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Analysis of the National Bank of Ukraine Resolution No. 121 dated October 5, 2024
The Resolution of the Board of the National Bank of Ukraine No. 121 dated October 5, 2024, concerns the approval of amendments to certain regulatory acts of the National Bank of Ukraine that regulate financial monitoring issues.
Main Provisions of the Resolution
1. Approval of Amendments to Regulatory Acts
The Resolution approves amendments to two main provisions:
- Regulation on Financial Monitoring by Banks (Resolution No. 65 dated May 19, 2020, with amendments).
- Regulation on Financial Monitoring by Institutions (Resolution No. 107 dated July 28, 2020, with amendments).
2. Requirements for Banks
Banks are provided a period of one month from the date the resolution comes into effect to align with the amendments to Regulation No. 65. This includes updating the client questionnaire for resident legal entities and creating a register of discrepancies regarding ultimate beneficial owners (UBOs) and ownership structure.
3. Requirements for Financial Monitoring Institutions
Institutions must make amendments to Regulation No. 107 within one month from the date the resolution comes into effect. This includes updating the client questionnaire for resident legal entities, relevant client lists, and a register of discrepancies regarding UBOs and ownership structure.
4. Oversight of Compliance with the Resolution
The responsibility for overseeing compliance with the resolution is assigned to Deputy Governor of the National Bank of Ukraine Dmytro Oliinyk.
5. Effectiveness of the Resolution
The resolution comes into effect the day following its official publication.
Amendments to the Regulation on Financial Monitoring by Banks
Amendments to Sections and Paragraphs
-
Paragraph 5 of Section I:
- Subparagraph 12-1 is added regarding the holder of the Unified State Register (USR) — the Ministry of Justice of Ukraine, which ensures the functioning of the Unified State Register (USR).
- Reformulated subparagraph 48 defines the register of discrepancies between information about UBOs and ownership structure in the USR and the data obtained by the bank during client due diligence.
-
Subparagraph 9 of Paragraph 26 of Section III:
Is supplemented with the words “and ownership structure,” expanding the scope of control to include the ownership structure alongside UBOs.
Amendments to Appendices
-
Appendix 4:
- Paragraph 2-1 is added, which requires the bank to verify the received ownership structure or information about UBOs for discrepancies with the USR within five working days and make corresponding changes to the client questionnaire.
-
Appendix 15:
- Paragraph 15 is supplemented with the words “and ownership structure.”
- Reformulated subparagraph 3 of paragraph 19 defines the process of entering discrepancy information into the register.
- Clarifications are added to paragraph 24 regarding the ownership structure.
- Revised paragraph 25 details the definition of discrepancies and the procedure for their registration.
- Amendments to paragraphs 29, 31, and 37 clarify the connection with the holder of the USR.
-
Appendix 23:
- Clarifications to paragraphs 21 and 22 regarding the date of discrepancy detection concerning UBOs and ownership structure.
Amendments to the Regulation on Financial Monitoring by Institutions
Amendments to Sections and Paragraphs
-
Paragraph 5 of Section I:
- Subparagraph 7-1 is added regarding the holder of the USR — the Ministry of Justice of Ukraine.
- Reformulated subparagraph 39 defines the register of discrepancies between information about UBOs and ownership structure in the USR and the data obtained by the institution during client due diligence.
-
Subparagraph 8 of Paragraph 23 of Section III:
Is supplemented with the words “and ownership structure,” expanding the monitoring scope.
Amendments to Appendices
-
Appendix 4:
- Paragraph 2-1 is added, which requires the institution to verify the received ownership structure or information about UBOs for discrepancies with the USR within five working days and make corresponding changes to the client questionnaire or client lists.
-
Appendix 14:
- Paragraph 17 is supplemented with the words “and ownership structure.”
- Reformulated subparagraph 3 of paragraph 21 defines the process of entering discrepancy information into the register.
- Clarifications to paragraphs 26 and 27 regarding the definition of discrepancies and the procedure for their registration.
- Amendments to paragraphs 31 and 33 clarify the connection with the holder of the USR.
-
Appendix 22:
- Clarifications to paragraphs 21 and 22 regarding the date of discrepancy detection concerning UBOs and ownership structure.
Requirements for Financial Monitoring Institutions
Financial monitoring institutions are required to form and maintain electronic lists of clients with different levels of risk in business relationships, including information on clients’ designation as PEPs and discrepancies regarding UBOs and ownership structure. In particular, they must:
- Regularly verify the conformity of the received information with the USR.
- Enter information about discrepancies into the register of discrepancies.
- Send information about identified discrepancies to the holder of the USR within the established timeframes.
Conclusion
Resolution No. 121 introduces significant changes to the financial monitoring process, particularly strengthening the requirements for reporting and verification of information regarding ultimate beneficial owners and ownership structure. It aims to enhance transparency and compliance with regulatory requirements, contributing to more effective combat against money laundering and terrorist financing.[:]
