In March 2019, the National Bank of Ukraine (NBU), based on inspection results in the area of prevention of and counteraction to legalization (laundering) of proceeds from crime and financing of terrorism and proliferation of weapons of mass destruction (AML/CFT), applied the following corrective measures to OTP Bank JSC:
- a fine – in the amount of UAH 7,142,125.42 for the following:
risky activity in the area of financial monitoring, which included customer money transfer transactions1 to other banks carried out between March 2017 and June 2018 under agreements on money collection services for the total amount exceeding UAH 700 million. Consequently those funds were collected and delivered in cash to financial institutions and were used, in particular, for cash loans2 to individuals for their payments to other individuals for agricultural produce.
The nature or consequences of such financial transactions might relate them to legalization of proceeds from crime or conversion of cashless funds into cash. Moreover, the bank took no efforts to clarify the essence of said financial transactions, particularly through requests to the customers to provide additional documents and information associated with the financial transactions as specified in the bank’s internal AML/CFT documents
- failure to identify domestic politically exposed persons (PEPs), their family members or related parties among the customers during their identification and verification, as specified in the internal AML/CFT documents
- improper execution of the duty to ensure risk management and customer risk revaluation in their activity
- a warning letter, particularly for the following:
failure to identify financial transactions subject to financial monitoring
failure to comply with the obligation to carry out initial financial monitoring of financial transactions where participants or beneficiaries are domestic PEPs, their family members or related parties, in the manner prescribed for high risk customers
failure to submit full and reliable reports to the NBU with information required by the rules and procedures set forth in the NBU’s regulation.
1 Funds received by the bank’s customers from other legal entities mostly as assignment of rights or payment under factoring agreements.
2 According to the National Commission for State Regulation of Financial Services Markets, the financial institution granted no retail loans in 2017–2018.