Sources of Legal Regulation of Compliance in Ukrainian Banks
Authors: Sheludko Sergii 
Published: June 2023

Problem setting. The banking sector plays a crucial role in the economy and therefore needs to function in a comprehensive and effective legal environment. In order to monitor compliance with current requirements, banks organize compliance offices, whose activities are regulated by numerous scattered provisions of national and international law. Analysis of recent researches and publications. The legal regulation of banking activity is constantly becoming the center of attention of practitioners, government experts and scientists, in particular E. Dmytrenko, L. Kasianenko, I. Tovkun. The legal regulation of compliance in banking and financial institutions has not yet received adequate coverage in legal studies, but certain aspects of it were considered in their works by M. Mozharovskyi, A. Mulyk, and N. Patsuriia. Purpose of the research is to systematize and analyze the sources of legal regulation of compliance in Ukrainian banks. Article’s main body. Banking activity in Ukraine is regulated by more than 2,500 regulatory and legal acts, which causes serious difficulties both for the sector itself and for regulatory and supervisory authorities. Legal norms, which form the institution of compliance, create the system, so they should be summarized using a hierarchical approach. Although the act of the highest legal force – the Constitution of Ukraine – does not directly mention either compliance or meeting the requirements in the banking sector, its individual provisions in one way or another relate to the necessity and importance of compliance with current norms: this is Art. 6, which defines the obligation to fulfill the requirements of legislation at the national level; Art. 13, 19, 41, 47, 65, which refer to personal compliance in certain spheres of public life. An important place in the system of sources of legal regulation of banking compliance is occupied by foreign legislative acts, with which Ukraine has brought national laws into compliance – in particular, documents from the EU Acquis. Thus, Directive 2015/849 specifies that banks must develop an internal compliance management policy, appoint a special manager, and can exchange information on compliance control between officials within the same bank or banking group. In 2021, for the first time, a holistic concept of the organization and operation of the compliance service within the bank was enshrined in legislation. Amendments to the Law “On Banks and Banking Activity” determine the obligation to form a compliance unit, the exclusive competence of the Bank’s Council regarding it, qualification requirements, status and powers of the Chief Compliance Manager. The leading normative document that defines the organizational and legal foundations of the service for ensuring the fulfillment of requirements is the Regulation of the NBU On the Organization of the Risk Management System in Ukrainian Banks and Banking Groups. It complements and expands the norms of the relevant Law regarding the appropriate status and qualifications of the Chief Compliance Manager, approaches to compliance risk management, and the place of the compliance department in the bank’s risk management system. Other regulatory documents of the National Bank of Ukraine, including the Regulation on the Organization of the Internal Control System in Ukrainian Banks and Banking Groups and the Regulation on Licensing of Banks, extend compliance regulation to related areas of bank activity. Mainly, these sources are harmonized with the international legal standards on this issue, first of all – with the Principles of Corporate Governance in Banks of the Basel Committee on Banking Supervision. Conclusions and prospects for the development. Therefore, the sources of legal regulation of compliance form a complex system of international standards, Ukrainian laws and by-laws of the NBU. Dispersion of relevant norms complicates and further weakens the effectiveness of state influence on relations regarding compliance with applicable requirements in the banking sector. Therefore, the codification of these sources is a promising direction of scientific and applied studies