Remote VASP serving residents in Ukraine

Law of Ukraine "On Virtual Assets" (Закон України "Про віртуальні активи"): Link to Ukrainian Parliament (Verkhovna Rada) website - official legislative acts (You may need to use a translation tool for the full text).

While the VA Law is in force, its full implementation, particularly the practical licensing mechanism, depends on the adoption of secondary legislation (resolutions, procedures, and detailed requirements) by the NBU and MinDigital.

As of late 2023/early 2024, this secondary legislation has not yet been fully adopted, meaning the actual process for obtaining a license is largely suspended or not fully operational. The focus of the government has been on wartime priorities.

National Bank of Ukraine (NBU): Responsible for the regulation of virtual assets secured by currency (fiat-backed stablecoins) and for payment services involving virtual assets.

Ministry of Digital Transformation of Ukraine (MinDigital): Responsible for the regulation of other types of virtual assets, including licensing of Virtual Asset Service Providers (VASPs).

State Financial Monitoring Service of Ukraine (SFMS): Responsible for financial monitoring of transactions with virtual assets and ensuring compliance with AML/CFT legislation.

Exchange services between virtual assets and fiat currencies. (This covers traditional crypto exchanges).

Exchange services between different virtual assets. (Also covered by crypto exchanges).

Evidence fact ua.licensing.transfer-of-virtual-assets not found (may have been renamed).

Custody and/or administration of virtual assets or instruments enabling control over virtual assets. (This covers custody providers).

Participation in and provision of financial services related to the issuance/sale of virtual assets.

For exchanges (providers of exchange services between virtual assets and fiat): Potentially around UAH 10 million (approx. $250,000 - $300,000, subject to exchange rate fluctuations).

For other VASP activities (e.g., custody, transfer): Potentially around UAH 5 million (approx. $125,000 - $150,000).

Law of Ukraine No. 361-IX "On Preventing and Counteracting Legalization (Laundering) of Criminal Proceeds, Terrorist Financing and Financing the Proliferation of Weapons of Mass Destruction" (dated December 6, 2019, with subsequent amendments).

This is the foundational AML/CFT law in Ukraine, bringing the country's framework closer to FATF recommendations and the EU's 4th and 5th AML Directives. It designates "virtual asset service providers" as "reporting entities" (subjects of primary financial monitoring).

Law of Ukraine No. 2074-IX "On Virtual Assets" (dated February 17, 2022).

Exchange between virtual assets and fiat currencies.

Exchange between one or more forms of virtual assets.

Transfer of virtual assets.

Safekeeping and/or administration of virtual assets or instruments enabling control over virtual assets.

Participation in and provision of financial services related to an issuer’s offer and/or sale of a virtual asset.

Identification and Verification:

For Individuals: Obtain and verify the customer's identity, including full name, date of birth, place of birth, address, identification number (where applicable), and details of the identity document (series, number, date of issue, issuing authority). Verification must be based on reliable, independent source documents, data, or information.

For Legal Entities: Obtain and verify the legal entity's name, registration number, legal form, legal address, contact details, and identify the management structure.

Beneficial Owner (UBO) Identification: Identify and take reasonable measures to verify the identity of the beneficial owner(s) of the customer. This is crucial for both individuals (e.g., if acting on behalf of another) and legal entities.

Understanding the Business Relationship:

Conduct ongoing monitoring of the business relationship and transactions undertaken throughout the course of that relationship to ensure consistency with the VASP's knowledge of the customer, their business, and risk profile. This includes monitoring the source of funds and the destination of virtual assets.

Enhanced Due Diligence (EDD):

Customers who are Politically Exposed Persons (PEPs), their family members, or closely associated persons.

Transactions involving high-risk jurisdictions.

Complex, unusually large, or unusual patterns of transactions that have no apparent economic or lawful purpose.

Non-face-to-face business relationships without adequate safeguards.

Transactions above specific thresholds (e.g., equivalent of UAH 400,000 for certain types of operations, though suspicion requires reporting even below this).

Mandate: The Law "On Virtual Assets" mandates that any entity providing virtual asset services, including custody services, must obtain a permit (дозвіл). This permit functions similarly to a license.

Definition of VASP: Article 1 of the Law defines a "Virtual Asset Service Provider" (VASP) as a legal entity that, as part of its business activities, performs one or more of the following services for or on behalf of another natural or legal person:

Evidence fact ua.custody.safekeepingandor-administration-of-virtual not found (may have been renamed).

Issuing Authority: The NSSMC is generally responsible for issuing these permits. For virtual assets secured by monetary values, the NBU would be the responsible authority.

Specific Conditions: While the Law mandates permits, the specific conditions and procedures for obtaining these permits (e.g., capital requirements, personnel qualifications, technical requirements) are to be established by normative legal acts of the NSSMC and NBU. These specific acts are still largely in development or pending full implementation.

Separate Accounting: Article 12, Part 2, Point 2 requires VASPs to maintain separate accounting records for their own virtual assets and those of their clients. This is a foundational step towards ensuring client assets are not commingled with the VASP's proprietary assets.

AML/CFT Compliance: Obtaining a permit is intrinsically linked to strict adherence to the AML/CFT Law, including KYC procedures, transaction monitoring, and reporting suspicious activities.

Legal Basis: Criminal Code of Ukraine (Кримінальний кодекс України), Code of Administrative Offenses of Ukraine (Кодекс України про адміністративні правопорушення).