Myths About Most Controversial Law from EU Package

On 17 October, the Verkhovna Rada passed a bill on strengthening financial monitoring for politically exposed persons (PEPs), which had remained the sole obstacle to starting EU accession negotiations.

The condition on "indefinite PEPs" is not new to Ukraine. Such a law was in effect in 2019, but in November 2022, the lawmakers voted for harmful amendments. The PEP status was retained without exception, only for three years after leaving a politically significant position.

The new law corrects this flaw, but precisely these changes sparked heated discussions among Ukrainians.

There are seven most popular myths about PEPs and their debunking, as presented by Oleksandr Kalitenko, a legal advisor at Transparency International Ukraine.

Myth 1: The PEP bill has been made stricter than necessary! They voted under the fake sauce of Eurointegration for what the EU did not demand, and Ukraine's negotiating group failed.

This is not true. The adopted law on PEPs complies with FATF Recommendations No. 12 and 22, the mandatory directive for EU member states (candidate state is obliged to implement), and the requirements of the IMF for receiving macro-financial assistance.

The EU strongly demanded that the rules for Ukrainian PEPs should be no less strict than, for example, those for Germany.

Myth 2: Now all civil servants will have to confirm every transaction for life. Punishment for everyone working for the state!

The thesis about perpetual monitoring, which gained significant popularity, is a myth, or more precisely, manipulation.

EU and FATF standards indeed allow for the principle of lifelong control. However, this rule does not apply to all politically exposed persons.

The law adopted by the Verkhovna Rada speaks of enhanced monitoring for 12 months after leaving the politically significant position, just as the EU Directive requires.

If, within 12 months of enhanced financial monitoring, a financial institution confirms low-risk operations for a PEP, then the enhanced financial monitoring for that person will cease, and they will be treated no differently from an ordinary individual.

Ordinary financial monitoring is applied to all bank clients.

Myth 3: The law on PEPs was pushed into unconstitutionality to repeal it. Allegedly, parliament "retroactively strengthened liability for those who were not PEPs but now have become."

This is also untrue.

The law does not pertain to strengthening legal liability for PEPs and, accordingly, does not have a retroactive effect.

Myth 4: Now, no one will want to be a civil servant because people will be afraid to become PEPs, including their families, who will also suffer.

PEP status is only given to top officials. Civil servants whose positions fall under categories "B" and "C" will not be affected by it.

Read more in the full article – Seven most popular myths about PEPs and their debunking.