A committee of Ukraine's parliament, the Verkhovna Rada, has voted to send a bill on parcel taxation authored by lawmaker Danylo Hetmantsev to a full vote, rejecting an attempt by the Cabinet of Ministers to rewrite a related amendment on politically exposed persons, or PEPs, that risked blocking financial assistance to Ukraine.
Hetmantsev, writing on Telegram, said the committee had recommended that parliament adopt bills No. 15460 and No. 16051-1 as a basis and in full. The bills amend the Tax and Customs Codes regarding value-added tax on e-commerce transactions.
The government had submitted a new version of its amendment to bill No. 16051, which deals with parcels, but the committee instead recommended backing an alternative bill that does not contain that amendment.
What the PEP rule change would have done
Under a decision the Rada voted on in June, enhanced financial monitoring of PEPs would by default end 12 months after a person leaves their public position. Monitoring could only be extended where there was a documented and justified finding of high or unacceptably high risk.
That June amendment never took effect because Ukraine's international partners objected to what was described as a presumption that risk automatically falls after a PEP leaves office. Finance Minister Serhiy Marchenko said that if a law containing such a provision were signed, any assistance from the European Union could be blocked as a result.
Why PEP monitoring matters
Politically exposed persons are officials, their relatives and close associates who are subject to extra scrutiny under anti-money laundering rules because their public roles could make them targets for bribery or the misuse of state funds. Financial institutions and regulators worldwide apply enhanced checks to their transactions.
In a memorandum issued in June, the International Monetary Fund said the change to Ukraine's financial monitoring rules would weaken the PEP oversight regime and take the country's anti-money-laundering and counter-terrorism-financing system out of line with the standards set by the Financial Action Task Force, the global body that sets rules for combating money laundering and terrorist financing. Ukraine's compliance with those standards has been a condition tied to continued international financial support during the war.
PEPs push back against IMF
The politically exposed persons affected by the rule have themselves appealed to the IMF, asking the Fund to examine the amendment passed by the Verkhovna Rada more closely and not use it as grounds to block aid to Ukraine.
The committee's recommendation now goes to the full Verkhovna Rada for a vote, with lawmakers set to decide whether to adopt the Hetmantsev-authored bills rather than the government's rewritten version.
