The National Bank fined EasyPay and City24 270 million hryvnias: what exactly did the NBU find?
6 June 06:23
In May, the National Bank of Ukraine imposed sanctions on the companies “FC ‘Kontraktovy Dom’” LLC and “Swift Garant” LLC, which provide money transfer services through the EasyPay and City24 payment terminal networks. The total amount of fines was 270.3 million UAH—135.15 million UAH for each company.
The regulator announced this on its website, according to "Komersant Ukrainian"
The sanctions were imposed due to violations of legislation regarding the prevention and counteraction of money laundering, terrorist financing, and the financing of the proliferation of weapons of mass destruction.
Why were the operators of EasyPay and City24 fined?
This does not concern the EasyPay and City24 brands themselves, but rather the legal entities that handle money transfers through these terminal networks. The National Bank stated that both companies had inadequately organized their initial financial monitoring and had committed a series of systemic violations in their work with clients, risk management, and reporting.
Each of the two companies received a fine of 135.15 million UAH, as well as written warnings for specific violations.
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What claims did the NBU bring against FC “Kontraktovy Dom” LLC?
The National Bank imposed a fine of UAH 135,150,000 on FC “Kontraktovy Dom” LLC for violating the requirements of paragraph 2 of part two of Article 8 of the AML/CFT Law. This concerns the failure to fulfill the obligation to ensure the proper organization and conduct of initial financial monitoring.
According to the NBU’s assessment, this led to the following violations:
- improper application of a risk-based approach, taking into account risk criteria related to customers;
- inadequate development and approval of internal AML/CFT documents to the required extent;
- inadequate management of risks associated with the use of existing information products, business practices, or technologies, particularly for transactions without direct contact with the customer;
- inadequate due diligence on new and existing customers;
- inadequate verification of customers associated with the category of politically exposed persons (PEPs), their family members, and related parties;
- failure to provide, in a timely and complete manner, information and documents requested by the National Bank that are necessary for financial monitoring supervision.
In addition to the fine, the company received a written warning for the following violations:
- failure to ensure that fund transfers are accompanied by information about the payer, specifically a unique electronic payment instrument number;
- submitting AML/CFT reports to the NBU in violation of the procedure for compiling statistical reporting indicators;
- failure to meet deadlines for updating AML/CFT reporting data.
What violations did the NBU identify at Swift Garant LLC
To Swift Garant LLC The National Bank also imposed a fine of UAH 135,150,000 for violating the requirements of paragraph 2 of part two of Article 8 of the AML/CFT Law—that is, for failing to fulfill the obligation to ensure the proper organization and conduct of initial financial monitoring.
According to the regulator, this led to the improper fulfillment of the obligation to:
- develop and implement internal AML/CFT documents in accordance with legal requirements and risk assessments;
- properly stipulate in internal documents procedures sufficient for effective risk management;
- manage risks associated with the use of information products, business practices, and technologies, including transactions without direct contact with the customer;
- conduct due diligence on customers;
- verify payers with respect to mandatory data;
- conduct enhanced due diligence measures for high-risk customers;
- apply a risk-based approach in its operations;
- submit accurate and complete information and documents in response to requests from the National Bank;
- provide, upon request by the NBU, an electronic list of customers with established or reassessed risk levels, as well as information regarding whether customers fall under the PEP category.
Additionally, “Swift Garant” received a written warning for:
- inconsistencies in the data submitted or failure to submit/update client questionnaires with new or revised information;
- submitting AML/CFT reports to the NBU in violation of the procedure for compiling statistical indicators.
EasyPay and City24 — the largest payment terminal networks in Ukraine
The EasyPay and City24 networks are the largest in the Ukrainian payment terminal market. Each currently has over 20,000 devices. By comparison, PrivatBank has about 10,000 terminals.
In other words, the National Bank’s decision affects the two largest market players through which Ukrainians pay their utility bills, top up their accounts, transfer funds, and make other payments every day.
What EasyPay said
Following the NBU’s decision, EasyPay stated that the company is constructively cooperating with the regulator on matters of compliance with the law.
“We are constantly improving our internal control, risk management, and financial monitoring procedures, and we are taking all possible measures to prevent the use of our services in illegal activities. Any other statements and interpretations circulating in certain media outlets are not based on established facts and are manipulative,” reads a post on EasyPay’s Facebook page.
The company emphasized that it is constantly improving its internal control, risk management, and financial monitoring procedures, and is taking measures to prevent the use of its services in illegal activities.
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