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RESOLUTION OF BOARD OF THE NATIONAL BANK OF UKRAINE

of July 2, 2019 No. 88

About approval of the Regulations on the organization of internal control system in banks of Ukraine and banking groups

According to Articles 7, 15 and 56 Laws of Ukraine "About the National Bank of Ukraine", to Articles 39, 44 and 66 Laws of Ukraine "About banks and banking activity", for the purpose of increase in efficiency of corporate management in banks and banking groups by enhancement of internal control system the Board of the National Bank of Ukraine DECIDES:

1. Approve Regulations on the organization of internal control system in banks of Ukraine and banking groups (further - the Provision) which are applied.

3. Banks of Ukraine / responsible persons of banking groups:

1) shall bring the activities into accord with requirements of the Provision till January 2, 2020;

2) have the right to provide fulfillment of requirements of the Section IV of Provisions in the terms established in appendix to the resolution of Board of the National Bank of Ukraine of June 11, 2018 No. 64 "About approval of the Regulations on the organization of risk management system in banks of Ukraine and banking groups" (with changes).

4. To department of methodology (Natalya Ivanenko) after official publication to inform banks information on adoption of this resolution.

5. To impose control over the implementation of this resolution on the First Deputy Chairman of the National Bank of Ukraine Ekaterina Rozhkova.

6. The resolution becomes effective from the date of, its official publication following behind day.

Acting as Chairman

A. Chury

Approved by the Resolution of Board of the National Bank of Ukraine of July 2, 2019 No. 88

Regulations on the organization of internal control system in banks of Ukraine and banking groups

I. General provisions and terms

1. This Provision is developed according to requirements of the Law of Ukraine "About the National Bank of Ukraine", the Law of Ukraine "About banks and banking activity" taking into account provisions of the Directive 2013/36/EU of the European Parliament and Council of June 26, 2013 about access to activities of credit institutions and prudential supervision of activities of the credit institutions and investment companies, Installations of the European banking supervisor authority about corporate management (on September EBA/GL/2017/11, 26, 2017) regulating the principles of effective corporate management and functioning of internal control system.

2. This Provision determines main objectives and the principles of the organization and functioning of complex, adequate and effective internal control system which are established and carried out on all activities of bank and/or banking group at all organizational levels, and establishes the minimum requirements concerning the organization of this system which functioning is aimed at providing efficiency of corporate management in bank and/or banking group.

3. The bank integrates internal control system in corporate management system of bank in the way:

1) creations of the corresponding organizational structure;

2) determinations in intra bank documents of powers, subordination, accountability, descriptions and distributions of functional obligations of persons involved in functioning of internal control system, their responsibility and order of interaction.

4. The terms used in this Provision are used in such values:

1) internal control - the process integrated into all processes and corporate management of bank, directed to achievement of operating rooms, information komplayens-is more whole than activities of bank;

2) intra bank documents - policy on separate activities of bank, provision, the instruction, technique, the rule, order, decision, orders or documents developed by bank in other form which among other things include the description of procedures/processes, responsibility of employees of bank for accomplishment of functional obligations of internal control by them, distribution of obligations, order of interaction of divisions and employees of bank and other questions concerning the organization and functioning of internal control system in bank, taking into account requirements of this provision;

3) information security - the complex of organizational actions of bank, program and technical and technological means which function at all organizational levels of bank and provide information security from accidental and/or deliberate threats which consequence violation of availability, integrity, confidentiality of information concerning activities of bank or its clients can turn out to be;

4) the control circle of bank - set of subjects of internal control system of bank, procedures, policy on separate activities of bank and other intra bank documents on internal control, and also cultures of control;

5) culture of internal control - respect for the principles determined by bank, rules, regulations directed to knowledge of employees of bank concerning functioning of internal control system in bank and participations of each of workers in these activities (further - culture of control);

6) periodic actions for monitoring - the actions for monitoring of internal control system of bank performed on periodic basis according to separate procedures of activities of bank;

7) division - structural/separate division of bank;

8) the current actions for monitoring - actions for monitoring of internal control system of bank which are built in processes of bank and are performed on permanent basis;

9) internal control system of bank (further - internal control system) - set of organizational structure of bank, procedures, the actions of internal control directed on:

achievement of the purposes by bank, including accomplishment of the planned indicators of its activities, ensuring efficiency and effectiveness of implementation by bank of transactions, safety of its assets;

ensuring efficiency of corporate management in bank by functioning of complex, effective and adequate risk management system; ensuring completeness, timeliness and reliability of creation and provision of financial, statistical, management and other reporting; compliance of activities of bank to the legislation of Ukraine, to regulatory legal acts of the National Bank of Ukraine, standards of professional associations which action extends to bank, and to intra bank documents;

10) judgment of bank - the solution of managerial personnel / collegiate organ of bank in writing concerning implementation of internal control which is based on:

the complex and objective analysis of all information influencing determination of components and criteria of implementation of internal control system;

own experience of bank, is based on reliable, continuous, complete and complete data;

11) functional control - control activities which are performed by the employees of bank responsible for implementation of internal control, on regular basis for the purpose of ensuring control over the implementation of functional obligations with employees of bank according to their job descriptions.

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