The Verkhovna Rada reviewed the financial monitoring rules for politically exposed persons (PEP) and has removed the provision on automatic reduction of risk level one year after leaving office. The relevant amendment was added to draft law № 16051−1 on the taxation of international parcels.
How the PEP financial-monitoring rules will change
The previous wording of the law contained a presumption of reduced risk: one year after leaving office a former politically exposed person was to be considered a client with a lower level of risk, unless there were grounds to consider otherwise. That provision has now been removed.
Banks will continue to assess risks on an individual basis. If risks related to a client’s former powers persist, a financial institution may continue enhanced monitoring after the first year; the requirement to provide documentary proof of an “unacceptably high level of risk” in order to continue such monitoring has also been removed.
Heads of state-owned banks will not be included in the extended list of PEP
The proposed extension of the list of politically exposed persons to include heads of state-owned banks has been abandoned. They will therefore not be added to the extended list of PEP in this amendment.
PEP status remains lifelong, but it does not in itself entail mandatory enhanced monitoring for life. Also, this status should not be the sole basis for refusing banking services.
How the changes will affect international financial support for Ukraine
The previous draft amendment had prompted objections from European partners and became an obstacle to signing the law on digital platforms. As a result, the rules were revised taking international comments into account.
The changes are intended to remove this problem and unfreeze further provision of international financial support to Ukraine.
