News (#11 November 2019)

Draft

Government initiatives on introducing changes in countering money laundering

The text of government Draft Law No. 2179 On Prevention and Counteraction to Legalization (Laundering) of the Proceeds from Crime or Terrorism Financing, as well as Financing Proliferation of Weapons of Mass Destruction was registered with the Ukrainian Parliament. In particular, it establishes:

Ч introduction of generally-accepted international terminology in the field of preventing and countering legalization (laundering) of the proceeds from crime or terrorism financing, as well as financing proliferation of weapons of mass destruction;

Ч application of a risk-based approach by the reporting institutions (RI) when conducting due diligence of their customers and, accordingly, switching to reporting cases on suspicious transactions (activities) of their customers.

It is also proposed to increase the threshold amount and to reduce the number of criteria for mandatory reporting on financial transactions, about which RI (banks, insurers, credit unions, pawnshops, stock exchanges, payment organizations, and other financial institutions) are required to submit to the State Financial Monitoring Service. So, the obligation to report on financial transactions for the amount of more than UAH 400,000 (now UAH 150,000) and related to cash funds, transfer of funds abroad by politically significant persons and clients from countries that do not fulfill recommendations of international and intergovernmental organizations operating in the anti-legalization sphere, remains.

The document is also intended to expand the circle of RI that will report suspicious financial transactions by including persons providing information and consulting services on tax issues. Also proposed are:

Ч improvement of the procedure for disclosing their ultimate beneficial owners (controllers) by† business entities and tightening the requirements for identifying beneficial owners of their customers by RI;

Ч introduction of international tools for assets freezing and regulation of RI activities with assets related to terrorism and financing thereof;

Ч improvement of legislative provisions affecting the quality of investigations related to crimes in the field of legalization (laundering) of proceeds from crime;

Ч improvement of legislative provisions ensuring the confidentiality of the receipt and implementation by RI of requests, decisions and instructions from the State Financial Monitoring Service and, as a result, protection of RI from threats, discriminatory actions and other negative consequences related to the implementation of measures designed for initial financial monitoring;

Ч transition to tracking money transfers as a tool to prevent, detect and investigate cases of money laundering and terrorism financing, as well as to implement restrictive measures.

Alternative draft law made public on freeing land market

Draft Law No. 2178-10 On the Land Market, which could become the main one for implementation of land reform in Ukraine, has been registered with the Ukrainian Parliament. It was developed under the supervision of MP Mykola Solsky, Chairman of the Parliamentary Committee on Agrarian and Land Policy.

The document is an alternative to government Draft Law No. 2178 On the Land Market in Ukraine. The following are its key provisions:

Ч to reduce land concentration limits within a region (oblast) from 15% to 8%;

Ч to introduce a limit of 35% on the concentration of land within united territorial community;

Ч to introduce a transitional period until 1 January 2024, when legal entities, whose beneficial owners are foreigners, stateless persons, legal entities established under legislation other than that of Ukraine, foreign states, could not acquire agricultural land of state, communal property, as well as land shares, except for those land plots, which at the moment of the law entry into force are already leased, in emphyteusis of such legal entities and subject to establishment of such legal entities not less than 3 years before the law enters into force;

Ч acquisition of ownership of agricultural land plots: citizens of Ukraine; legal entities of Ukraine established under the legislation of Ukraine; territorial hromadas (communities); the state.

Activities of State Customs Service and the State Fiscal Service in framework of single legal entities

On 16 October the Cabinet of Ministers of Ukraine approved the Draft Law of Ukraine On Amendments to the Customs Code of Ukraine and Some Legislative Acts of Ukraine on Improving the Structure of the State Customs and Fiscal Policies.

In particular, the Draft Law introduces a new framework of activities of central executive bodies system implementing state customs and fiscal policies as a single legal entity, following which their territorial bodies will operate not as legal entities, but as separate subdivisions.

The project proposes to make changes, following which:

Ч the possibility to create separate subdivisions without the status of a legal entity by the State Customs Service and the State Fiscal Service (SFS), which will provide the opportunity to carry out activities within the framework of single legal entities;

Ч changes are made to the definitions of legislation;

Ч the heads of the State Customs Service and SFS are given the opportunity to delegate their powers to heads of their respective separate subdivisions (territorial bodies) following the provisions on territorial bodies;

Ч peculiar features of remuneration for civil servants of the State Customs Service, SFS and their territorial bodies are determined in view of the provisions of the Customs Code of Ukraine and the Tax Code of Ukraine;

Ч possibility to receive, on a free basis, as open data (API), impersonal information on export-import transactions is established, particularly the customs value of goods, information on legal offenses;

Ч possibility to use electronic documents during customs procedures is expanded.

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