Courts may restrict access to NBU banking secrecy: draft law registered in the Rada

The Verkhovna Rada has registered draft law No. 15555, which proposes to change the rules for the disclosure of banking secrecy by the National Bank of Ukraine. The new restrictions will not apply to all banking information, but to data that the NBU receives from banking supervisory authorities of other states. The changes are necessary to bring Ukrainian legislation closer to EU requirements.

Why do they want to change the rules

The basis for the legislative changes was the assessment of the European Banking Authority (EBA). European experts identified a number of differences between Ukrainian confidentiality rules and the requirements of Directive 2013/36/EU.

In particular, in Ukraine, the range of bodies to which the NBU can transfer confidential information is wider than that provided for by European rules.

Ukrainian legislation also allows for the provision of banking secrecy to courts more widely, while the European directive establishes stricter restrictions.

Another problem is the lack of a direct requirement to obtain the consent of a foreign regulator before disclosing confidential information transferred by it.

The lack of a positive assessment by the EBA, as the authors of the bill note, complicates the exchange of data between the NBU and the central banks and financial regulators of the European Union countries.

What banking secrecy is proposed to be protected

The bill No. 15555 does not provide for a general ban on courts receiving banking secrecy.

The new rules will apply specifically to information that the National Bank received from the banking supervision authority of another state.

The corresponding amendments are proposed to be made to the Civil Procedure and Commercial Procedure Codes.

If a party to the case asks the court to request such information as evidence, the court will have to dismiss the motion.

A similar rule is planned to be established for applications for securing evidence.

The court will verify where the NBU obtained the information from

In cases of disclosure of banking secrecy, the court will have to establish the origin of the relevant data.

If it turns out that the information was transferred to the National Bank by the banking supervision authority of another state, the application for its disclosure should be dismissed.

Thus, the key criterion will be not only the content of the information, but also the source of its receipt by the National Bank.

The NBU will be able to appeal the court decision within five days

The draft law provides for a separate mechanism for the National Bank to protect information received from foreign regulators.

If the court nevertheless decides to disclose such data, the NBU will have the right to appeal it within five days.

If the National Bank was not notified of the case, the countdown of this period will begin from the moment of receiving a copy of the court decision.

The consent of the foreign regulator will not be enough

It is also proposed to strengthen control over the further use of the information received.

The NBU will be able to disclose banking secrecy transferred by a foreign banking supervision authority only with its consent.

At the same time, the information will be used exclusively for the purposes specified in the relevant consent of the foreign regulator.

Thus, the body that transferred confidential data to Ukraine will actually retain control over the permissible purposes of their further disclosure.

Why does Ukraine need these changes

The main goal of draft law No. 15555 is to bring Ukrainian rules on banking secrecy into line with Directive 2013/36/EU.

A positive assessment by the EBA should open up wider opportunities for the exchange of information between the NBU and European financial regulators. Such data is necessary, in particular, for banking supervision and combating money laundering and terrorist financing.

In addition, a positive conclusion on the confidentiality regime is a prerequisite for the next assessment by the EBA – on the equivalence of Ukrainian regulatory requirements with European ones.

The adoption of the draft law should also contribute to Ukraine’s fulfillment of its European integration obligations and the conditions of the negotiation process for accession to the European Union.