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Financial monitoring of individuals in 2024

If you are going to open a deposit in the bank, then be prepared for the fact that you may be asked about the sources of origin of funds. Such a check is part of the financial monitoring that the bank is obliged to carry out in relation to its customers. Let's figure out what financial monitoring of individuals is, for what purposes it serves and how it can affect ordinary Ukrainians.


About financial monitoring in Ukraine

In simple words, financial monitoring is an examination of the legality of financial transactions in order to identify and prevent:

  • financing of terrorism and proliferation of weapons of mass destruction;
  • laundering of illegally obtained income.

Financial monitoring, or as it is also called financial intelligence, functions at the state level and contributes to international financial security. In Ukraine, the National Bank of Ukraine is among the state financial monitoring bodies of Ukraine. Banking and financial institutions, in turn, belong to the subjects of primary financial monitoring, which can be the first to detect and prevent an illegal financial transaction. The National Bank establishes and monitors compliance by banking institutions with the requirements for verification of clients and their financial transactions in order to prevent the legalization of illegally obtained funds.


Who is subject to financial monitoring when opening a deposit account

If you are not a client of the bank and you contact the bank for the first time to open, for example, a deposit account, the bank must identify you regardless of the amount of the deposit you place. To do this, you must fill out a standard questionnaire, and the bank checks the information you provided, which takes about 30 minutes. In particular, a check is carried out for your inclusion in the registers of persons connected with terrorist activities or persons subject to sanctions.
In certain cases, in addition to primary identification, the bank requires confirmation of the origin of the funds. What are these cases:

  • when opening a deposit or several deposits for a total amount subject to financial monitoring;
  • if you are a politically significant person, a member of his family or related to him, regardless of the amount of your contribution;
  • when there are suspicions that you have received these funds illegally.


What amounts are subject to financial monitoring in 2024

Before carrying money for depositing in a bank, you need to know the amount from which the financial monitoring of individuals in 2024 begins, and if necessary, immediately take documents confirming the source of the funds.
The bank is obliged to clarify the source of the funds if the amount of cash financial transactions, starting from the moment of the NBU Board Resolution No. 60 of March 23, 2022, exceeds UAH 400,000 or an equivalent amount in foreign currency. They can also make a request if they see financial transactions that are not typical for an individual, or transactions that do not correspond to the financial status, taking into account the information received during the study about the financial status, financial transactions on the account.
Complete and reliable information provided to the bank in the questionnaire regarding your financial situation and planned operations on the account will reduce the likelihood of additional questions from the bank. If the bank understands that your financial transaction corresponds to your financial capabilities, it can approve it without further verification.
Even if you have been in your bank for a long time, but now you decided to make a deposit for a much larger amount or another deposit, and as a result, the total amount of your deposits will be more than UAH 400,000 or the equivalent in currency, taking into account the specifics of the implementation of legislative requirements in the field financial monitoring during the period of martial law, the bank will necessarily ask the source of the funds.


Confirmation of origin of funds

Therefore, if you belong to those who are subject to financial monitoring, at the request of the bank, you must provide official documents that confirm the sources of origin of funds and help the bank to perform due diligence.
Such documents can be:

  • certificate of salary received in Ukraine or abroad, even if you are no longer working but recently had a sufficient level of income;
  • documents on the sale or lease of property, sales of products or services provided;
  • documents confirming the acquisition of the right to inheritance or to treasure or lottery winnings;
  • a certificate from the revenue and tax authority about the received income and the taxes paid on it;
  • a copy of the tax declaration with a mark of the controlling body;
  • a copy of declarations submitted by politically significant persons;
  • any other statements, certificates or receipts confirming the sources of origin of funds.

These documents do not necessarily have to be "up-to-date", but must logically explain the sources of funds. All information and documents provided by you are bank secrets, and the bank will not disclose them except as required by law, such as a court order.
If you refuse to provide this information or provide inaccurate information, the bank will be forced to refuse you to open an account or conduct a transaction.
Therefore, as in the rest of the world, Ukrainian banks are obliged to carry out financial monitoring of customers and carefully check the sources of funds for the purpose of financial security of the country - to prevent illegal financial transactions, tax evasion and money laundering.


