Ukraine – CM PB

2024, Cross-border, Update

Country Manual Private Banking – Ukraine BRP Update 2024

BRP has updated its Country Manual Private Banking for Ukraine – (Def, RS, BT & RT)

Source of changesAnswers
Law / RegulationYes
New Position of the AuthoritiesNo
Evolution of Expert’s InterpretationNo

Regulatory Template, Regulatory Summary and Behaviour Template

Material changes

(1) Recent amendments to the Law “On Advertising” introduced additional rules for advertising on the territory of Ukraine and clarified the territoriality principle of advertising in Ukraine. There is a broad notion of both the terms “on the territory of Ukraine” and “advertisement”; even activities undertaken abroad but with effect in Ukraine may trigger application of the local law. Further implementing regulation and practice need to be followed, which may provide further clarifications on the new rules on advertising. It is generally recommended for foreign banks to take mitigant measures to avoid the application of local advertising law (“Territoriality Mitigants in Advertising”). Relevant elements of these mitigants still include a one-to-one approach and the avoidance of mass marketing and the provision of marketing material specifically designed for Ukrainian prospects or clients (see Definitions & Concepts for further detail); in this regard, the approach in our manual largely remains the same. For advertising out of the European Union (EU) note that by the letter of the law the abovementioned territoriality requirements do not apply to advertisement disseminated in the official languages of the EU by a legal entity located in one or several EU member states (the “EU entities exception”). For the time being, however, it remains unclear due to a lack of official guidance on which requirements (and to which extent) of the Law on Advertisement will be applicable to advertisement activity in Ukraine for legal entities located in one or several EU member states.

(2) In order to avoid the application of local financial regulation, it is now recommended for a foreign bank’s service agreement to be subject to the laws and the jurisdiction of the Bank’s country of establishment.

(3) Moreover, according to the new Law of Ukraine “On Financial services and Financial Companies” (the “Financial Companies Law”), of which the main provisions have entered into force on 1 January 2024, “intermediary services on financial market” will be subject to authorization requirements. These “intermediary services on the financial services markets” are defined as “one or more services aimed at obtaining a financial service by a client (except for services provided within the framework of professional activities in the capital markets provided for by the Capital Markets Law) related to informing, consulting, offering, preparing, concluding and executing (supporting) financial service agreements, receiving payments under these agreements, including the implementation of primary financial services on the basis of an agreement with a subject of primary financial monitoring for identification and verification of customers, as well as other services specified by special laws”. As investment advisory services (and, possibly, general advisory services) may potentially fall within the ambit of such intermediary services on financial markets, it is advised to follow legislative updates in this respect; for the time being, this aspect must remain a grey zone. We have not amended our approach in the Behaviour Template in this regard. Note that also the activity of local third parties for the bank may be considered as intermediary services on the financial services markets.

(4) Lastly, Ukraine has generally adopted a number of restrictions in response to the invasion of Ukraine by the Russian Federation (“martial law limitations”) which are of a capital-control nature. They have been dynamic in nature and may be expected to continue to change in the future. Accordingly, they should be checked carefully each time a particular operation is intended to be carried out. The more salient restrictions with implications on currency control (of relevance for cross-border purposes) are described in the manual. In particular, such martial law limitations concern (but are not limited to) cross-border payments.

Non-material changes

Some comments/conditions have been reworded, additional references to applicable law/regulation have been made in order to provide more clarity and to reflect the current regulatory situation more accurately. Further non-material changes have been made throughout the documents.

Definitions & Concepts

Please refer to the Definitions & Concepts documents particularly for a description of the Territoriality Mitigants in Advertising.

BT Short Comparison

BRP has created a comparison document allowing users to quickly identify the modifications made compared to the previous version of the PB Manual (BT Short Comparison). The BT Short Comparison can be found on BRP’s platform (mybrponline) in the Search tab by entering in the Document Field “CM PB BT SHORT COMP” and “UKRAINE” in the Target Country Field.

The BT Short Comparison should be read as follows:

The first column contains a short description of the activity in question. The second column contains the answers of the previous version of the Country Manual (online until the day of the alert). The third column contains the new answers of the most recent version of the Country Manual. Only the modified answers are displayed (in color). If the answers in the new version are unchanged compared to the previous version, they are shaded in grey.

For more information, please contact us: info@brpsa.com

Geneva, June 4th, 2024