Business supports Ukraine's accession to SEPA, but calls for further work on the draft law - EBA

The European Business Association has issued a statement regarding Ukraine's accession to the Single Euro Payments Area (SEPA) - business supports bill 13233, but asks to refine certain provisions to comply with European standards, UNN reports.

Details

On July 3, the Committee of the Verkhovna Rada of Ukraine on Finance, Tax and Customs Policy decided to recommend that the Parliament adopt draft Law No. 13233 on Ukraine's accession to the Single Euro Payments Area (SEPA) in the first reading.

The European Business Association welcomes the initiative to harmonize national legislation with European legislation in the field of preventing money laundering, terrorist financing and ensuring the transparency of the financial system. Therefore, the Association supports the adoption of the bill in the first reading. At the same time, the business community emphasizes the need to refine certain provisions of the bill for their practical implementation and compliance with EU standards - the statement says.

The Association's experts have already submitted their proposals for improving the bill to the responsible bodies. Given the public concern about the disclosure of banking information, the Association emphasizes the importance of achieving a balance between effective financial monitoring and ensuring the rights, interests and financial privacy of citizens and businesses.

Key proposals of the Association's experts to the bill:

1. Definition of "senior management" of primary financial monitoring entities (PFMEs), not limited to general meetings.

The draft Law stipulates that financial monitoring rules, primary financial monitoring programs and other internal documents on financial monitoring must be approved by the highest management body of the PFME. According to Ukrainian legislation, this body is the general meeting.

However, as member companies note, the term "senior management" in the context of EU legislation does not cover general meetings, but refers to persons who actually carry out the operational management of the company (director, members of the board, board of directors, etc.). In addition, approval at the level of general meetings can create difficulties for the fulfillment of PFME obligations due to the need for operational updating of internal financial monitoring documents depending on the risks.

Therefore, the Association proposes to leave the current version of Law No. 361-IX or to provide a definition of "senior management" that is as close as possible to Directive (EU) 2015/849.

2. Simplification of verification of non-resident legal entities.

Currently, when verifying a client who is a non-resident legal entity, the PFME must be provided with, in particular, a copy of a legalized extract from a trade, banking or court register or a notarized certificate of registration of a legal entity. According to business, in the era of digitalization and open online registers, such a requirement seems excessive.

Therefore, the Association proposes to amend Law No. 361-IX, providing for the possibility of verifying non-resident legal entities based on an independent analysis of data from official registers of foreign states.

3. Review of threshold amounts for financial monitoring.

The draft Law provides for a significant increase in penalties for PFMEs for violations in order to bring them in line with the amounts in euros. However, the document does not adjust the threshold amounts of transactions that are the basis for financial monitoring. These threshold amounts remain at the level of UAH 400,000 (≈ EUR 8.5 thousand), which is lower than the European threshold of EUR 15 thousand.

According to business, increasing sanctions without reviewing threshold amounts is not fully consistent with the requirements of EU Directive 2015/849. Moreover, the actual reduction in the size of threshold operations in terms of euros leads to the involvement of PFME resources in the analysis of low-risk operations, which is inconsistent with the principles of a risk-based approach.

Accordingly, the Association proposes, along with increasing sanctions, to review the threshold amounts of financial transactions so that they are consistent with the thresholds provided for in Directive 2015/849.

4. Alternative approaches to identifying ultimate beneficial owners (UBOs) who are non-residents.

Entrepreneurs draw attention to the fact that many foreign UBOs are concerned about the requirement to provide notarized copies of passports, in particular, this is related to the protection of personal data. As a result, businesses face additional barriers when submitting information about UBOs.

Therefore, the Association's proposal is to allow the use of official extracts from trade, court or commercial registers of foreign states containing data on UBOs instead of copies of passports.

The European Business Association calls on lawmakers to take into account the comments made and is ready to involve its experts in further discussion and refinement of the bill