The Verkhovna Rada of Ukraine adopted the new anti-money laundering law 

 

On 6 December 2019, the Verkhovna Rada of Ukraine adopted a new Law of Ukraine “On the Prevention and Counteraction to the Legalization (Laundering) of the Proceeds from Crime or Terrorism Financing, as well as Financing the Proliferation of Weapons of Mass Destruction” (the “AML Law”)1.

 

The adoption of the AML Law is aimed at bringing the legislation of Ukraine in line with the criteria established by the European Union (“EU”) for the states that intend to join the EU. 

 

Among the main points introduced by the AML Law are the following:

 

  • Increase of the threshold of the financial transactions subject to financial monitoring and currency control from UAH 150,000 to UAH 400,000
  • Extension of the scope of the AML Law on transactions with virtual assets (inter alia, cryptocurrencies)
  • Mandatory application of the risk-oriented approach by the primary financial monitoring entities (the “Reporting entity”) when conducting the verification of their clients
  • Strengthening of the liability and requirements with regard to the identification and disclosure of ultimate beneficial owners (the “UBO”) of legal entities, inter alia: 
  • failure to comply with the requirements related to the disclosure of information regarding the UBO of the legal entity may lead to a fine to be imposed on the director in an amount up to UAH 51,000 (approx. EUR 2,000)
  • failure to notify state authorities about discrepancies between the information about the UBO that is contained in the State Registry and the information revealed by the Reporting entity during the verification of the client may lead to a fine being imposed on the Reporting entity in an amount up to UAH 340,000 (approx. EUR 13,000)
  • Furthermore, the AML Law establishes the maximum size of fines that may be imposed on the Reporting entities for violations:
  • For financial institutions – up to UAH 135 million (approx. EUR 5 million)
  • For other Reporting entities – up to UAH 27 million (approx. EUR 1 million).

The AML Law comes into effect four months after it is signed by the President of Ukraine and is officially published2. 

We are analysing the impact of the AML Law on Ukrainian business and preparing practical recommendations that will help the business to get ready for new challenges. We will soon publish such an analysis and recommendations in one of our next legal newsletters.