A recently adopted legislative provision abolishing the lifetime requirement for enhanced financial monitoring of politically exposed persons (PEPs) after 12 months have passed since they left office is unlikely to work in practice because of the position of the National Bank of Ukraine (NBU), which has failed to ensure proper law enforcement practices, according to Danylo Hetmantsev, chairman of the Verkhovna Rada Committee on Finance, Tax and Customs Policy.
"I do not believe anything will change regarding PEPs. The only issue with PEPs is that, unfortunately, the National Bank failed to ensure proper law enforcement practices. Our law is exactly the same as in the European Union, word for word. Everything has been translated, everything is correctly formulated, absolutely everything," he said in an interview with Interfax-Ukraine.
In Hetmantsev’s view, actual practice in Ukraine is entirely different.
"It goes beyond the formal wording. This concerns not so much PEPs as financial monitoring as an institution in general. Financial monitoring in Ukraine operates formally," the committee chairman explained.
He believes that Ukrainian commercial banks are afraid to make independent decisions when assessing transactions and determining the circumstances under which they are conducted. Instead, they rely on formal indicators and, on that basis alone, either block transactions or refuse to work with clients, significantly undermining public trust in the banking system.
"My position is that implementing European approaches in the field of financial monitoring is a matter of law enforcement practice rather than legislative changes. We have failed to teach banks how to apply these approaches, and this should have been done by the National Bank," Hetmantsev concluded.
As reported, the Verkhovna Rada, in the law on the automatic exchange of information on income earned through digital platforms (bill No. 15111-d), removed the lifetime requirement for enhanced financial monitoring of PEPs and retained it as mandatory only during the first 12 months after they leave office. Thereafter, enhanced due diligence should be conducted, while in-depth financial monitoring will continue only if there is a justified and documented high risk.