FATCA requirements

On July 1, 2014, the Foreign Account Tax Compliance Act of the United States of America entered into force (Foreign Account Tax Compliance Act, FATSA), which establishes requirements for foreign financial organizations, in particular, regarding the conclusion of a special agreement with the Internal Revenue Service of the United States of America Service, IRS), monitoring accounts opened by US taxpayers in Ukrainian financial institutions and informing the IRS about these accounts.
FATCA aims to combat tax evasion by US taxpayers who have bank accounts in foreign financial institutions.
On February 7, 2017, Ukraine and the United States signed an intergovernmental agreement to improve the implementation of tax rules and the application of the provisions of the FATCA law. This Agreement was ratified in 2019, and from 2021, annual reporting of the accounts of American tax residents is carried out. According to this, all financial institutions of Ukraine are obliged to identify their clients (individuals, sole proprietorships and legal entities) and transfer information about their accounts to the IRS.
Failure to comply with the requirements of the FATCA law on the part of the Bank or the Bank's client entails the application of sanctions.

Definition of US tax resident

Determination of the status of a US tax resident in accordance with the requirements of the FATCA law is carried out according to the following criteria:

In relation to a individuals person and sole proprietors:

  • availability of US citizenship;
  • having a permanent residence permit in the USA (permanent resident card (form I-551 (Green Card or Permanent Resident Card);
  • compliance with the "Long-term stay" criteria.

In relation to a legal entity:

  • place of registration in the USA;
  • the status of a taxpayer in the USA;
  • availability of the GIIN code (for financial institutions).

Criteria for "Long-term stay" in the United States

Recognition of an individual or sole proprietorship as a tax resident of the United States takes place if he was in the United States for at least 31 days during a calendar year and at least 183 days during 3 years, including the current year.
In addition, to determine this status, the sum of the days of presence in the United States during the current and two previous years is multiplied by the following factor:

  • coefficient of the current year – 1 (each day of stay is taken into account);
  • last year's coefficient - 1/3;
  • the coefficient of the year before last - 1/6.

The Bank has the right to use any legally available means of obtaining information to determine the client's status as a foreign taxpayer, in particular: a questionnaire, written and verbal requests to the client; analysis of customer data from available sources.
If the Client is recognized as a tax resident of the United States, the Bank is obliged to include information about him in the annual report, which is submitted to the tax authorities of Ukraine and the United States.


General information about CRS reporting

On April 28, 2023, the Law of Ukraine "On Amendments to the Tax Code of Ukraine and other legislative acts of Ukraine regarding the implementation of the international standard for automatic exchange of information on financial accounts" No. 2970 of March 20, 2023 entered into force.

From July 1, 2023, this law obliges accountable financial institutions of Ukraine to conduct due diligence of financial accounts to establish their accountability. If the account is confirmed to be accountable, the financial institution must include information about it in the report on accountable accounts and send this report to the DPS.
In view of this, the Bank is obliged to collect and disclose tax information about non-resident clients (individuals, sole traders or legal entities, ultimate beneficial owners of clients).
The CRS self-assessment document (Appendix) is provided to the client to fill in when establishing business relations with the bank, when updating identification data, or at the bank's separate request.
The self-assessment document is valid indefinitely, provided that the circumstances relating to the information provided by the client about their tax residency status for CRS purposes remain unchanged.

!!! If the client did not provide self-assessment documents, did not inform JSC AGROPROSPERIS BANK of a change in tax residency status, or did not provide within thirty calendar days from the date of receipt of a request from us information and/or documents to confirm the status of the account holder for tax purposes, JSC AGROPROSPERIS BANK" has the right to refuse the client to establish business relations and to provide or continue to provide financial services, in particular to unilaterally terminate contractual relations with the client. Upon termination of contractual relations with the account holder, the bank returns the available balance of funds to him and is not responsible for losses caused to the client as a result of termination of contractual relations.

Anna Gerashchenko Head of the financial monitoring department

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