The Head of the Research Service of the Verkhovna Rada, Lesya Vaolevska, has published a parliamentary study that comprehensively analyzes the legal regulation of the status of a "politically exposed person" (PEP) in Ukraine and approaches to applying enhanced financial monitoring to such persons, their family members and related persons. The document compares national practice with FATF recommendations, EU norms and examples of countries, including Australia, the United Kingdom, France, Canada, Singapore, Switzerland and the UAE.
According to the study, Ukrainian regulation requires banks and financial institutions to apply enhanced monitoring of PPOs: to verify the source of the client's wealth, obtain management approval for transactions of UAH 400,000 or more, and conduct ongoing risk analysis. The status of PPO extends not only to the officials themselves, but also to close relatives - spouses, children, parents - and related persons, which include beneficiaries of companies or business partners.
The study highlights that after the cessation of public functions, increased attention is maintained for at least 12 months, with the assessment of residual risks taking into account the level of influence of the individual and their connections to countries with high money laundering risks. If the risks are considered low, the status and associated measures may be removed earlier. This model is consistent with the principle of a “risk-based approach”, but in other countries the timing and criteria differ.
A comparative review in the document shows a significant diversity of approaches around the world: the UK applies a risk-based approach without a fixed monitoring period; France requires enhanced control for at least 12 months after resignation; Canada divides the approach by origin - for foreign PPOs, control can be lifelong, for domestic ones - 5 years; Singapore also practices risk-based without a fixed period; Switzerland provides for a minimum of 10 years of supervision; the UAE - a minimum of 3 years. The study participants note that these variations reflect different risk assessments, the historical and legal context of each country, and the level of development of the financial infrastructure.
The document also compares Ukrainian regulations with European legislation, in particular Directive 2015/849 and later EU recommendations, which define a wide range of positions subject to the PSO regime (heads of state, government officials, MPs, judges, ambassadors, etc.). In 2023, the EU published additional guidelines on the list of positions for member states, and the study notes that Ukrainian regulations adapt these approaches within the framework of the Association Agreement.
The practical implications for banks and their customers are clear: the need for enhanced KYC (know your customer) procedures, more stringent beneficiary verification, the introduction of internal limits for approving large transactions, and constant monitoring of transactions. Banks must not only identify suspicious transactions, but also document risk assessments and take action in accordance with internal policies and national regulatory requirements.
The study also raises the issue of the effectiveness of practical implementation: the lack of unified approaches to monitoring deadlines, differences in the definition of "related persons" and the difficulty of identifying real beneficiaries complicate the work of both banks and regulatory authorities. The authors draw attention to the need to improve information exchange mechanisms between state registers, financial institutions and law enforcement agencies for faster detection of anomalies and correlation of risks.
The key conclusion of the study is that to comply with FATF standards and international best practices, Ukraine should ensure clear procedural rules for the application of enhanced monitoring, define transparent criteria for setting supervision deadlines, and strengthen control tools over declarations and sources of income of PPOs. This also includes increasing banks' capacity in terms of risk analytics and better coordination between regulators.
