National Bank says about 100 insurers in Ukraine hide their real owners' names

Head of Licensing of Insurance Companies with the National Bank of Ukraine (NBU) Dmytro Smal says the ownership structure of about 100 insurance companies in Ukraine is non-transparent, while nearly 90 owners acquired significant participation in insurers without approval by the NBU or the former regulator, namely the National Commission for State Regulation of the Financial Services Market.

Read alsoG7 Ambassadors express support for independence of Ukraine's Central BankHe made the comment following an analysis of insurance companies' owners, the NBU's press service wrote on Facebook on March 18.

The regulator elaborated on four popular schemes to conceal beneficial owners' names.

• Scheme No. 1 is the so-called "football teams," where a company's stake is split between nominal shareholders so that each of them could own a share that is smaller than 10%, since the acquisition of that size of the stake requires the regulator's approval.
• Scheme No. 2 features nominal owners. It has several shareholders who only conceal the real owners under their names. Thus, the documents stipulate certain persons as owners, while the actual owners are other people.
• Scheme No. 3 suggests a trust-like structure, where Ukrainian beneficiaries can shun disclosure of information about them by using foreign (offshore) companies, nominal shareholders or trusts based abroad.
• Scheme No. 4 is the so-called "loopbacks," where an insurer de facto owns itself, while the owner of a minority stake may be a little-known individual.

Also, the National Bank plans to approve the regulation on disclosure of ownership structures soon.

"The document will require full disclosure of real owners of non-bank financial institutions, including insurance companies. Market participants will be given an opportunity to vet their owners and will have time to bring the structure in line with the regulator's requirements," the press service quoted Smal as saying.

Background

The National Bank found out that 46 insurance companies and nine credit unions had violated the mandatory financial standards, following the audit of their reports for the second half of 2020.