The government has approved a bill (No. 13233) that provides for the creation of a centralized registry of bank accounts and individual bank safety deposit boxes held by individuals. Let’s examine its key provisions, the reasons behind its development, the opportunities it presents for law enforcement agencies, potential risks of abuse, and ways to mitigate them.
Key Provisions of the Bill
This document is part of a broader strategy to bring Ukrainian legislation into line with EU standards, particularly for accession to the Single Euro Payments Area (SEPA).
The registry, which will be administered by the State Tax Service, promises to become a powerful tool for law enforcement agencies in the fight against financial crimes such as money laundering, tax evasion, and corruption. At the same time, the bill raises concerns about potential violations of bank secrecy and the risk of abuse by law enforcement agencies.
Bill No. 13233 amends a number of legislative acts, including the laws “On Banks and Banking Activities” and “On Preventing and Combating the Legalization (Laundering) of Proceeds from Crime.”
The main changes include:
The creation of a registry of accounts and bank safes:
the registry will contain information on all bank accounts, e-wallets, and contracts for individual bank safety deposit boxes held by individuals;
The State Tax Service acts as the custodian and administrator of the registry, receiving data from the National Bank of Ukraine, banks, non-bank payment service providers, and electronic money issuers;
The registry will include data on the opening and closing of accounts and safe deposit boxes, but will not contain information on transactions, account balances, or the contents of safe deposit boxes.
Register of Ultimate Beneficial Owners (UBO):
A separate registry is being created to record the UBO of trusts and similar legal entities, also under the management of the State Tax Service.
New obligations for primary financial monitoring entities (PFME):
PFM entities, including banks, must report discrepancies in UBO data to the State Tax Service;
The list of PFMs has been expanded to include entities dealing with cultural property through free ports and trustees of trusts that are residents of Ukraine.
Whistleblower protection:
The draft law provides legal protection for individuals who report suspicious financial transactions, including free legal aid and confidentiality.
Strengthening supervision and sanctions:
Stricter sanctions are being introduced for non-compliance with financial monitoring requirements, in line with FATF standards and EU directives.
Opportunities for Law Enforcement Agencies
Currently, access to bank secrecy is granted only upon:
a written request or the client’s consent;
a court order;
requests from certain government agencies (the Prosecutor General’s Office, the Security Service of Ukraine, the National Anti-Corruption Bureau, the Bureau of Economic Security, the National Agency for Corruption Prevention, the State Tax Service, etc.), but these requests must be substantiated, relate to specific individuals or transactions, and be consistent with the purpose of the request.
The introduction of a registry of accounts and bank safes significantly expands the capabilities of law enforcement agencies to bring individuals to criminal liability. Access to it will be granted to:
the State Tax Service (STS)—for the performance of tax functions;
The Central Executive Authority for Combating Money Laundering (State Financial Monitoring Service)—to detect suspicious transactions;
The National Agency for the Identification, Tracing, and Management of Assets (ARMA)—to manage assets derived from crimes;
The National Anti-Corruption Bureau of Ukraine (NABU)—to investigate corruption crimes;
The Economic Security Bureau (ESB)—to combat economic offenses;
National Agency for Corruption Prevention (NACP) — to verify officials’ asset declarations;
state enforcement agencies and private enforcement agents—for the compulsory recovery of assets.
These agencies will be able to obtain information through special access or electronic interaction between registries (without the need to obtain a court order or prepare reasoned requests), which will significantly simplify and expedite their work.
Simplifying the Search for Assets Subject to Seizure and Confiscation
One of the biggest obstacles in investigating financial crimes is the difficulty of identifying assets that can be seized or confiscated. Offenders often conceal funds by distributing them across various accounts, using straw men, or storing valuables in safes. The registry eliminates this problem by providing law enforcement with a complete picture of a suspect’s financial assets.
Example. Consider a corruption case in which NABU is investigating the activities of a high-ranking official who accepted a bribe. Previously, detectives had to
send requests to dozens of banks, a process that could take weeks. The registry will make it possible to obtain a list of all accounts and safe deposit boxes belonging to the suspect within hours and to promptly seize assets (conduct searches).
Facilitating the Investigation of Financial Crimes
Financial crimes, such as money laundering, fraud, or tax evasion, require analysis of complex financial schemes. The registry simplifies this process by providing access to information about suspects’ financial instruments. Specifically, the registry allows for:
track financial flows: law enforcement officials can identify which accounts are linked to a suspect, even if they are registered in other people’s names;
identify suspicious assets: The State Financial Monitoring Service can analyze data to detect atypical financial behavior;
identify ultimate beneficial owners: The AML Registry will help identify the actual owners of trusts or companies.
