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NBU Implements Enhanced Risk-Based Approach for Politically Exposed Persons in Nonbank Financial Institutions

PEPsNBU Implements Enhanced Risk-Based Approach for Politically Exposed Persons in Nonbank Financial Institutions

The National Bank of Ukraine has introduced standardized measures to ensure that nonbank financial institutions appropriately implement the risk-based approach when dealing with politically exposed persons (PEPs). These institutions are now discouraged from adopting a purely formal approach to assessing the risk associated with PEPs and are held responsible for any incorrect application of the risk-based approach in such cases. Whenever an institution determines a level of risk associated with PEPs, it must have a valid justification for doing so. This approach aims to prevent institutions from setting unjustifiably high-risk levels and unreasonably denying services to customers.

Furthermore, the NBU has relaxed certain requirements for institutions concerning their efforts to determine the source of wealth and funds for PEPs involved in financial transactions. Notably, the transaction volume limits for PEPs conducted through these institutions have been raised from UAH 200,000 per quarter to UAH 400,000 per month. This adjustment is one of the conditions for not imposing additional measures to verify the source of wealth for PEPs. These changes were implemented through NBU Board Resolution No. 108, which amends the Regulation on Conducting Financial Monitoring by Institutions and declares NBU Resolution No. 145 dated 17 December 2021 as invalid. The new resolution becomes effective on 7 September 2023.

By FCCT Editorial Team

Disclaimer: The views expressed in this article are independent views solely of the author(s) expressed in their private capacity.

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