persons providing financial services in Ukraine, whose activity is supervised by the NBU, including representative offices of foreign companies providing such services (insurers, credit unions, payment system operators; postal operators providing financial payment services and/or postal transfer services and/or services for trading currency assets in cash; branches or representative offices of foreign commercial entities providing financial services in Ukraine, etc.)
The Regulation also sets out rules for acquiring institutions and rules of conducting transactions using payment instruments. Until May of this year, non-bank institutions were guided in their work (in terms of the implementation of sanctions) by the requirements of the National Financial Services Commission Regulation adopted in 2015.
What will the subjects do to implement the sanctions?
monitor the sanctions lists
identify sanctioned persons and persons acting on their behalf among clients and other participants in financial transactions, in particular, those that have come to their attention in the course of providing services to clients
identify controlled persons (who may directly or through other persons dispose of the assets of the sanctioned persons)
refuse to do business with sanctioned persons
block funds of sanctioned persons
suspend/refuse to conduct financial transactions subject to sanctions
suspend/refuse to conduct financial transactions that violate, facilitate or may facilitate the violation/avoidance of sanctions
To implement the sanctions, the NBU has obliged:
banks and non-bank institutions to adopt relevant internal documents on the implementation of sanctions by 12 August 2023 and to adjust internal systems for monitoring financial transactions to ensure their verification under the sanctions lists
non-bank institutions to provide the NBU with information as of 1 July 2023 on the presence of the non-bank institution itself, its ultimate beneficial owners/shareholders of significant participation, executives and clients among the sanctioned persons by 1 August 2023
What information will be analysed?
all information at subjects' disposal, including data from clients' payment instructions
data on the ownership structure, corporate governance of clients, as well as their business relations with sanctioned persons (including shareholders of significant participation, ultimate beneficial owners of clients of subjects of sanctions implementation)
What will the subjects regularly inform the NBU about?
availability of accounts where funds of sanctioned/controlled persons are accounted for and balances on such accounts
attempts to conduct financial transactions by sanctioned/controlled persons, other persons on behalf of/for the benefit of such sanctioned/controlled persons
attempts to conduct (in particular, through third parties) financial transactions that facilitate or may facilitate the violation/avoidance of sanctions
availability of individual bank safes opened for the benefit of sanctioned persons
implementation of personal and sectoral sanctions
What are the implications for business?
The amendments enacted by the NBU significantly restrict financial transactions involving sanctioned/controlled persons and, therefore, affect not only the commercial activities of such persons but also their counterparties. Thus, a thorough analysis of the relationships with sanctioned/controlled persons and relevant counterparty due diligence is exceptionally relevant.
It is worth noting that in March 2023, the NBU obliged banks to disclose information about clients (their counterparties) associated with the aggressor state in 15 separate categories. Such information may be used in the future to decide on the imposition of sanctions.