial monitoring by the bank, which were carried out by the NBU Board on 04/02/2019, was due to the purpose of preventing the use of banking services in order to launder money obtained in a criminal way, both in Ukraine itself and abroad, for shell company account.
The main goal of this change is to introduce a mechanism for the bank to identify the shell enterprise from non-resident legal entities. This change in the regulation, which entered into force on 04/04/2019, contains the following points:
- define the shell company;
- the procedure for analyzing the information of documents in order to identify the above companies;
- the application of certain actions by a banking institution in the event that the client of this bank turns out to be a shell company, or if he refuses to provide the bank with the requested documents (data), or if the information provided was not enough to carry out an appropriate analysis.
It should be noted that the requirement to analyze data and documentation does not apply to a non-resident legal entity that is a holding company or its corporate enterprise.
But this is possible only if the structure of the own holding company is transparent and makes it possible to determine the beneficial owners (controllers). It is also important that the economic activities of such legal entities make it possible to understand its nature.
For more detailed information, please contact our specialists.