Banks block collateral payments to VAKS: NBU explained who makes the decision

The National Bank of Ukraine stated that it did not instruct banks to automatically block payments made to deposit collateral in criminal proceedings. The regulator emphasizes that each such transaction must be assessed individually by the bank, taking into account the risks.

The issue gained publicity after reports of problems with making payments to deposit collateral to the account of the High Anti-Corruption Court.

In particular, Iryna Mudra’s lawyers stated that banks and payment services refused to carry out transactions allegedly because the payment purpose indicated the word “collateral” and the recipient was the account of the High Anti-Corruption Court.

The High Anti-Corruption Court obliged the NBU to investigate

The High Anti-Corruption Court responded to the situation. As noted in the material, the High Anti-Corruption Court declared a violation of human rights and obliged the National Bank to check within 24 hours whether banks were really blocking such payments.

The NBU reported that they are already analyzing the practice of banks conducting operations related to the provision of collateral, and plan to provide financial institutions with additional explanations regarding the application of a risk-based approach.

NBU: no automatic ban

The National Bank emphasized that they did not give banks instructions either to automatically refuse to pay collateral to the VAKS, or to necessarily conduct such operations.

The decision on a specific transaction is made by the bank itself after its analysis.

The financial institution can check:

the source of origin of funds;

the financial condition of the payer;

the participants in the transaction;

other circumstances that may indicate increased risk.

The word “collateral” is not a reason to automatically block a payment

The NBU separately emphasized: the very fact that money is transferred as collateral in criminal proceedings does not automatically make the operation suspicious and is not an independent reason for refusing to conduct it.

Similarly, PEP status alone cannot be an automatic reason for denial of service.

Thus, banks should assess each collateral payment individually, and not block it solely based on the purpose of the payment or the status of the person. The NBU, in turn, continues to analyze the situation and should provide banks with additional clarifications.