In the second reading, the Ukrainian Parliament (the Verkhovna Rada) adopted draft law No. 9296-d on strengthening financial monitoring of PEPs (politically exposed persons). The day before, the committee rejected amendment No. 101, which postponed the entry into force of the law until Ukraineʼs accession to the EU.
276 MPs voted pro, as informed the MP Yaroslav Zheleznyak.
The wording of the law complies with AML/CFT standards and will be counted as meeting the requirements of the International Monetary Fund.
It is also the last step for the start of negotiations on Ukraineʼs membership in the EU.
The main innovation of the law is that now, instead of three years after leaving office, top officials will actually have the status of Politically Exposed Persons for life. The draft law also strengthens the responsibility of the SPF (for example, banks) for unjustified refusal of users of financial services.
The essence of the changes is that the presumption of innocence does not actually apply to PEP. They are a priori suspected of maintaining high influence even after leaving office. Therefore, a person who once became a politically significant person must be under financial control for life. This means that banks must carefully check all financial transactions of their customers who have the status of PEP and report to the regulatory authorities.
Who are Politically Exposed Persons?
Politically Exposed Persons (PEP) are people who hold important government positions. For example, the president, the prime minister, members of the government, MPs, the secretary of the NSDC, the chairman and members of the board of the National Bank, the chairmen and judges of the Constitutional and Supreme Courts, higher specialized courts, etc. Members of the families of these officials and persons related to them, for example, business and business partners, are considered to be equal to PEP.
All this is defined in the current law "On preventing and countering the legalization (laundering) of proceeds obtained through crime, the financing of terrorism and the financing of the proliferation of weapons of mass destruction." There is also a procedure for financial monitoring of REP. This law is a consequence of the implementation of the recommendations of the Financial Action Task Force (FATF). Ukraine undertook to implement these recommendations by signing the association agreement with the EU. This law was adopted by the Verkhovna Rada back in 2014, but then it did not meet FATF requirements.
It was subsequently re-enacted in 2019 to meet the recommendations of partners and to provide for lifelong financial monitoring for PEPs. However, opponents of the law considered it "excessive interference in private life", and therefore submitted bills to change the rules. In 2022, the deputies voted on changes that provided that the status of a "politically significant person" was limited to only three years after leaving office.
However, this moment did not suit the partners, so the deputies were forced to make changes, which, in fact, were voted on today — financial monitoring became lifelong.