How Ukraine is moving toward a "financial visa-free regime" and why it matters
On 18 April, the Cabinet of Ministers approved and submitted to Ukraine's parliament a bill aimed at facilitating Ukraine’s accession to the Single Euro Payments Area (SEPA).
The purpose of the draft law is to create a more effective mechanism to combat money laundering in Ukraine, particularly by establishing a comprehensive register of ultimate beneficial owners.
Read more about how this relates to SEPA accession and its implications in a column by Iana Okhrimenko, Senior Economist at the Centre for Economic Strategy – Moving towards financial visa-free regime: what Ukraine needs and whether banking secrecy will suffer.
SEPA (Single Euro Payments Area) is a European Union initiative that simplifies electronic euro payments between countries. It currently covers 36 countries (all EU member states and nine others) and enables fast transfers between banks, facilitates regular bill payments and standardises card transactions.
SEPA is essentially a "financial visa-free regime," explains Iana Okhrimenko.
"If Ukrainian businesses gain access to SEPA, companies will no longer need to open additional accounts abroad or pay extra fees for international transfers," writes the senior economist.
According to her, Ukraine could join SEPA even before joining the EU but it requires some reforms.
These reforms, she adds, can be broadly divided into two components:
Technical compatibility, meaning the creation of payment infrastructure that meets EU standards, the introduction of open banking, and so on;
Compliance with EU regulations aimed at combating money laundering and the criminal use of funds (in line with the EU’s 4th to 6th Anti-Money Laundering Directives), to minimise abuse risks and protect the EU's financial system.
"If technical compatibility with SEPA is nearing completion, regulatory and institutional trust is still in the development phase," Iana Okhrimenko notes.
Therefore, the next steps in the field of financial monitoring will be crucial. However, there is no alternative.
The senior economist emphasises that Ukraine is currently opting for the European model of "phased transparency": basic data will be accessible to supervisory authorities, while more sensitive information will be available only within tax or criminal proceedings.
According to the new bill, tax and supervisory authorities will be able to access basic account information (IBAN, account holder’s name, institution and date of opening) without a court ruling.
The ultimate beneficial owners of accounts will become public, and banks will be required to report suspicious transactions even without a request from the state.