The National Bank announces a comprehensive review and updating of approaches to the application of fines to banks for key violations of anti-money laundering (AML/CFT) and currency legislation, a comparison of documents indicates an increase in individual fines from 2 to 8 times.
“(This) will help prevent banks from committing violations of legal requirements, increasing responsibility for their failure/inadequate implementation, as well as the effectiveness of the impact measure, its deterrent nature in order to change the approach to the proper organization of the bank, the functioning of an appropriate risk management system,” the NBU said in a press release on Friday.
It is specified that the amendments were introduced by the NBU №80 of June 21, which comes into force on June 24, 2023.
In particular, for the violation of financial monitoring the scale with the ceiling of fines now starts from UAH 1 million, while previously it was UAH 0.4 million, and after the step of UAH 10 million the new value of UAH 50 million with a saved ceiling of UAH 135.15 million, with the specification that this ceiling applies even if there are several violations.
The NBU specified that fines of up to UAH 50 mln may be imposed for violations of legislative requirements in the field of CDD / CFT risk management or for improper checks on customers, while banks may receive fines of up to UAH 1 mln for failure to comply with internal documents on CDD / CFT legislative requirements in this area.
Inappropriate application of the risk-oriented approach to PEP clients, in particular, setting them an unreasonable risk level, taking disproportionate measures in accordance with the risk category, will be subject to a fine of up to UAH 10 million.
Also, the limits of fines for key violations in the field of currency legislation were revised and increased. In particular, significant violations (from UAH 1 million per transaction or from UAH 10 million in total) in the order of settlement of currency transactions, foreign exchange trading, transfer of currency valuables, cross-border movement, failure to perform / improper performance by the bank of currency supervision, violations of security measures are now punishable by a fine of up to UAH 1 million, whereas previously there were UAH 0.4 million.
Small amounts of violations may now be fined up to UAH 400 thousand instead of the previous UAH 50 thousand.
Other significant violations of currency legislation by the bank, including preventing or hindering to check the employees of the National Bank, failure of the bank to carry out the analysis, check documents on currency operations – up to 1% of the registered authorized capital of the bank, whereas before there was a limit of 8 million UAH.
Net sales of dollars by the National Bank of Ukraine (NBU) fell this week to $277.6 million from $457.0 million a week earlier after three weeks of increases.
According to the NBU on its website, from June 5 to June 9, 2023, its purchase of currency rose to $11.9 million from $15.1 million, while sales fell to $292.7 million from $469.0 million.
In the cash market, the dollar depreciated by about UAH 0.10 during the week – to UAH 37.15/$1.
Since the beginning of the year, the NBU bought $146.0 mln on the market, while it sold $11 bln 40.3 mln.
As reported, the volume of interventions of the National Bank in May increased to $1.93 billion, compared to $1.37 billion in February and $1.67 billion in March.
However, due to a significant influx of external financing, international reserves rose by 4%, or $1.358 billion, to $37 billion 311.3 million in May.
The National Bank of Ukraine in May fined Cominbank by UAH 10.45mn and Motor Bank by UAH 10.05mn for improper checking of new and existing clients and insufficient financial monitoring of operations.
As stated in a statement on the NBU website on Monday evening, the regulator also fined Alliance Bank UAH 1.45 million for late submission of information and documents on currency operations at the request of the National Bank, problems with internal documents on prevention and countermeasures.
In addition, Concord Bank was fined UAH 0.4 million for improper risk-based approach and Ukreximbank UAH 0.2 million for delayed provision of information.
Finally, as indicated by the NBU, Bank Lviv received a written warning for problems with internal documents on prevention and counteraction and violations in informing about suspicious activities of customers.
The National Bank of Ukraine (NBU) in May increased currency sales in the market to $1.991 billion from $1.374 billion in April and $1.674 billion in March.
According to the central bank’s website on Thursday, the volume of purchases in May rose slightly to $63 million versus $4-5 million in April-March, but still remains an order of magnitude below the volume of its sales.
As a result, as the NBU points out, its net foreign exchange interventions last month rose to $1.928 billion from $1.370 billion in April and $1.674 billion in March, but less than $2.431 billion in February and $3.082 billion in January.
According to Alexey Blinov, head of Sense Bank’s analytical department, taking into account the significant inflows of external financing, Ukraine’s international reserves in May should exceed $37 billion, while in April they increased by 13%, or by $4.07 billion – to $35.94 billion.
The National Bank of Ukraine has applied influence measures to ALC IC “Varto” and PrJSC “IC “Into” in the form of the obligation to take measures to eliminate violations and the causes that contributed to their commission.
“Measures of influence are applied due to failure to comply with the requirements of paragraphs 1 and 11 of the NBU’s board resolution “On peculiarities of registration procedures and licensing of participants of the non-banking financial services market during martial law …”, the regulator said in a statement on its website.
According to the document, it refers to written assurances of companies to the National Bank on the compliance of direct and ultimate owners of material participation to the requirements of the regulator on the financial / property status, the documents to assess such a position and subsequent responses to the NBU request.
It is clarified that the Committee on the Supervision and Regulation of Non-Banking Financial Services Markets adopted such decisions on May 29, 2023.
According to the NBU, the net earned premiums of IC “Varto” in the first quarter of 2023 amounted to 4,36 mln UAH, insurance payments – 2,57 mln UAH, net profit – near zero. Assets of the company at the beginning of April equaled UAH 39,03 mln, shareholders’ equity – UAH 34,16 mln.
The larger IC “Into” has net earned insurance premiums in the first quarter of 2023 were equal to UAH 17,67 mln, insurance payments – UAH 10,46 mln, net profit – UAH 0,28 mln. At the beginning of April assets of the company amounted to UAH 146,35 mln, shareholders’ equity – UAH 110,63 mln.
The National Bank of Ukraine on May 11 has cancelled all licenses of ALC Insurance Company Speir (Kyiv) to provide financial services.
According to the message on the website of the regulator, an unscheduled inspection carried out by the NBU in February-March this year found a repeated violation of license conditions – the insurer does not comply with mandatory standards.
The countermeasure for similar violations of license conditions to ALC “IC “Speir” was already applied on September 2, 2022.
The decision on revocation of the license shall come into force on May 12, 2023.
As previously reported, the rating agency “Standard-Rating” has withdrawn the credit rating / financial stability rating of the insurer SK “Speir” on February 9, 2023.
By results of H1 2022 ADO IC Speir received UAH 5,5 m of insurance premiums, 95% of which – from natural persons, and carried out UAH 22,8 th of insurance payments. The market share of the company according to the results of H1 2022 – 0,06%.
