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The Law on Financial Monitoring - What Changes Should We Expect?
08 May 2020

On April 28, 2020, new requirements came into force for making payments in accordance with the Law of Ukraine "On Prevention and Counteraction to Legalization (Laundering) of Proceeds from Crime, Financing of Terrorism and Financing of Proliferation of Weapons of Mass Destruction."
It is important to know that more than 95% of customers will not make life difficult, but rather simplify it. After all, all customers are already identified in the bank branch by filling out a questionnaire and providing photocopies of their documents. The changes mainly concern unidentified transactions.

We hope the answers to possible questions will help you understand everything:

Why introduce new requirements?

The law has been in force since 2014, and the new version, in accordance with the requirements of European legislation in the field of combating money laundering and terrorist financing, introduces the requirements of a risk-oriented approach to working with clients. A risk-based approach is to identify, assess and understand the risks of money laundering, terrorist financing and / or proliferation financing, and to take appropriate risk management measures in a manner and to an extent that minimizes such risks depending on their level. 

Do I need to explain the sources of funds?

Existing customers of the bank are already identified, and therefore the bank has information about your usual operations. If the transactions on your account do not have the signs provided by the current legislation, there will be no risk of need for re-identification. So, only if it is an atypical transaction that does not meet the financial capabilities of the client, then the bank will seek appropriate explanations sources of income.

How have transaction requirements changed?

According to the amendments to the Law of Ukraine on Financial Monitoring, the transaction limit was increased to UAH 400 ths and the list of features of transactions for which reporting is required was reduced to four: 
1. crediting or transferring funds, granting or receiving a loan (loan), carrying out other financial transactions if at least one of the parties - participants in the financial transaction has the appropriate registration, place of residence or location in the state (jurisdiction) that does not perform or improperly implements the recommendations of international, intergovernmental organizations involved in the fight against money laundering, terrorist financing or proliferation of weapons of mass destruction (including and diplomatic missions, embassies, consulates such foreign state) or one of the parties - members of a financial transaction is a person who has a bank account registered in that state (jurisdiction);
2. financial transactions of politically significant persons, members of their family and / or persons related to politically significant persons;
3. financial operations on the transfer of funds abroad (including to the states referred by the Cabinet of Ministers of Ukraine to offshore zones);
4. financial transactions with cash (deposit, transfer, receipt of funds). 

If the amount of the transfer exceeds the maximum of UAH 400 ths is it necessary to indicate the sources of funds?

When opening an account, the client provides the bank with information about himself, his income and so on. The bank monitors and knows the client's transaction history on a daily basis and knows what is familiar to him.
Therefore, only if it is an atypical transaction that does not meet the financial capabilities of the client, then the bank will ask for appropriate explanations.
If the client explains that this is, for example, the result of inheritance, then the bank will carry out the transaction, and the client will be able to safely use these funds.
The new version of the Law does not change the bank's approach to identification. The client must identify himself and his income. To carry out a transfer operation, the client must provide complete information about himself and the recipient (both for individuals and legal entities)ю

Is identification required when transferring funds from card to card?

No, it is not necessary, because the bank's customers have already been identified

Do I need to be authenticated to pay through the terminal?

If the amount of the transfer is more than UAH 5 ths customers will need to be identified, for which purpose self-service terminals will be additionally equipped with special readers by the end of the year.

This requirement does not apply to:
o utility payments, payment of taxes and other obligatory state payments, payment for goods or services;
o Loans / credit card payments within UAH 30 ths;

Is it possible to split payments, for example UAH 5 ths each, and make several transactions?

If the same sender transfers several identical payments to the account of the same recipient, the transactions will not be "unique" and typical, so to avoid blocking the transaction before identification it will be necessary to enter the account / e-wallet number or confirm the unique financial transaction account number. .

Yes. Crediting to clients' accounts - ie ordinary transactions of Ukrainians - is not subject to audits for financial monitoring. Such low-risk operations will not interest banks. The purpose of the law is quite different. Banks, in accordance with the requirements of the new law, should focus on the highest risk areas - risky and large-scale operations over UAH 400 ths

However, financial institutions must comply with certain technical requirements of the law, such as assigning a unique number to each transaction. They will have enough time for this, because a long transition period will be established - until the end of 2020. During this time, they will be able to perform all the technical aspects.