This initiative seeks to impose stricter limits on card transfers and enhance monitoring of individual entrepreneurs to combat financial irregularities and comply with EU regulations.
Key Provisions of the Memorandum
Transfer Limits
Under the memorandum, the participating banks will implement the following restrictions on card transfers:
- General Limit: A maximum of UAH 100,000 per month can be transferred from a single account.
- Risky Clients: For customers classified as high-risk, the transfer limit will be reduced to UAH 50,000 per month.
Additional Restrictions
The memorandum also introduces further measures to control financial transactions:
- Account Limits: Customers without documented proof of funds will be restricted to opening a maximum of three accounts in a single currency.
- Enhanced Monitoring: Increased scrutiny of individual entrepreneurs to prevent "drops" (structuring transactions to evade reporting requirements) and ensure compliance with anti-money laundering (AML) standards.
Implementation Timeline
The new restrictions will be rolled out in two stages:
- January 1, 2025: The transfer limit will be set to UAH 150,000 per month.
- June 1, 2025: The transfer limit will be further reduced to UAH 100,000 per month.
Customers seeking to raise their transfer limits will be required to provide documentary evidence of their income.
Participating Banks
The memorandum will be signed by at least seven major banks in Ukraine, including:
- Oschadbank
- OTP Bank
- PrivatBank
- Pravex Bank
- FUIB
- Raiffeisen Bank
- Universal Bank
These institutions represent some of the most significant players in the Ukrainian banking sector, ensuring widespread implementation of the new transfer controls.
Strengthening Financial Monitoring
In addition to transfer limits, the memorandum emphasizes the need for robust financial monitoring of individual entrepreneurs. The measures include:
- Information Sharing: Banks will exchange data about customer violations with the State Financial Monitoring Service, Ministry of Justice, and the State Tax Service.
- Automated Verification: Introduction of automatic income verification through centralized databases of state bodies and inter-bank data exchange.
- Register of Dubious Customers: Creation of a registry for customers suspected of engaging in financial irregularities or "drops."
Compliance with National Bank Recommendations
Two months prior, the National Bank of Ukraine (NBU) introduced similar restrictions on peer-to-peer (p2p) transfers. The current memorandum extends these restrictions to all types of transfers, including those using IBAN, with lower limits to further tighten control.
Identifying "Business Fragmentation"
The memorandum incorporates both the NBU's recommendations and new risk indicators to identify and prevent "business fragmentation" among individual entrepreneurs. Key indicators include:
- Increase in Transaction Volume: A sharp rise in the number of transactions within an account.
- Zero Balances: Accounts that start and end the day with a balance of "0".
- Split Transfers: Transactions split into round amounts to evade reporting thresholds.
Impact on Individual Entrepreneurs
The enhanced inspections and monitoring will primarily affect individual entrepreneurs of Group I, who have been registered for less than six months. These entrepreneurs will face stricter financial oversight, while those in Groups II and III will experience less stringent inspections based on each bank's risk-based approach.
Collaboration with the National Bank
Following an inspection that revealed significant shortcomings in identifying potential financial schemes, the NBU provided banks with guidelines to detect "business fragmentation." The memorandum ensures that banks adhere to these guidelines while introducing additional measures to enhance financial oversight.
Technological Enhancements
Banks will leverage the "Diya" application to expand access to customer information, including income details and involvement in legal cases. This technological integration aims to streamline the monitoring process and improve the effectiveness of financial controls.
Industry Response
When contacted by Forbes Ukraine, representatives from the involved banks, as well as the NBU, declined to comment on the memorandum before its official signing.
Previous Regulatory Measures
Since October 1, the NBU has imposed temporary restrictions on card-to-card transfers, capping them at UAH 150,000 per month. The current memorandum builds on these measures, extending restrictions to encompass all transfer types and introducing lower limits to prevent financial abuses.
Conclusion
The signing of the memorandum by at least seven major Ukrainian banks marks a significant step towards strengthening financial controls and combating money laundering activities. By imposing stricter transfer limits and enhancing monitoring of individual entrepreneurs, Ukraine aims to align its banking practices with EU regulations and ensure a more secure financial environment. These measures are expected to curb illicit financial flows and promote transparency within the Ukrainian banking sector.
