Legislative news digest: LEGAL HOTLINE 06.08.2020

The government has resolved the issues on launching the authorized economic operators

On July 29, 2020, the Cabinet of Ministers of Ukraine adopted the Resolution “On Certain Issues of Functioning of Authorized Economic Operators”. The Resolution aims at regulating all the formalities for the comprehensive launch of authorized economic operators (hereinafter referred to as the “AEO”) program in Ukraine.

The main issues, which have been regulated by the Resolution, cover:

1. procedures for assessing compliance with AEO criteria and 
2. forms of documents to be submitted by enterprises and to be issued by customs authorities for obtaining a status of AEO.

In general, such a novelty as AEO has rather significant advantages for the Ukrainian customs system. In particular, it will facilitate material simplification in customs formalities for enterprises with a high level of trust and will provide for an opportunity of Ukrainian enterprises to participate in the formation of a safe chain of supply of goods enhancing their competitiveness on external markets. Introduction in Ukraine of the AEO program and conclusion of agreements on mutual recognition of AEO status will help the Ukrainian business in entering the EU markets and, potentially, markets of other countries.

The Resolution shall become effective on the date of its publication.

The National Bank has regulated the procedure for carrying out financial monitoring by non-bank financial institutions.

On July 30, 2020, Resolution No. 107 recently adopted by the National Bank of Ukraine became effective, by which the Resolution “On Carrying out Financial Monitoring by Non-Bank Financial Institutions” was approved.

This Resolution was adopted in pursuance of the new legislative requirements on financial monitoring, which were enacted on April 28, 2020. The general concept of financial monitoring carried out by non-bank institutions is based on the main financial monitoring principles for banks. Thus, the Regulations provide for applying a risk-oriented approach, including to politically exposed persons, their family members and associates, set a list of risk criteria and risk exposure criteria, set a remote client identification.

At the same time, Regulations on carrying out financial monitoring by non-bank institutions are rather simplified in comparison with the regulations, which govern carrying out financial monitoring by banks. In particular, the financial monitoring system for non-bank institutions should be automated. Furthermore, non-bank institutions shall be allowed to assess client risk by following simplified methods. In particular, the institutions are able to assess the risk not by each client separately, but simultaneously by a group of clients by separating such clients into relevant categories based on criteria clearly determined and enshrined in internal documents (social status criteria, criteria of using similar types of services, the total scope of financial transactions). 

The National Bank has updated the procedure for applying enforcement actions to non-bank institutions

Resolution No. 106 “On Approving the Regulation on Applying the Enforcement Actions by the National Bank of Ukraine to Institutions for Violating the Financial Monitoring Legislation” recently adopted by the National Bank of Ukraine became effective on July 30, 2020. 

This Resolution expanded the types of enforcement actions to non-bank institutions. From now on, the Management Board of the National Bank of Ukraine or a Committee, to which certain regulation and supervision powers were delegated, are authorized to apply the following enforcement actions to institutions, which have violated the financial monitoring legislation: 

• written warning;
• conclusion by the National Bank of Ukraine of a written agreement with an institution, under which the latter undertakes to debit the determined amount monetary obligation and take measures to eliminate and/or prevent violations of requirements of relevant legislation in the future;
• vesting the institution with the obligation to discharge an official of the institution, in particular, a head (heads) of the institution, employees responsible for financial monitoring.

It should be noted that a non-bank institution may submit its objections to the violation of the financial monitoring legislation during the consideration of a case by a relevant collegial body. In addition, it will be possible to challenge the decision to apply enforcement actions in court within 1 month after it becomes effective.

The government has improved the rules of inventory taking of property of state-owned enterprise to be privatized

The official website of the Cabinet of Ministers of Ukraine notifies that on July 29, 2020, the Government adopted the Resolution “On Amending the Regulation on Inventory Taking of Property of State-Owned Enterprises to Be Privatized (Corporatized), as well as Property of State-Owned Enterprise and Organizations to be Leased (to Be Returned After the Lease Agreement Expires or Is Terminated)”.

This Resolution expanded the list of functions of the inventory commission to be formed for inventory taking of property of state-owned enterprises to be privatized. Thus, the inventory commission is now vested with function to trace property, which is not subject to privatization pursuant to legislation. This will promote the transparency of information about privatization objects for potential investors, who have exhaustive data on the status of all property.