Simplification of the Procedure for Submitting Financial Monitoring Information

Simplification of the Procedure for Submitting Financial Monitoring Information

On September 6, the Verkhovna Rada adopted the Law (Bill No. 6320) “On Amendments to Certain Laws of Ukraine on Simplifying the Procedure for Submitting Information Required for Financial Monitoring”.

The Law introduces the following changes:

• to the Law of Ukraine “On State Registration of Legal Entities, Individual Entrepreneurs and Public Organizations“:
• automation of verification of information on persons who are ultimate beneficial owners (hereinafter – the “UBOs”) of a legal entity, submitted to the Unified State Register of Legal Entities, Individual Entrepreneurs and Public Organizations (hereinafter – the “USR”) in electronic form is stipulated, using the means of the Unified State Web Portal of Electronic Services;

However, it should be noted that the submission of the UBOs information has not yet been launched in electronic form using the Unified State Web Portal of Electronic Services.

• the requirement for the exclusive notarization of copies of documents, submitted to confirm the identity of the UBO, is canceled, now it is also possible to certify copies of documents using the  із застосуванням means of a qualified electronic signature;
• cases of submission of relevant information by legal entities during registration actions are reduced.

For example, to carry out the state registration of changes to information on the size of the authorized capital, the size of the shares in the authorized capital or the composition of the members of a limited liability company, a company with additional liability, it is no longer necessary to submit an extract, statement or other document from the trade, bank, court register, etc., which confirms the registration of a non-resident legal entity in the country of its location (if the founder of the legal entity is a non-resident legal entity) and a notarized copy of the document certifying the identity of the legal entity; the ownership structure in the form and content determined under the law is sufficient.

• to the Law of Ukraine “On Prevention and Counteraction of Legalization (Laundering) of Proceeds Obtained through Crime, Financing of Terrorism and Financing of Proliferation of Weapons of Mass Destruction“:
• the procedure for determining information about the UBOs and the ownership structure by legal entities is specified;

The information about the UBO should contain: surname, first name, patronymic (if available), date of birth, country of citizenship (nationality), and in the case that the foreign UBO is a citizen (subject) of several countries, all countries of their citizenship, series (if available) and number of the document(s) certifying identity and confirming citizenship, in particular, but not exclusively, the passport of a citizen of Ukraine for traveling abroad, the unique number of an entry in the Unified State Demographic Register (if available), place of residence, registration number of the taxpayer’s registration card (if available), as well as the full name, location and identification code (for a resident) of the founder of the legal entity, in which this person is the UBO, nature and extent (level, degree, share) of beneficial ownership (benefit, interest, influence). In case the legal entity does not have a UBO of a legal entity, including its founder’s UBO in case of the founder being a legal entity, a note is made indicating the justified reason for its absence in the ownership structure.

• the obligation of legal entities that are founders (participants) of legal entities, and natural persons who are founders (participants) of legal entities and/or exercise decisive influence over their activities to provide, at the request of legal entities, information necessary for submission by a legal entity for entry or updating in the USR the information about the UBO and the ownership structure of the legal entity is introduced;
• it is assumed that the State Financial Monitoring Committee will approve the methodology for determining the UBOs of the legal entity
• the scope and terms of submission by legal entities to the state registrar of information about the UBOs and the ownership structure are revised.

In particular, legal entities are obliged to keep information about the UBOs and the ownership structure of the legal entity up to date, to notify the state registrar of changes  within 30 working days from the date of their occurrence,  and to submit to the state registrar documents confirming the said changes, in accordance with the procedure specified by the Law of Ukraine “On State Registration of Legal Entities, Individual Entrepreneurs and Public Formations”. In the event that a legal entity discovers incompleteness, inaccuracies or errors in the information previously submitted to the state registrar about the UBO and/or ownership structure of a legal entity, such entity is obliged no later than three working days from the day of their discovery to submit the corrected information to the state registrar in accordance with the procedure provided for the Law of Ukraine “On State Registration of Legal Entities, Individual Entrepreneurs and Public Formations”.

It is worth noting that the Law has established new norms regarding liability for violation of the requirements for providing information about the UBOs:

• the introduction by persons authorized to take actions aimed at the state registration of the creation of a legal entity or the change of members of a legal entity into the documents submitted for such state registration of knowingly false information about the UBO of a legal entity or its absence entails the imposition of a fine on such a legal entity a person in the amount of one thousand to twenty thousand tax-free minimum incomes of citizens (from UAH 17,000 to UAH 340,000);
• non–submission or untimely submission by persons authorized to act on behalf of a legal entity to the state registrar of information about the UBO of the legal entity or its absence entails the imposition of a fine on such a legal entity in the amount of one thousand to twenty thousand non-taxable minimum incomes of citizens (from 17,000 to UAH 340,000);

At the same time, legal entities that have violated the requirements of this part in connection with the failure to receive a response to the request for information necessary for submission by a legal entity for entry or updating in the Unified State Register of Legal Entities, Individual Entrepreneurs and Public Formations of information about the ultimate beneficial owner and ownership structure are released from responsibility for such a violation.

• failure to provide by legal entities – residents who are founders (participants) of legal entities, and natural persons – residents who are founders (participants) of legal entities and/or exercise decisive influence on their activities, at the request of legal entities, required for submission by a legal entity for entering or updating information about the KBV and the ownership structure of a legal entity in the USR entails the imposition of a fine on such a legal or natural person – a resident in the amount of one thousand to twenty thousand non-taxable minimum incomes of citizens (from UAH 17,000 to UAH 340,000).

The procedure for bringing legal entities to justice and the procedure for determining the amount of fines for the above-mentioned violations will be established by the Ministry of Justice of Ukraine.

The beneficial ownership disclosure requirements do not apply to:

• political parties, structural formations of political parties;
• trade unions, their associations, trade union organizations, stipulated by the statute of trade unions and their associations;
• creative unions, local branches of creative unions;
• employers’ organizations, their associations;
• bar associations, bar offices;
• state bodies, local self-government bodies, their associations;
• public companies (legal entities created in the form of a public joint-stock company, the shares of which are admitted to trading on at least one stock exchange (regulated market) from the list of foreign stock exchanges (regulated markets), which is formed in the order determined by the Cabinet of Ministers of Ukraine, to which requirements for disclosure of information on ultimate beneficial owners, equivalent to those adopted by the European Union), apply;
• state and communal enterprises, institutions, organizations;
• chambers of commerce and industry;
• state pension funds;
• housing and construction cooperatives, dacha (cottage and construction) cooperatives, gardening and garage (garage and construction) cooperatives (societies), associations of co-owners of apartment buildings, associations of owners of residential buildings entered in the Register of Non-Profit Institutions and Organizations, agricultural cooperatives, agricultural cooperative associations;
• separate structural units with the status of a legal entity (except for a separate unit of a foreign non-governmental organization).