On 16 October 2019 the President of Ukraine signed the Law of Ukraine No. 79-IX (“Split Law”), which deals with a substantial reallocation of the regulatory powers on the financial services markets. While certain technical provisions of the Split Law came into effect on 19 October 2019, the rest of the law will become fully effective on 1 July 2020.
The following are the two key features of the Split Law that will become operational from 1 July 2020.
The Split Law provides for the liquidation of the National Commission for the State Regulation of the Financial Services Markets, which is responsible for overseeing a large part of the non-banking financial services sector. Thus, the Split Law reallocates its functions to the National Bank of Ukraine (“NBU”) and the National Commission on Securities and Stock Market (“Securities Commission”).
As a result, the NBU will become responsible for (i) insurance companies; (ii) leasing and financial companies; (iii) credit unions; (iv) pawnshops, and (v) credit bureaus. Likewise, the Securities Commission will commence overseeing (i) the non-state pension funds, and (ii) the construction financing funds.
As well as the above, the Split Law also makes substantial changes to the list of services that are regarded as “financial services” and, as such, their provision is currently subject to license. In particular, starting from 1 July 2020, the following services will no longer be regarded as financial:
- Issuance and servicing of payment documents, payment cards, traveler’s checks, clearance and other forms of settlement facilitation
- Financial assets trust management
- Issuance of suretyship
- Financial assets administration for purchase of goods within the group
- Property management for construction financing
- Operations with mortgaged assets for the purposes of the issuance of mortgage securities