Olha Vasylevska-Smahliuk proposes to scrap a threshold ten times stricter than the EU’s

Olha Vasylevska-Smahliuk, the member of parliament who chairs the subcommittee on payment and information systems and on preventing the laundering of criminal proceeds within the Verkhovna Rada’s finance committee, told an interview with “Ekonomichna Pravda” that Ukraine will sooner or later abandon the option of carrying out financial transactions of up to 5000 hryvnias without identifying the person. The argument she offered was short and categorical: the current rule allegedly contradicts European standards, and “identification is important and needed for any transaction”. What she has in mind is above all cash deposits through self-service terminals, along with the transfers a Ukrainian can still make today without producing a document.

The statement carries every mark of a programmatic one. It came not from a backbencher but from the person who runs the anti-laundering file in parliament and who accompanies the alignment of Ukrainian legislation with the European AML/CFT package. That makes it all the more worth examining on the merits rather than in the genre of a news recap: whether a European standard that the Ukrainian rule contradicts actually exists, and in which direction that standard departs from the Ukrainian one.

Start with what is in force in Ukraine. The rule in question has been alive since 28 April 2020 and flows from Article 14 of Law No. 361-IX on preventing and countering the legalisation of proceeds of crime, the financing of terrorism and the financing of the proliferation of weapons of mass destruction. Its content is plain. A cash transfer of funds inside Ukraine below 5000 hryvnias requires no identification or verification of the payer, provided the operation shows no signs of being linked to other transfers that together exceed the threshold. Anything at or above 5000 hryvnias is identified as a matter of obligation. At today’s exchange rate 5000 hryvnias comes to roughly 100 euros. A Ukrainian, in other words, cannot anonymously top up an account by so much as twice an average grocery bill.

Now to the European standard the MP invoked. It exists, it is written down, and it is available in the primary source. The model currently in force rests on Article 11 of Directive 2015/849, and from 10 July 2027 it gives way to the direct effect of Regulation (EU) 2024/1624, known as the AMLR. Article 19 of that regulation sets out precisely those cases in which an obliged entity must carry out customer due diligence, and each case has its own threshold. An occasional transaction triggers full due diligence from 10 000 euros. An occasional transaction that constitutes a transfer of funds within the meaning of Regulation 2023/1113 triggers due diligence from 1000 euros. An occasional cash transaction requires at least identification measures from 3000 euros. For crypto-asset service providers the threshold drops to 1000 euros, with full due diligence required even below it. Separately, Article 80 bans cash payments for goods and services of 10 000 euros or more from 10 July 2027, while allowing member states to set lower ceilings of their own.

The comparison that follows from all this is one the MP appears not to have made. The Ukrainian identification threshold for a cash transfer stands at around 100 euros. The European identification threshold for a transfer of funds stands at 1000 euros. Ukraine is already ten times stricter than the future EU rule, and it is stricter in exactly the direction she proposes to keep moving.

Hence the first finding of any professional weight: the claim of a conflict with European standards does not survive contact with the text. European law does not require identification for every transaction. It deliberately builds a system of thresholds, because the entire AML/CFT construction is risk-based. Compliance resources are steered towards where the laundering risk is real, instead of being scattered across every mobile top-up. If identification were always and universally required, Article 19 of the AMLR would carry no meaning whatsoever, and with it would collapse the notion of an occasional transaction, the notion of linked transactions, and the whole gradation of due diligence measures from simplified to enhanced. The European legislator spent years reconciling those thresholds and wrote them into a directly applicable regulation for the express purpose of stopping member states from turning financial monitoring into blanket passport control.

The second finding concerns the legal logic of “conflict” itself. Even if the Ukrainian threshold were a hundred times lower than the European one, that would still not constitute a breach. Article 80 of the AMLR expressly permits member states to apply stricter limits than the regulation sets. European anti-laundering law fixes a minimum level of protection and a maximum ceiling for cash settlements, but it does not forbid a state from being more exacting. What breaches the standard is a threshold set too high, because that opens a gap for launderers to walk through. A threshold set too low creates a different problem, and that problem is legal too, but its name is not conflict with a directive. Its name is disproportionate interference.

