Under IMF pressure, parliamentary committee removes scandalous amendment from PEP bill

The financial monitoring law is one of the IMF's two key requirements for Ukraine to receive the third tranche by this year’s end

Andrii Vodianyi

Senior editor

October 16 2023, 12:22

Chair of the Verkhovna Rada Financial Committee Danylo Hetmantsev. Photo: official

The finance committee of the Verkhovna Rada, the Ukrainian parliament, on Monday recalled an amendment from the financial monitoring bill that came under fire of the International Monetary Fund.

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Last week, the Ukrainian parliamentary financial committee greenlighted the draft law with an amendment that would restore the indefinite status of politically exposed persons (PEPs) only after Ukraine’s becoming a member of the European Union.

The IMF said it contradicted Kyiv’s obligations as well as the agreements reached between the Fund and Ukraine, according to which the financial monitoring of PEPs had to be reinstated immediately.

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"The draft law on PEPs was supported in the version agreed with the partners. The misunderstanding has been corrected. I thank my colleagues for their responsible position," Danylo Hetmatsev, the chair of the parliamentary financial committee, posted on Telegram.

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The financial monitoring law is one of the two key requirements of the International Monetary Fund for Ukraine to receive the third tranche by this year’s end, which affects other international financial assistance Kyiv hopes for.

In addition, the adoption of the law is necessary to start accession negotiations with the EU.

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Politically exposed persons (PEPs) in Ukraine are people who hold or have held important public positions, such as presidents, prime ministers, ministers and their deputies, MPs, senior political figures, senior officials of the judiciary, law enforcement, justice, defence, the management of the National Bank, etc., their family members and related parties, including business partners.

Last November, the Verkhovna Rada passed a law cancelling lifetime financial monitoring for officials and politicians, replacing it with a three-year monitoring following their leaving office.

One of the IMF’s benchmarks for the new loan programme included amending the law on anti-money laundering and counter-terrorism financing "to introduce enhanced due diligence measures for politically exposed persons" in line with FATF standards, which provide for lifelong financial monitoring of PEPs.