NBU simplifies account opening for foreign entities and introduces financial monitoring thereof

NBU allowed foreign entities and investment funds to open accounts in Ukrainian banks following the simplified procedure. Regulator’s notice says that this option has been implemented as part of the gradual transition of Ukraine to free flow of capital in accordance with the Currency and Currency Exchange Transactions Law of Ukraine and EU-Ukraine Association Agreement.

A simpler procedure for non-residents to open an account in Ukrainian banks

The National Bank has updated the applicable Guidelines for banks and by doing so it simplified account opening for non-residents. The changes include:

  • From now on account operation will be executed in accordance with a list of persons who pursuant to the legislature have the right to do so without notarial certification. Previously, clients had to produce signature cards to open an account.
  • Сhange of a legal entity’s name does not lead to a closure of current accounts.

In addition, guidelines do not contain provisions regarding the restrictions on account transactions. They only contain definitions of transaction peculiarities for accounts of certain clients.

The regulator believes that these changes will positively affect the business environment in Ukraine.

The new version of the Guidelines as approved by the decree of the Board of NBU on April 1, 2019 No 56 Concerning the Introduction of Amendments to Regulations of the National Bank of Ukraine. Updated Guidelines come in effect on April 4, 2019, i.e. today.

Though now they are subject to financial monitoring

The NBU explains that this deregulation increases the risk of misuse of the Ukrainian banking system by shell companies for laundering the proceeds from criminal activities. Therefore, to prevent the above, on April 2, the NBU amended its Regulation concerning financial monitoring activities of banks.

The main objective of the amendments is the introduction of a mechanism for banks to detect shell companies among non-resident legal entities. Amendments also come into effect today.

In particular, the NBU introduces the following innovations for non-resident accounts:

  • shell company detection,
  • procedure for analysis of documents to detect such companies,
  • actions of a bank in the event of establishing the fact that a client is a shell company (for example, if a client refused to provide the bank with necessary documents or provided an incomplete set, the bank is at liberty to block some account transactions).

It further notes that these requirements do not apply to non-resident legal entities that are holding companies or their corporate enterprises with a transparent structure of ownership, beneficiaries, and owners, and economic activities of such legal entity are completely transparent.