It is worth saying separately where the impression that the EU demands identification at all times may have come from. No conspiratorial explanation is needed here; the mundane one will do. First, Regulation 2023/1113, the so-called travel rule, does require information on the payer and the payee to accompany every transfer regardless of amount. But that is an obligation on the payment service provider to pass data down the chain, not an obligation on a citizen to produce a passport at a terminal, and for transfers below 1000 euros the provider is not even required to verify the accuracy of that information absent suspicion. Second, for crypto-assets the EU did indeed go for blanket identification and expressly banned anonymous accounts. Transpose that logic mechanically from the crypto market to a payment terminal in a supermarket and you arrive at exactly what was said in the interview. The difference is that the European legislator made no such transposition, and made none deliberately.

There is a further detail this discussion cannot walk past. The ban on cash settlements of 10 000 euros and above, introduced by Article 80 of the AMLR, does not extend to cash deposits and payments made at credit institutions, payment institutions and electronic money issuers. The very type of operation the MP proposes to blanket with identification is the one the European regulation carved out of its strictest prohibition. Those operations stay under the general monitoring of suspicious activity, and the EU considers that sufficient.

Now to the national limits that get quoted so eagerly in this debate. France and Spain cap cash settlements at 1000 euros, with France setting a ceiling of 15 000 euros for non-residents. Greece holds the harshest limit in the Union at 500 euros. Italy, after raising its cap in 2023, allows 5000 euros. Belgium and Portugal stopped at 3000 euros, with a separate 1000 euro threshold for Portuguese taxpayers. Germany, Austria, Finland, Sweden, Luxembourg and Ireland have set no general limit at all. But a caveat is needed here, without which the whole list turns into confusion. These are limits on paying for goods in cash, that is, prohibitions on a method of payment, and not thresholds for identifying a customer in a payment transaction. To measure Greece’s 500 euros against Ukraine’s 5000 hryvnias is to measure two different legal institutions against each other, and most of the errors in the public debate grow out of precisely that. The Ukrainian threshold belongs next to the European 1000 euros for a transfer of funds, and set against that figure it hardly supports the thesis of excessive Ukrainian permissiveness.

There is also a purely constitutional dimension, which for a legal readership weighs more than the arithmetic. Identifying a payer is an interference with the right to privacy and an act of personal data processing. Such interference is permissible, but it has to pass the proportionality test: a legitimate aim, a suitable means, necessity and commensurability. The Court of Justice has already shown, in the cases on beneficial ownership registers, that a noble anti-laundering purpose does not by itself legitimise any and every volume of interference. Explaining which money laundering risk is averted by identifying a person who feeds 200 hryvnias into a terminal will be difficult. Explaining it to the people for whom the terminal remains the only accessible payment channel will be harder still: residents of front-line communities, the elderly, those who lost their documents under occupation, those who have neither a smartphone nor an activated BankID. Financial inclusion in European law is not a statement of politeness. It is a standalone objective, and the EU adopted a directive on basic payment accounts to serve it.

And one last practical circumstance, the one parliament seems to recall least often. Scrapping the threshold does not make small payments transparent; it makes them unattractive. The money that passes through a terminal today and leaves a trace in the system will move into hand-to-hand settlement, where there is no trace at all. Transparency is measured not by the number of passports presented, but by the share of the flow that stays inside the observable perimeter.

Against that background, another initiative of the same MP, which she reported earlier, reads with particular eloquence: raising the mandatory financial monitoring threshold from 400 000 to 550 000 hryvnias. The result is a symmetrical construction running the other way. At the top the threshold goes up, at the bottom it is demolished. Whoever moves half a million gets a little more room, and whoever puts 500 hryvnias into a terminal gets passport control.

If the aim really is harmonisation with EU law, then the honest way to put the question is the exact reverse of the one voiced: should Ukraine’s 5000 hryvnias not be raised closer to the European equivalent of 1000 euros, rather than driven down to zero. And anyone claiming that the current rule conflicts with the standards of the European Union owes us the article and the act it supposedly breaches. Until that article is named, what we are dealing with is not harmonisation but an appeal to Europe that itself needs checking against Europe.