Example. Consider a drug trafficking case where a criminal group uses dozens of accounts to transfer funds through shell companies. Previously, law enforcement had to spend months
checking each bank one by one, giving criminals time to destroy evidence. The registry will make it possible to quickly obtain a list of all accounts linked to the group and prove their connection to criminal proceeds.
Strengthening the Fight Against Corruption
Corruption crimes are often linked to the concealment of illegally obtained assets. The registry will become a key tool for NABU and NAZK, allowing them to:
verify officials’ asset declarations: comparing data from the registry with asset declarations will help identify discrepancies;
identify unexplained assets: if an official has accounts or safe deposit boxes that do not correspond to their income, this will serve as grounds for an investigation;
prevent the transfer of funds: quick access to information will make it impossible to transfer proceeds of corruption abroad once an investigation has begun.
International Cooperation
The registry complies with FATF standards and facilitates cooperation with foreign law enforcement agencies. For example, data from the registry can help track cross-border transactions, which will aid in the investigation of international crimes.
Benefits for Criminal Prosecution
Shorter investigation times: The process of gathering information will be reduced from months to hours.
Increased success rates: Comprehensive data will improve the chances of proving a crime in court.
Prevention of evasion of punishment: a rapid response will prevent criminals from moving assets or destroying evidence.
Potential for Abuse
Despite the obvious benefits, granting broad access to the registry to numerous government agencies creates significant risks of abuse, particularly in the context of citizens’ privacy and potential corruption.
Unlawful surveillance: Direct access to the registry without the need for a court order allows law enforcement agencies to monitor citizens’ financial activities without proper justification. For example, the BEB or NABU could investigate an individual’s accounts based solely on assumptions, which could violate Article 8 of the European Convention on Human Rights, which guarantees the right to privacy.
Political persecution: In countries with unstable democratic institutions, access to financial information can be used to persecute political opponents, activists, or businesspeople. The registry could become a tool for finding “compromising material” or fabricating grounds for criminal cases.
Corruption and abuse: Officials or law enforcement officers with access to the registry may use the information for personal gain, such as to extort bribes or engage in blackmail. In Ukraine, where corruption remains a problem, this is a real threat.
Data security risks: The centralization of sensitive financial data makes the registry an attractive target for cyberattacks. In the event of a data breach, thousands of citizens could fall victim to fraud or identity theft.
Increased Tax Pressure: The registry will allow the State Tax Service to identify “forgotten” or undeclared accounts, which could lead to mass audits of citizens, especially individual entrepreneurs (FOPs) who use personal accounts for business purposes.
These risks underscore the need for clear mechanisms for data control and protection to prevent abuse.
Mitigating Risks
To ensure the proper use of the registry and protect citizens’ rights, the following measures must be implemented:
Strict access controls:
Implement two-factor authentication and restrict access to the registry to authorized personnel with clearly defined authority;
require justification for each access request, such as the existence of an official investigation.
Audit logs:
Maintain detailed records of all access to the registry, including information about the user, the time, and the purpose of access. These logs must be regularly reviewed by an independent body.
Independent oversight:
Establish an independent oversight board, including representatives from civil society, to monitor the use of the registry and investigate complaints.
Data protection:
Use modern encryption technologies and conduct regular cybersecurity tests to protect the registry from attacks;
limit the amount of data stored to the minimum necessary.
Transparency for citizens:
Provide citizens with the ability to receive notifications about access to their data in the registry and to challenge unauthorized actions;
ensure free access to registry extracts for account holders.
Legal Liability:
Introduce strict sanctions, including criminal liability, for the unlawful use of data from the registry;
ensure prompt and accessible mechanisms for judicial protection for citizens whose rights have been violated.
International experience:
Study EU practices, where law enforcement access to centralized bank account registries is governed by clear rules. For example, in the EU, access is granted only to specific competent authorities for the investigation of serious crimes, such as terrorism or organized crime, under strict oversight.
These measures will help balance the need for effective law enforcement tools with the protection of citizens’ rights.
Conclusion
Bill No. 13233 is an important step toward fulfilling Ukraine’s international obligations, particularly regarding accession to SEPA and strengthening the fight against financial crimes. The registry of accounts and bank safes will significantly facilitate the work of law enforcement agencies, allowing them to locate assets more quickly, investigate crimes, and uncover corruption. However, broad access to sensitive data without adequate safeguards creates risks of abuse, ranging from unlawful surveillance to political persecution and cyberattacks.
For the successful implementation of the bill, it is essential to introduce strict data protection measures, independent oversight, and transparent access procedures. Only in this way will Ukraine be able to strike a balance between security and privacy, thereby strengthening citizens’ trust in the state and its institutions.
Author: Vitaliy Chayun, Barrister
Source: https://zib.com.ua/ua/166962-reestr_rahunkiv_ta_seyfiv_riziki_dlya_zahistu_bankivskoi_tae.html