CEDEM holds expert discussion on banking services for CSOs

January 20, 2023

On January 19, the Center for Democracy and Rule of Law held a closed expert discussion “Problems of CSO Banking Services and Ways to Solve Them”.

The event was attended by representatives of the public sector, the State Financial Monitoring Service, the Independent Association of Banks of Ukraine, a representative of the Council of Europe Office in Ukraine, representatives of the offices of MPs of Ukraine and the largest banks of Ukraine: PrivatBank and Oschadbank.

The reason for the discussion was the increasing number cases of banks blocking the accounts and transactions of NGOs and charitable organizations due to financial monitoring measures. 

The discussion was lively and lasted more than two hours instead of the planned one and a half hours. Public sector representatives shared cases of banks blocking their finances due to enhanced financial monitoring measures. 

One of the most common reasons was the verification of founders of organizations, which is required by law, but, according to the public sector, it is absolutely pointless, because the founders of NGOs and COs lose any authority and influence on the activities of the organization from the moment of its state registration. There are also frequent cases of blocking accounts or transactions of organizations that operate in the deoccupied territories or on the front line. 

Understanding the pressure of liability provided for by the NBU for improper customer due diligence (among other things, heavy fines, revocation of license), under which banks carry out financial monitoring, the participants of the discussion nevertheless came to a common point of view that the problems can be solved by amending the legislation governing the implementation of financial monitoring activities by banks, in particular, the provisions of Annexes 7 and 19 of the Resolution of the Board of the National Bank of Ukraine No. 65. 

Therefore, based on the results of the discussion it was decided to prepare a number of proposals and materials from CSOs and send them to the National Bank of Ukraine for consideration. It was also decided to additionally organize a meeting to find ways to solve the problems of organizations operating in the deoccupied territories or on the front line.

The expert discussion was held as part of the Project Ukraine Civil Society Sectoral Support Activity implemented by the Initiative Center to Support Social Action “Ednannia” in partnership with the Ukrainian Center for Independent Political Research (UCIPR) and Centre for Democracy and Rule of Law (CEDEM). 

The expert discussion was held as part of a series of public events aimed at improving banking services for civil society organizations (CSOs) and liberalizing legislation regarding security challenges related to sanctions policy and anti-money laundering and terrorist financing legislation.