NBU changes financial monitoring for politically exposed persons

The National Bank of Ukraine has made significant changes to the financial monitoring procedure aimed at servicing clients who are politically exposed persons (PEPs).

According to the NBU press service, these changes were introduced to comply with the requirements of the new Law of Ukraine (No. 3419-IX) "On Amendments to the Law of Ukraine "On Prevention and Counteraction to Legalization (Laundering) of Proceeds of Crime, Terrorist Financing and Financing of Proliferation of Weapons of Mass Destruction" regarding politically exposed persons.

It was established that when establishing business relations and servicing the RER, the subjects of primary financial monitoring should apply a risk-based approach.

The NBU amended the Regulation on Financial Monitoring by Banks and the Regulation on Financial Monitoring by Institutions.

According to the new rules, if more than twelve months have passed since the termination of the performance of significant public functions by an RER and the primary financial monitoring entity believes that such a person no longer poses risks inherent in the RER, it may not apply certain measures provided for by Ukrainian legislation.

To make such a decision, the financial institution must analyze the financial transactions of the REE and its related parties from the date of termination of the performance of significant public functions.

If a financial institution refuses to establish or maintain business relations with a client who is an REE, it must provide the client with an explanation within five business days, justifying the reasons for the refusal.

These new regulations allow financial institutions to more effectively identify and respond to PEP-related risks, ensuring a high degree of financial security and compliance with the law.