Ukrainian PEPs urge IMF to review lifetime monitoring | Ukrainian News - EUROPE SAYS
IMF Managing Director Kristalina Georgieva (Photo: EPA / Jung Yeon-Je)A group of Ukrainians who hold lifetime politically exposed person (PEP) status due to their current or former public offices has. . .
IMF Managing Director Kristalina Georgieva (Photo: EPA / Jung Yeon-Je)A group of Ukrainians who hold lifetime politically exposed person (PEP) status due to their current or former public offices has published an open letter to International Monetary Fund Managing DirectorKristalina Georgieva. Former Deputy Minister of Economic Development, Trade and Agriculture Svitlana Panaiotidiannounced on Facebookthat she is collecting signatures for the appeal. The letter was prompted bythe IMF’s criticism of an amendmentlimiting the mandatory period of enhanced financial monitoring for PEPs to 12 months after they leave office. In its June memorandum, the IMF said the amendment weakens the PEP framework and brings Ukraine’s anti-money laundering and counter-terrorist financing (AML/CFT) regime below Financial Action Task Force (FATF) standards. Financial monitoring of former public officials has become one of the key points of disagreement between Ukraine and the IMF. On the one hand, Ukraine cannot ignore the IMF’s position, as international financial assistance finances roughly half of the state budget. On the other hand, for PEPs themselves,the current regime creates significant everyday difficulties. It complicates routine banking transactions, makes it harder to open bank accounts, and discourages qualified professionals from entering public service. “Many highly qualified professionals are reluctant to serve on supervisory boards, hold political office, or join the civil service precisely because of the way this regime has been implemented in Ukraine. In practice, this means that individuals, their family members, and business associates remain subject to enhanced financial monitoring for life, regardless of how long ago they left office,” the letter states. The signatories argue that Ukrainian banks apply financial monitoring rules in an excessively formalistic manner, requiring regular in-person re-identification, annual submission of passport copies, and explanations even for routine transactions. The lifetime PEP regime, introduced into Ukrainian legislation in 2023 to replace a three-year limit, applies to everyone who has ever held a qualifying public office, effectively reaching back to 1991, when Ukraine regained its independence. The authors of the letter urge the IMF to conduct a comprehensive assessment of the amendment, engage in dialogue with stakeholders, and refrain from opposing the legislative change until such an assessment has been completed. “Ukraine needs effective, not token, AML/CFT regulation. A system that burdens law-abiding citizens and businesses while failing to identify actual criminals serves neither the goals of transparency nor the interests of the Ukrainian people,” the letter says. The letter is scheduled to be sent on July 28 in English, together with the full list of signatories. Copies will also be sent to the European Commission’s Directorate-General for Enlargement and the Eastern Neighbourhood (DG ENEST), European Commissioner for Enlargement Marta Kos, EU Ambassador to Ukraine Katarína Mathernová, and Deputy Prime Minister for European and Euro-Atlantic Integration Taras Kachka. The signatories include former public officials Ihor Diadiura, Dmytro Zolotukhin, Oleksandr Starodubtsev, Maksym Nefyodov, Dmytro Romanovych, Oleksii Liubchenko, Maksym Nemchinov, Volodymyr Omelian, and Tetiana Salnikova, as well as current and former members of parliament Yevheniia Kravchuk, Mykyta Poturaiev, Andrii Motovylovets, Oleksandr Fediienko, Hryhorii Shverk, and Andrii Zhurzhii. In Ukraine, politically exposed persons (PEPs) are individuals who hold or have held prominent public functions, including the president, prime minister, ministers and deputy ministers, members of parliament, senior political figures, high-ranking judges, prosecutors, law enforcement and military officials, as well as senior officials of the National Bank of Ukraine. The designation also extends to their family members and close associates, such as business partners. Law No. 361-IX on financial monitoring initially introduced lifetime PEP status. In November 2022, the period of enhanced monitoring was reduced to three years after leaving office. In 2023, at the IMF’s request, the Verkhovna Radarestored lifetime enhanced financial monitoring for PEPs.