The  figures released by the National Bank of Ukraine point to a decrease in the number of sham transactions involving purchase and/or transfer of foreign currency recorded in the Register. In February 2016, the NBU rejected only 706  FX purchase transactions, compared to 2.8 thousand rejections in November 2015 and 6.7 thousand rejections in December 2015.   

As a side note, on 18 December 2015 and 29 January 2016, the NBU served banks with Letters No. 25-02002/101317 and  No. 25-0005/8349 informing banks that they are FX contol watchdog bodies  and should verify the compliance with FX laws and regulations.

“Up until December 2015, banks collected certain documents pertaining to FX control, and could even notify the Financial Monitoring Service of suspicious transactions, but nonetheless they recorded this transaction in the Register and submitted information thereon  to the NBU. The Regulator was forced to block suspicious transactions itself. The main aim of this Letter was to establish a regulatory regulatory framework to change the overall approach.  As we can see, this move has yielded some results. Banks themselves began to detect and block suspicious transactions,” said Director of the Financial Monitoring Department, Mr Ihor Bereza.

He underlined that in view of the fact that banks have begun submit more complete information there is no need for the NBU to reject banks’ requests to execute transactions due to the technical reasons, which led to a decrease in the number of rejections by the regulator. 

For reference

Authorized banks are required (as mandated by NBU Board Resolution No. 124, dated 23 February 2015, On Specific Features of Some Foreign Exchange Transactions, and NBU Board Resolution No.140, dated 3 March 2016, On Resolving the Situation in the Money and Foreign Exchange Markets of Ukraine) to maintain a register of fx purchases which shall be submitted to the NBU together with copies of documents  that substantiate these transactions.

The NBU has the mandate to  to request and receive from the authorized bank copies of additional documents required to identify  the details of a specific transaction and retains the right not to approve the transaction entered into the register if an examination of the documents reveal evidence bearing out banks’ involvement in risky activities or if the regulator concludes that the nature of financial transactions or their consequences can  pose a  real or potential threat that a bank is being used for  legalization (laundering) of the proceeds from crime, terrorist financing and financing of weapons of mass destruction.