Stress testing of banks, new corporate governance requirements for financial companies, authorization of insurance intermediaries - what legislative novelties await the market of financial institutions in 2025

From January 2025, the National Bank of Ukraine is updating a number of legal acts for its supervised entities (banks, payment institutions, financial companies, etc.). The changes concern such aspects as the resumption of stress testing of banks, approval of the procedure for authorization of insurance intermediaries, regulation of requirements for corporate governance and internal control systems of financial companies, etc. In addition, the NBU published plans for inspections of supervised entities for 2025.

Among the most important news, in our opinion, are the following.

1. News for banking institutions

1.1. Resumption of stress testing of banks. In 2025, the NBU will resume stress testing of banks in accordance with the approved "Technical Terms of Reference for Assessing the Stability of Banks and the Banking System of Ukraine in 2025". Stress testing will be conducted in 2025 for 21 banking institutions, accounting for over 90% of the banking system's assets.

1.2. Approval of the approaches to assessing the minimum size of settlement risk to be covered by capital. The National Bank has determined the rules for assessing by banks and banking groups the minimum size of settlement risk that must be covered by capital. The introduction of new requirements will be phased. At the first stage, banks and banking groups must develop or finalize existing intra-bank (intra-group) documents on determining the minimum size of settlement risk. Banks must complete this stage by October 31, 2025, and banking groups - by March 31, 2026.

1.3. Updating the requirements in the field of cyber protection. The National Bank of Ukraine plans to revise some regulations related to the functioning of the cyber protection system and monitoring information security and cyber protection in the banking system of Ukraine.

2. News for the insurance market

2.1. Updating the Requirements for insurance intermediaries. The National Bank of Ukraine has updated the requirements for the activities of insurance intermediaries and the conditions for carrying out activities related to the sale of insurance and/or reinsurance products. A number of transitional requirements are provided for insurers and insurance intermediaries, in particular:

2.1.1. insurance and/or reinsurance brokers currently listed in the broker register are required to register in the new Register of Intermediaries by March 31, 2025 and within three months from the date of implementation of the National Bank of the comprehensive information protection system (CIPS) to update information about themselves in the Register of Intermediaries;

2.1.2. Insurers are required to register their insurance agents/subagents/additional insurance agents in the Register of Intermediaries by March 31, 2025 and update information about such agents within three months from the date of implementation of the CIPS;

2.1.3. Insurers and insurance agents are required to bring the relevant intermediary agreements into line with the requirements of the Law on Insurance within three months from the date of registration of such intermediaries in the Register of Intermediaries;

2.1.4. Insurers and insurance intermediaries are obliged to bring their activities in line with the requirements of the Law on Insurance and the Regulation on the activity of persons, which provide the sale of insurance and/or reinsurance products by September 30, 2025.

2.2. Determining the procedure for disclosing information about an insurance intermediary and the sale of an additional insurance product. The National Bank has determined and updated the procedure for disclosing information about an insurance intermediary and the sale of an insurance product as additional to other goods, works or services. Insurance intermediaries must bring their activities in line with the requirements of the Regulations by May 1, 2025.

2.3. Verkhovna Rada of Ukraine has registered a draft Law on the War Risks Insurance System. The draft Law was developed to protect the insurance interests of individuals and legal entities and is aimed at ensuring compensation for damage caused to such persons as a result of the sale of war risks in Ukraine.

3. News for financial companies

3.1. Regulation of requirements for corporate governance and internal control systems of financial companies. The National Bank has approved the requirements for the corporate governance system and internal control system of financial companies. According to the requirements, a financial company is obliged to organize a comprehensive, adequate and effective internal control system by introducing measures for internal audit, risk management, compliance control and other elements to qualitatively manage operational, compliance risk and other risks inherent in the activities of a particular market participant. Financial companies must bring their activities into line with the new requirements by April 30, 2025.

4. Financial monitoring

4.1. Updating the NBU's requirements in the field of financial monitoring. The National Bank has adopted the Regulation on the procedure for organizing the implementation of certain legislative requirements in the field of financial monitoring, currency supervision, supervision in the field of implementation of special economic and other restrictive measures (sanctions) during martial law. The Regulation, in particular, provides for the application by financial institutions during wartime of: i) a simplified mechanism for identification and verification by banks of buyers of domestic state loan bonds "Military Bonds"; ii) increased limits for banks to implement simplified methods of remote identification and verification of individual clients; iii) a special procedure for updating client data in conditions when it is not possible to establish contact with them, etc.

4.2. Plan of on-site inspections on financial monitoring issues for 2025. The National Bank of Ukraine has planned on-site inspections on financial monitoring, compliance with currency and sanctions legislation of seven banks and nine institutions in 2025.

We recommend that financial institutions begin to implement the new requirements in advance. PwC specialists in Ukraine are ready to help with such implementation. If you are interested, please contact Vadym Romaniuk, Head of the Banking and Finance Law practice, and Mykola Aleksandrov, Manager of the Banking and Finance Law practice.