In H1 2018, the National Bank of Ukraine (NBU) conducted 506 inspections of non-bank financial institutions’ units on compliance with the procedures for organizing and transacting FX operations.
The inspections were performed in the city of Kyiv and the following oblasts of Ukraine: Vinnytsia, Volyn, Dnipropetrovsk, Donetsk, Zhytomyr,Zakarpattia, Ivano-Frankivsk, Kirovohrad, Lviv, Odesa, Poltava, Rivne, Kharkiv, Kherson, Khmelnytskyi, Cherkasy, and Chernivtsi.
Main deficiencies identified during the inspections of non-bank financial institutions (NBFIs) include failure to provide materials upon written request of an authorized NBU employee, transaction of FX operations without relevant paperwork, inconsistency between actual cash balances and cash recognized on statements.
The deficiencies found during the inspections of the NBFIs’ units were described in letters that were sent to top managers of the respective financial institutions. The letters contained requests to explain and eliminate the identified deficiencies.
In the course of its inspections of legal foreign exchange bureaus in H1 2018, the NBU identified 39 foreign exchange bureaus that were operating illegally in the city of Kyiv and the following oblasts: Dnipropetrovsk, Donetsk, Zakarpattia, Ivano-Frankivsk, Kirovohrad, Kyiv, Lviv, Rivne, Kharkiv, and Cherkasy.
The NBU passed on the information on the illegal foreign exchange bureaus to law enforcement authorities.
“The NBU supports an ongoing improvement of transparency across the NBFIs that have been granted the general licenses for FX operations. In this regard, in 2018, the NBU amended the regulations providing for the activity of such financial enterprises, which forced them to strengthen their procedures of internal control over their units’ operations. As a result, the number of identified material deficiencies decreased, while the average volume of daily foreign exchange operations within one bureau increased,” said Director of the NBU Financial Monitoring DepartmentIhor Bereza.
The information on the illegal bureaus with respective photographs has been published on the NBU’s official website in the section Illegal Foreign Exchange Bureaus (available in Ukrainian).
Further details on the NBU’s general licenses issued to non-bank financial institutions can be found on the NBU’s official website through the search system Information on Licenses Issued to Non-Bank Financial Institutions and Other Legal Entities (Except Banks) (available in Ukrainian).
Moreover, under Resolution of the NBU Board No. 962 dated 1 July 2016, the NBU keeps the Register of Premises licensed to transact foreign exchange operations or render other financial services using domestic and foreign currency cash.
For reference, the NBU conducted 1018 inspections of the units (foreign exchange bureaus) of non-banking financial institutions in 2017.