Peculiarities of Financial Monitoring during Martial Law

We continue to inform you about the changes that Ukraine’s banking system underwent during the war. Below, the Resolution of the Board of the NBU from April 8, 2022 No. 69 “On Amendments to the Resolution of the Board of the National Bank of Ukraine of March 23, 2022 No. 60” is analyzed, which provides for the following changes regarding financial monitoring:

1. It has been clarified that Ukrainian banks shall not take measures to verify the sources of funds, provided by the Law of Ukraine “On Prevention and Counteraction to Legalization (Laundering) of Proceeds from Crime, Terrorist Financing and Financing of Proliferation of Weapons of Mass Destruction” in case of financial cash transactions carried out by individual clients in order to deposit them in the current account of an individual client in the amount of UAH 400,000, if such a client has not provided relevant documents or information at the request of the bank.
2. Banks of Ukraine are prohibited from carrying out expenditure operations (issuing funds in cash, transferring them, other expenditure operations) to the accounts of individual clients with the funds specified above (deposited in the amount of UAH 400,000), unless documents on their origin are provided, except in cases of transfer of such funds to:

1) accounts of the Armed Forces of Ukraine for assistance to the Armed Forces of Ukraine and a special account opened by the National Bank of Ukraine for assistance to the Armed Forces of Ukraine;

2) current account of the Ministry of Social Policy of Ukraine, opened with the National Bank of Ukraine for charitable assistance and support of the most vulnerable categories of the population;

3) accounts of Ukrainian banks for the purchase of domestic government bonds “Military Bonds”.

3. Procedure of the bank’s actions when an individual deposits cash:

А) the bank, before the client’s financial transaction on depositing funds in cash to their current account in the amount of UAH 400,000 and more,
informs the client about the restriction of expenditure transactions with funds in case the client does not provide documents or information necessary to establish their sources at the request of the bank;

1. B) the bank independently in its internal documents identifies cases of mandatory identification of sources of funds, a list of necessary documents/informationto be provided by the client to establish the sources of their origin;
2. C) the bank is obliged to inform the client by means specified by the bank inits internal documents, with the mandatory informing of the client about the conditions for depositing cash stated above, and restrictions on spending transactions;
3. D) the bank monitors the targeted use of funds depositedin the current account of the client by setting a limit on the balance of funds on the account, which corresponds to the amount deposited in the account;
4. E) the bank reduces the established limit on the balance of funds on the client’s account by the amount of funds transferred to the accounts specified in 2 of this article (accounts for assistance to the Armed Forces of Ukraine, account of the Ministry of Social Policy for charitable assistance, bank accounts for the purchase of military bonds);
5. F) the above-mentioned requirements do not apply to cases where the client provides the bank with documents or information required by the bank to establish the sources of origin of cash deposited by the client for a financial transaction.

Thus, given the above provisions, if an individual deposits the amount of UAH 400,000 or more in their current account and fails to provide documents proving the source of funds, expenditure transactions on such accounts shall be limited. The deposited funds may be transferred only to accounts for assistance to the Armed Forces of Ukraine, the account of the Ministry of Social Policy for charitable assistance, bank accounts for the purchase of military bonds.

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Changes to the Rules of Financial Monitoring during Martial Law