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Ministry of Justice of Ukraine

September 17, 2012

No. 1590/21902

RESOLUTION OF BOARD OF THE NATIONAL BANK OF UKRAINE

of August 17, 2012 No. 346

About approval of the Regulations on application of corrective actions by the National Bank of Ukraine

(as amended on 05-07-2021)

According to article 56 of the Law of Ukraine "About the National Bank of Ukraine", article 74 of the Law of Ukraine "About banks and banking activity" and for the purpose of increase in efficiency and providing the proper organization of implementation of the liquidating procedure of the Board of the National Bank of Ukraine DECIDES: banks

1. Approve Regulations on application of corrective actions by the National Bank of Ukraine which are applied.

2. Recognize invalid regulatory legal acts of the National Bank of Ukraine according to the list which is attached.

3. The liquidation procedure of bank begun to the introduction in operation of the Law of Ukraine "About system of guaranteeing household deposits" comes to the end according to the procedure established by the legislation which was effective to the introduction in operation of this Law.

4. (Novikov V. V.) to submit to department of normative and methodological ensuring bank regulation and supervision (Ivanenko N. V.), Legal department this resolution on state registration to the Ministry of Justice of Ukraine.

5. To department of normative and methodological ensuring bank regulation and supervision (Ivanenko N. V.) after state registration in the Ministry of Justice of Ukraine to report contents of this resolution to structural divisions of central office, territorial administrations of the National Bank of Ukraine, and also liquidators of banks for use in work.

6. The resolution becomes effective from 22:09. 2012, but not earlier than day of its official publication.

7. To impose control over the implementation of this resolution on the vice-chairman of the National Bank of Ukraine Sorkin I. V.

Acting Chairman

I. V. Sorkin

Approved by the Resolution of Board of the National Bank of Ukraine of August 17, 2012 No. 346

Regulations on application of corrective actions by the National Bank of Ukraine

I. General provisions

1. Basic provisions

1.1. This Provision is developed according to the Laws of Ukraine "About the National Bank of Ukraine", "About banks and banking activity" (further - the Law on banks), "About prevention and counteraction of legalization (washing) of income gained in the criminal way, to financing of terrorism and financing of distribution of weapons of mass destruction" (further - the Law on prevention of legalization), "About currency and currency transactions" (further - the Law on currency), "About financial services and state regulation of the markets of financial services" (further - the Financial services act), the legislation of Ukraine on economic societies, on consumer protection of financial services, other legal acts of Ukraine and regulatory legal acts of the National Bank of Ukraine (further - National Bank).

1.2. This Provision determines the bases and procedure for application by National Bank of corrective actions, financial / penalties (further - corrective actions) for violation by banks, branches of foreign banks and other persons who are covered by supervising activities of National Bank, the bank, foreign exchange legislation, regulatory legal acts of National Bank, its requirements established according to article 66 of the Law on banks, legislations in the sphere of prevention and counteraction of legalization (washing) of income gained in the criminal way or to terrorism financing namely: The law on prevention of legalization, the Law on banks regarding prevention and counteraction of legalization (washing) of income gained in the criminal way, to financing of terrorism and financing of distribution of weapons of mass destruction, the regulatory legal acts of National Bank regulating activities of banks in the sphere of prevention and counteraction of legalization (washing) of income gained in the criminal way, to financing of terrorism and financing of distribution of weapons of mass destruction (further - the legislation concerning financial monitoring) consumer protection laws of financial services, including requirements for interaction with consumers in case of settlement of overdue debt (requirements of rather ethical behavior), or implementation of risk activities which threaten interests of investors or other creditors of bank, and also in case of application by foreign states or interstate associations or the international organizations of sanctions against banks or owners of essential participation in banks which pose threat to interests of investors or other creditors of bank and/or banking system stability (further - application of foreign sanctions).

1.3. Terms which are used in this Provision are used in such values:

application by foreign states or interstate associations, or the international organizations of sanctions against banks or owners of essential participation in the banks posing threat to interests of investors or other creditors of bank and/or banking system stability (further - application of foreign sanctions), - the acceptance fact foreign state, interstate consolidation or the international organization of the decision on application to bank or the owner(s) of essential participation in bank of sanctions;

the transactions performed by bank - are actions or events during provision of banking and other financial services, implementation of other activities owing to which there are changes in financial condition of bank which are displayed on balance sheet or off-balance bank accounts;

the stop of transactions - temporary, for certain term, prohibition to bank to perform separate transaction types;

restriction of transactions - temporary, for certain term, prohibition to bank to perform separate transaction types taking into account the set restrictions on type/amount/amount/circle to clients/region;

the termination of transactions - termless prohibition of implementation by bank of separate transaction types;

the authorized officer of National Bank - the official of National Bank who has right to sign of documents on behalf of National Bank according to the legislation of Ukraine or regulatory legal acts of National Bank, or the ordering documents of National Bank or the power of attorney.

Other terms which are used in this Provision are used in the values determined in the Law on banks and other legal acts of Ukraine and regulatory legal acts of National Bank.

2. Corrective actions which are applied by National Bank

2.1. The National Bank applies to banks of corrective action, the stipulated in Article 73 Laws on banks.

2.2. The National Bank for violations in activities of separate division of bank applies corrective actions directly to bank - the legal entity (except for temporary discharge of the official of separate division of bank from position).

The National Bank has the right to make the decision on the termination of implementation by separate division of bank of transactions according to part six of article 23 of the Law on banks.

