Financial Crime World

Title: NBU’s Role in Ensuring Compliance and Financial Stability in Ukraine’s Banking System

Guardian of Financial Security and Stability in Kiev

  • The National Bank of Ukraine (NBU) is located in the heart of Kiev, ensuring financial security and stability.
  • It regulates and supervises the country’s banking sector to assure customers, depositors, lenders, and borrowers that their financial institutions are sustainable and complying with their obligations.

Jurisdiction and Supervision

  • All Ukrainian banks and their overseas subsidiaries, foreign banks operating within Ukrainian borders, and other financial organizations and individuals fall under NBU’s jurisdiction regarding compliance with the Ukrainian Law on Banks and Banking.

Supervision and Risk Analysis

The NBU employs a risk-based approach to identify and manage risks, including:

  1. Professional judgement: assessing market risks using leading supervision practices and tools.
  2. Forward-looking analysis: evaluating current and future risks to a bank’s sustainability and stability.
  3. Focused intervention: targeting issues and banks that pose the most significant threats to Ukraine’s banking system.

Banking Groups and Transparent Ownership Structures

The NBU identifies and registers banking groups to maintain financial stability. Key aspects include:

  • A banking group is defined as a collection of financial organizations under a common owner or controller.
  • Banking assets account for at least 50% of a group’s total assets.
  • Transparent ownership structures prevent excessive lending to related parties and funds diversion.

Regulation and Enforcement

The NBU is the primary regulatory body for banking in Ukraine, governing the following:

  • Establishment, operation, and relationships between banks, depositors, lenders, and the country.
  • Enforces regulations, fostering a competitive banking landscape.

Adherence to International Norms

  • The NBU follows international regulatory standards set by the European Banking Authority and the Basel Committee on Banking Supervision.
  • Currently reviewing regulations to align with EU Directives according to the Association Agreement between the EU and Ukraine.

Ownership and Management

The NBU conducts background checks and demands impeccable business reputations for potential owners and managers. Additional requirements include:

  • A clean track record and competency.
  • Owner’s property value equals or surpasses their share in the bank’s capital.
  • Lawful origin of property must be reported.