The Verkhovna Rada supported Ukraine’s accession to the euro payments area — this should simplify transfers

Ukraine is moving closer to integration into the European financial space. On November 10, the Verkhovna Rada adopted as a basis draft laws on Ukraine’s accession to the Single Euro Payments Area (SEPA) (No. 14327-d and No. 15503), the parliament reported, writes UNN.

Details

"For" the first bill, 249 MPs voted. For the other — 258.

Draft Law No. 14327-d, as explained by the NBU, is aimed at bringing Ukrainian legislation in the field of financial monitoring into line with European legislation and fulfilling the conditions that will enable Ukraine to apply for accession to the Single Euro Payments Area (SEPA).

SEPA is a common payments area used by more than 500 million people and businesses in over 41 European countries, the Ministry of Finance noted.

"The document provides for the possibility of making international transfers in euros more quickly, without excessive fees and under uniform rules for all SEPA member countries. In addition, the document strengthens control over the transparency and integrity of financial institution owners," the parliament said.

The Ministry of Finance explained point by point what this will provide:

• euro transfers — quickly and without unnecessary intermediaries;
• fees — from 0 to 5 euros instead of the significantly higher costs currently charged;
• funds in the account — practically instantaneously;
• 70–100 million euros will remain in the country each year, which currently goes toward bank fees.

According to the NBU, the bill is aimed, in particular, at ensuring:

• transparency of beneficial ownership — the procedure for verifying information about the ultimate beneficial owners of legal entities will be improved, and a Register of the ultimate beneficial owners of trusts or other similar legal arrangements will be created;
• the introduction of a whistleblower institution in the area of preventing and combating the legalization (laundering) of proceeds of crime, the financing of terrorism, and the financing of the proliferation of weapons of mass destruction, including defining their rights and protection guarantees, such as the creation of anonymous reporting channels, confidentiality, free legal aid, exemption from legal liability in cases specified by this draft law, and so on;
• the creation of a Register of Accounts and Individual Bank Safe Deposit Boxes of Individuals. This is an information and communications system for recording individuals’ bank accounts, securities accounts, payment and other accounts, electronic wallets, and contracts for the provision of individual bank safe deposit boxes, which provides online access to the Register, in particular for authorized persons of bodies designated by law, for the purpose of investigating crimes, including money laundering and terrorist financing.

As explained by the NBU, the Register will record the fact that an individual has opened an account or bank safe deposit box at a particular financial institution, but without any information about the amounts held in the account or the movement of funds. Information about the existence of an individual’s account at a particular financial institution is a banking secret. Access to such information may be granted exclusively in cases expressly provided for by law and only to authorized bodies — ARMA, NACP, and BEB — in accordance with the procedure established by law.

The Ministry of Finance of Ukraine will be the administrator and holder of the Register. The regulations governing the Register and the procedure for its establishment and maintenance will be approved by the Ministry of Finance in coordination with the NBU and the NSSMC.

In addition, the draft law also provides for raising the financial monitoring threshold from UAH 400,000 to UAH 550,000.

According to the Ministry of Finance, the following changes are expected in financial monitoring:

• the mandatory monitoring threshold will rise from UAH 400,000 to an amount equivalent to more than EUR 10,000 (approximately UAH 550,000);
• the threshold for gambling will remain unchanged — UAH 55,000;
• fines will not be increased.

The Register of Accounts and Safe Deposit Boxes will contain only the IBAN, the owner’s name, and the bank’s name. Information about account balances, account transactions, and the contents of safe deposit boxes will not be included, the Ministry of Finance noted.

What benefits accession to SEPA provides

According to the NBU, the new legislation will affect several areas:

• for the banking system. Joining SEPA will ensure that Ukrainian banks operate on a level playing field with European financial institutions and will simplify and reduce the cost of processing cross-border euro payments. This will open up new opportunities for attracting customers, developing modern payment products and technological innovations. At the same time, integration into the European payments area will help improve the quality of banking services, strengthen competition and reinforce confidence in Ukraine’s banking system;
• for businesses. SEPA will mean faster, cheaper and simpler settlements with European partners, reduced operating costs and better conditions for developing international trade. According to estimates by the Ministry of Finance, total annual savings on international transfers could amount to €70–100 million, while small and medium-sized businesses that regularly export goods and services to the EU could save, on average, approximately €4,000 per year per enterprise. The transparency and standardization of payments will also help strengthen the confidence of European counterparties and expand opportunities for Ukrainian companies in the EU market;
• for citizens. Joining SEPA will make euro transfers between Ukraine and European countries faster, more affordable and more convenient. For example, in Moldova, the basic minimum cost of a single euro transfer fell from €20 to €1.26.

The second bill adopted in principle, No. 15503, provides for amendments to the Civil Code of Ukraine to ensure compliance with European Union legal acts and the relevant criteria established by the European Payments Council, with the aim of Ukraine joining the Single Euro Payments Area (SEPA).