Based on the submission of AS PrivatBank contesting the decision of 02.11.2021 by the Board of the Financial and Capital Market Commission (FCMC) and the application submitted to the Administrative Regional Court regarding the decision of 13.09.2019 by the Board of FCMC to apply a fine for the breach of regulatory requirements for the prevention of money laundering and terrorism and proliferation financing (AML), the FCMC repeatedly heard the arguments of AS PrivatBank, assessed the legal and actual circumstances, as well as progress in addressing the infringements. Considering conclusions of the assessment and the fact that AS PrivatBank is focused on cooperation by changing the management position and actively addressing shortcomings, on 20.05.2022, the FCMC entered into an administrative agreement with the Bank reducing the fine to 893 986 euro (previously – 1 787 972 euro).
The FCMC emphasizes that despite the different status of supervisor and market participants, in all cases the FCMC is aiming at constructive cooperation. In a situation where non-compliance with regulatory requirements is identified, it is crucial that the Bank recognizes breaches and shortcomings and draws up a plan to address them as quickly as possible and to ensure that no infringements are committed in the future. As this is a case, i.e., compliance with AML regulatory requirements has improved in the Bank, the position of the Bank’s management regarding the importance of AML area and compliance with requirements has changed, consequently, there is an opportunity to enter into the administrative agreement also providing for reducing the previously applied fine. In addition to the measures taken so far to strengthen the internal control system, the administrative agreement imposes on the Bank several obligations to improve the compliance of the Bank’s activities with the AML regulatory requirements.
As reported, the FCMC carried out an on-site inspections of AS PrivatBank in the AML area, to examine compliance with the AML regulatory requirements when starting business relations with individual customers and carrying out customer due diligence and transaction monitoring. During the inspections, the FCMC identified breaches and deficiencies related to inappropriate Bank’s internal control system, customer base risks and risk management. The irregularities showed serious shortcomings in the Bank’s internal control system in the AML area as they were identified in the key elements of customer due diligence and transaction monitoring. The Bank had failed to establish an internal control system that would be adequate to the AML risks inherent in its activities to ensure effective compliance with the regulatory requirements.
With entering into the administrative agreement, the FCMC’s decisions of 13.09.2019 and 02.11.2021 are annulled, and this is a basis for the Bank to submit a withdrawal of the application to the Administrative Regional Court.
For further information:
Dace Jansone
Head of Communications Division
Phone: +37167774808
E-mail: