Tuesday, November 15, 2016

Ukrainian parliament passes president's law on returning funds to duped depositors via Individual Deposit Guarantee Fund

Ukraine's Verkhova Rada has passed the law proposed by Ukraine's president on returning personal savings deposits via the system for guaranteeing the deposits of individuals suffering losses because of banking or other financial fraud (No. 5390)

The law was passed on Tuesday. Some 285 lawmakers supported the measure, more than the 226 simple majority required.

As earlier reported, on November 11, Ukrainian President Petro Poroshenko during a meeting with depositors from Mykhailovsky bank said that he would submit said draft law to parliament urgently.


According to the bill, banks performing the functions of a representative, agent or intermediary when attracting investments must acquaint customers in written form on the ineligibility of guarantee provided for such funds by the Individual Deposit Guarantee Fund (IDGF).

An explanatory note attached to the draft law said such a system would avoid violating the trust of depositors using banks. In particular, this pertains to the scheme under which individuals in banks are offered to sign a loan agreement with non-banking financial institutions via a bank representative. Bank accounts had been opened and funds were transferred to these non-banking entities.

According to the IDGF, Mykhailovsky bank used such a scheme with 14,000 individual depositors for more than UAH 1.5 billion worth of transactions. More than 45% of the depositors were more than 55 years old.

Under the law, IDGF is tasked with studying carefully documents submitted by each individual depositor, and, not later than 20 working days from the date the law takes effect, to begin making payments to return savings deposits.



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