2.3. The National Bank applies to branches of foreign banks of corrective action, provided by part one (except Items 2, of 4, 9 regarding the owner of essential participation and person who acquired or increased essential participation in bank with violation of requirements of article 34 of the Law on banks, 10 and 12 regarding reference to category of insolvent) article 73 of the Law on banks.

In case of assumption branch of foreign bank of violations of the bank, foreign exchange legislation, legislation concerning financial monitoring the National Bank can make to foreign bank demands concerning their elimination, report about the allowed violation to supervisory body of foreign state both before application of adequate corrective actions, and after their application.

The branch of foreign bank not later than three working days from day of receipt of the decision of National Bank on application of corrective action to it (the written requirement) reports about it to foreign bank and supervisory body of the corresponding foreign state.

2.4. The National Bank applies to banking group, the responsible person of banking group, other members of banking group of corrective action, the stipulated in Article 73 Laws on banks (except Items 2, of 12, 13 parts one of this Article).

The National Bank in case of need of application of corrective actions to non-bank financial institution which is member of banking group for violation of the bank law addresses state body which exercises supervision of it, concerning application to this person of adequate corrective actions.

2.5. The National Bank applies to other faces which are object of check of National Bank according to the Law on banks, the corrective actions provided by Items 1, of 9, 10 parts one of article 73 of the Law on banks.

3. Bases and procedure for application of corrective actions

3.1. The National Bank applies corrective actions for violation by banks, their separate divisions, branches of foreign banks, banking groups, responsible persons of banking groups, other members of banking groups or other faces which are object of check of National Bank under the Law on banks (further - banks), the bank, foreign exchange legislation, the legislation concerning financial monitoring, the consumer protection law of financial services, including requirements for interaction with consumers in case of settlement of overdue debt (requirements of rather ethical behavior), or implementation of risk activities which threaten interests of investors or other creditors of bank (further - risk activities), or in case of application of foreign sanctions, based on results (materials):

inspection checks of activities of banks;

checks of banks concerning financial monitoring (exit check concerning financial monitoring, permanent supervision concerning monitoring);

permanent banking supervision behind activities of banks;

the analysis of observance by banks of requirements of the bank law with use of the statistical reporting, monthly and daily balances and so forth;

audit inspections of banks by auditing firms which have the right according to the legislation of Ukraine to carrying out external audit of banks;

checks of observance by banks of the foreign exchange legislation;

control of elimination by banks of the violations revealed in their activities, accomplishment of decisions of National Bank on application of corrective actions, accomplishment of the imposed (made) demands, the termination of implementation of risk activities, compliance of goodwill of heads of banks to requirements of the legislation of Ukraine;

proposals of the curator of bank;

containing information obtained from relevant organs of other states, interstate associations or the international organizations, public authorities of Ukraine, and/or officially published (promulgated, including by placement on their official sites) them information on application of foreign sanctions;

supervision of observance by banks and other faces which are covered by supervising activities of National Bank, requirements of the bank law and regulatory legal acts of National Bank concerning registration and licensing of banks, acquisition (increase) of essential participation in bank and disclosure of information on structure of property;

supervision of observance of requirements of regulatory legal acts of National Bank by banks which introduce restrictions on carrying out transactions which have the purpose / break, promote or can promote avoidance/violation of the restrictions set by special personal economic and other rationing measures (sanctions).

supervision of observance of the consumer protection law of financial services by banks, including requirements for interaction with consumers in case of settlement of overdue debt (requirements of rather ethical behavior).

3.2. Corrective actions which are applied by National Bank to banks shall be adequate to specific violations which were allowed by them.

The choice of the adequate corrective actions applied to banks according to the Law on banks and this Provision shall be performed taking into account:

nature of the violations allowed by bank;

the reasons which caused emergence of the revealed violations;

general financial condition of bank;

the size of possible negative consequences for creditors and investors;

possible reputation risks for bank;

information of Fund of guaranteeing household deposits (further - Fund of guaranteeing) concerning violation by banks of the requirements established by the Law of Ukraine "About system of guaranteeing household deposits" (further - the Law on system of guaranteeing), results of check of banks by Fund of guaranteeing [are not considered during the choice of corrective actions for violations of the law in the sphere of financial monitoring and the foreign exchange legislation, requirements of regulatory legal acts of National Bank which introduce restrictions on carrying out transactions which have the purpose / break, promote or can promote avoidance/violation of the restrictions set by special personal economic and other rationing measures (sanctions)].

3.3. The decision on application of corrective action is made by Board of National Bank or Committee on questions of supervision and regulation of activities of banks, supervision (oversight) of payment systems (further - Committee on questions of supervision) according to this Provision.

The fact of implementation by bank of risk activities is determined by Board of National Bank or Committee on questions of supervision.

The National Bank has the right to draw conclusion on implementation of risk activities by bank based on analysis results of the reporting of bank, by results of banking supervision, checks of observance by banks of requirements of the foreign exchange legislation or the legislation concerning financial monitoring.

In particular, can be signs of making by bank of risk activities:

1) implementation of the transactions by bank (directly or indirectly) which do not have obvious economic feasibility (sense);

2) implementation of indirect crediting of the faces tied with bank;

3) non-inclusion in the list of the faces tied with bank having coherence signs with bank and with which the bank performs transactions directly or indirectly;

4) implementation of the transactions with securities having fictitiousness signs;

5) use of financial instruments by bank that leads to artificial improvement of financial result of bank or misstatement of its reporting;

6) early return of the urgent means involved from persons connected with bank;

7) single gross or systematic violation of the legislation by bank in the sphere of the cash address.

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