News (#12 December 2018)



AMCU fined National Information Systems

The Antimonopoly Committee of Ukraine fined the State Enterprise National Information Systems the sum of about UAH 1.2 million for two violations of the Law On Protection of Economic Competition in the form of abuse of the monopoly position in the national market on provision of access and use of the Unified State Registries maintained by the Ministry of Justice of Ukraine. Violations were related to access for notaries to the registries.

Master Avia and KyivAirport fined for anticompetitive concerted actions

The AMCU has fined KyivAirport the sum of UAH 681,000 and its managing company Master Avia LLC UAH 1.8 million for violating the Law On Protection of Economic Competition in the form of anticompetitive concerted actions. KyivInternationalAirport is located 7 km from the center of the capital. It is second in Ukraine in terms of the number of flights and passenger traffic.

Following the results of the investment tender held in 2010, the airport is managed by the company Master-Avia, which concluded an agreement on the lease of airport property for 49 years. According to company data, during this time it has invested more than USD 50 million in creation of a new airport infrastructure and is still directing all available resources to repaying the loan. According to the state register, the beneficiaries of this LLC are Vasily Khmelnitsky and Denis Kostrzhevsky.

Master-Avia has stated that it owns terminals and the apron, and the airfield and the runway are on the balance sheet of the municipal enterprise IA Kyi (Zhuliany).

Visa Policy

E-visas for entering Ukraine to cost more from January

From 1 January 2019 the cost of issuing e-visas to enter Ukraine will rise. The rules for issuing visas for entering Ukraine are also changed.

A visa in electronic form is issued for a one-time trip for a period of up to 30 days to enter Ukraine. The rise in the tariff increases the consular fee for issuing a visa from USD 65 to USD 85 for issuing an electronic visa. In addition to business and tourist visas, list of purposes for entry registration is expanded. From now on, it is possible to enter Ukraine with the purpose of carrying out activities in the scientific, educational, sporting, cultural spheres and for media representatives.


Ministry of Economic Development initiates cryptocurrency legalization in Ukraine

The Ministry of Economic Development is initiating adoption of the Concept of State Policy in the Field of Virtual Assets. The Ministry submitted the relevant draft Government directive for public discussion. The Concepts implementation is foreseen in two stages for the period up to 2021. At the first stage (2018 - 2019), it is envisaged to define the legal status of cryptocurrency; to acknowledge business entities providing services of cryptocurrency exchange for fiat currencies (traditional currencies) and vice versa; to conduct monitoring and analysis of problems and trends in virtual assets and market development of virtual currencies to elaborate proposals for improving regulatory policy. At the second stage (2020 2021), it is envisaged to acknowledge providers-digital wallets of virtual currencies (persons providing services of private cryptographic keys protection designed for storing and transferring virtual currencies on behalf of their clients) as subjects of primary financial monitoring; to develop special legislation regulating the use of virtual assets, smart contracts and tokens (digital accounting units within a distributed register of records in the form of data with cryptographic protection, which can be used to verify the availability of rights to objects of civil law and obligations), to conduct ICO/ITO.

First syndicated loan on blockchain issued

Spanish bank BBVA has, in cooperation with the Japanese MUFG and the French BNP Paribas, issued a loan for USD 150 million to Red Electrica, a Spanish company, using private blockchain. This is the first syndicated loan on blockchain in the world.

The whole process, starting from negotiating the conditions up to signing the agreement, was conducted on the basis of a distributed registry subject to full access provision both for the borrower and the bank. The agreement was then registered on the public platform Blockchain Ethereum.

The Financial Times notes that the total volume of the syndicated loan market is USD 4.6 trillion per year. The use of blockchain will simplify transactions when issuing such loans.

Financial Services

UnionPay International enters Ukraine

UnionPay International, the largest international payment system in the world by number of issued payment cards, is entering the Ukrainian market.

On 12 November the National Bank of Ukraine agreed on the terms and conditions and procedure for its operations in Ukraine. At the first stage, UnionPay International will provide services for acquiring, cash withdrawal and conduct of payments for goods and services under UnionPay payment cards in Ukraine. UnionPay payment cards will be issued by Ukrainian banks in future. In July 2018, UnionPay International also signed a memorandum on strategic partnership with state-owned institution Privatbank. UnionPay International (UPI) was established in 2002 and is a subsidiary of China UnionPay.


Russia imposed sanctions on Ukraine

On 1 November 2018, the Russian government imposed economic sanctions against Ukrainian companies and personalities. The list includes 322 persons and 68 companies.

The introduction of special economic measures, as is stated in the resolution, envisages freezing of cash, securities and property located in Russia and a ban on transfer of funds from Russia to Ukraine.

The Russian Ministry of Finance will be responsible for introducing changes to the sanctions list. Moreover, the Ministry of Finance will be able to send proposals to the Government regarding granting temporary permits to conduct operations with respect of companies on the list.

In list includes two former prime ministers of Ukraine, Yulia Tymoshenko and Arseniy Yatsenyuk, the former leader of Right Sector, which is banned in Russia, Dmytro Yarosh, and the former commander of the Donbas battalion, Semen Semenchenko, a number of military leaders, including the Defense Minister Stepan Poltorak, and the Chief of Defense, Viktor Muzhenko, the Secretary of the National Security Council, Oleksandr Turchynov, the Head of the Ministry of Internal Affairs, Arseniy Avakov, the Prosecutor General, Yury Lutsenko, and the eldest son of the President, Oleksiy Poroshenko.

The sanctions will be extended to Ukrainian MPs, judges of the Constitutional Court of Ukraine, officials of the presidential administration, heads of authorities and large companies, as well as some business figures and companies themselves.

In particular, the list includes billionaire Victor Pinchuk and the investment consulting group EastOne Group Ltd, which he controls. The sanctions will also apply to the head of Naftogaz of Ukraine, Andrey Kobolev, the owner of the large private gas producing group Burisma, Mykola Zlochevsky, and the Head of the Energy Standard Group, Konstantin Grigorishin.

The sanctions also apply the largest Ukrainian agricultural holding, Myronivsky Hliboprodukt, sunflower oil producer Kernel Holding, iron ore group Ferrexpo, Ukrhimenergo, Pokrovsky Mining Processing Plant, Krivorozhskiy Iron Ore Plant and other companies.

French bank Société Générale to pay US penalty for dealing with sanctioned nations

US authorities have imposed a fine of USD 1.3 billion on the French bank Société Générale. The bank conducted financial transactions worth billions of dollars in relation to countries that find themselves under sanctions. The New York Attorney General estimates that the bank conducted more than 2,500 transactions worth USD 13 billion in violation of sanctions legislation. In 20032013, Bank Société Générale conducted transactions involving Iran, Cuba and Sudan, which are under US sanctions.

The fine is the second largest one imposed on financial organizations evading sanctions. In 2014, another French bank, BNP Paribas, agreed to pay a fine of USD 9 billion to the US authorities.

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