Financial Crime World

Ukraine’s Know Your Customer (KYC) Regulations: Identity Verification Requirements for Businesses

Overview

In response to money laundering and terrorist financing, Ukraine introduced its Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) legislative framework. The following article focuses on the Identity Verification requirements as per the Ukrainian regulations, based on guidelines from the State Financial Monitoring Service of Ukraine (SFMS), the National Bank of Ukraine, and the relevant acts.

Key Definitions

Before diving into the Identity Verification procedures, it’s essential to familiarize yourself with the following definitions:

  • Client: Shufti Pro’s customer
  • Customer: The client’s customer subjected to KYC-AML checks
  • End-user: The customer from Shufti Pro’s perspective
  • Document Verification: The process of verifying the authenticity of a government-issued identity document
  • Identity Verification: The process of confirming a client’s customer’s identity
  • Proof of Identity: Any government-issued identity document capable of identifying an individual
  • Enhanced Due Diligence (EDD): A process involving a greater level of scrutiny related to potential business relationships
  • Third-Party Diligence: Outsourcing due diligence process to an external party by the Client
  • Politically Exposed Person (PEP): A person with a higher risk for potential involvement in bribery or corruption

Identity Verification Requirements

To identify a natural person from official documents, the following attributes are required:

  1. Name and surname
  2. Date of birth
  3. Passport number of a Ukrainian citizen or another identity document
  4. Date of issue and issuing authority
  5. Nationality
  6. Address

Compliant CDD Methods

Shufti Pro utilizes various methods to perform Identity Verification on behalf of the Client for an end-user who is not physically present:

  1. Independently source documents for verification: Utilize reliable and legitimate identity documents to confirm the End-user’s identity. These documents include passports, national identity cards, and government-issued identification.
  2. Perform a real-time, audio-video transmission: Initiate a live, interactive session between an Identification Expert and the End-user. The End-user will be required to present their identity documents and perform random gestures as a part of a liveness check.
  3. Verify submitted documents: Use specialized Document Verification services to confirm the authenticity of the documents the End-user submits. This includes checks for security features such as holograms, expiration dates, MRZ, and microprinting.

Documents for Verification

The following documents are considered proof of identity in Ukraine:

  • Identity Card or Internal Passport
  • Traveling Passport
  • Any other identity document, as permitted by the legislation of Ukraine

For address verification, consider using a utility bill, a bank statement issued within the past three months, or any document issued by a government department demonstrating the End-user’s address and name.

Timing for Verification

Identity Verification is a continuous process. It is required at multiple instances, as per regulations:

  • When onboarding a new customer
  • Upon reaching monetary thresholds defined by Ukrainian regulations
  • When dealing with customers posing higher risks

Enhanced Due Diligence Measures

In the absence of specific guidelines, clients can opt for Enhanced Due Diligence measures for high-risk End-users. Shufti Pro provides an AML Screening service that screens an individual’s selected ID attributes against watch-lists of global regulatory authorities, domestic databases, PEPs, and sanctioned individuals. Clients can choose to use these services as needed, either before or after establishing a relationship with their Customer.

Reliance on External Services

Clients can only rely on external services for identifying and verifying clients if a written agreement is reached between the primary financial monitoring subject and the agent. Despite using external services, the Client remains responsible for maintaining regulatory compliance and fulfilling AML and KYC obligations.

Record Retention

As per Ukrainian Acts, clients must retain data for a minimum of five years as part of their due diligence and AML/KYC obligations. If the information is processed, collected, and managed by a relevant third-party, clients are obligated to collect necessary Due Diligence Data from the third-party without delay.