The law specifies the list of services which shall be considered financial; prohibits the provision of financial services not included in this list; enables relevant state bodies to decide on pertaining of operations to a certain type of financial services. Moreover, financial establishments, already operating on the market, can continue their activities until expiry of the license.
ForUm has asked MPs and experts what these innovations mean for common Ukrainians.
Viktor Shvets, first deputy chairman of the parliamentary committee on legal policy:
- The law aims at combating pyramid schemes, pseudo-credit unions, etc. We hope that the law will be effective and will make frauds impossible to realize. However, I am afraid these amendments may open the door to corruption in the licensing system, though we can learn about it only after the implementation in practice. That's what we are here for - to trace illegal processes.
Oleksiy Komarov, analyst of Istrats company:
- It is comforting that the authorities finally try to take in hand all those scammers on the financial market. For the last 20 years Ukrainians have seen a lot - financial pyramids, dishonest credit unions. There have been several high-profile cases when credit unions cheat population, and it is very difficult to bring them to account. Thus, I also welcome the initiative of the National Bank on strengthening control over credit unions. Indeed, Ukraine's financial markets need more state control.
Vitaly Melnychuk, economist:
- Opinions vary on the new law, but in general it is expected to be efficient. The new document defines the activity of financial operators, including illegal financial pyramids. From now on, if a business entity does not have the legal right to attract money, if won't be able to do it. Moreover, legal economic operators will no longer be able to abuse attracted means outside the legal field and state control. The law aims at unshadowing of economy, though for its effectiveness we still need a full complex of legal acts, as well as improvement of legislation on activities of controlling and force authorities.
Mykhailo Strishenets, detective office of Interior Ministry department on fight against cyber crime:
- I would like to focus on financial frauds in Internet. The Interior Ministry has calculated that there are about 100 big financial pyramids operating in Ukrainian internet space. Several years ago they were only a few. Take for example a case in Dnipropetrovsk, when scammers created a website and called upon people to deposit money to earn 100% per annum, or a case in Odessa, when scammers invited to invest a certain sum to get an auto. We are working on these cases, but due to poor legislation in this sphere we have no legal instruments to bring these people to liability. According to the current legislation, we can hold scammers accountable only if there are official complaints from victims, but citizens are afraid to report, especially if there are relatives involved. Such fears are groundless, as we will charge only the final recipient, not all participants of the pyramid. The legislation on cyber crimes must be improved, and amendments adopted by the parliament are very helpful.
Volodymyr Oliynyk, deputy chairman of the parliamentary committee on legal provision of law enforcement activity:
- The law aims at combating organizations simulating financial activity to deceive people - MMM, pyramid schemes, virtual financial organizations. Though such structures are not as widespread in Ukraine, as in other countries, it is better to have legal instruments to prevent unlawful acts. These "businessmen" play on people's heartstrings. If a person hears that for one hryvnia in the morning he can get 100 in the evening, he will agree to such tempting offer, even if deep down he understands it is impossible.
Oleksandr Yedin, head of the parliamentary subcommittee on activity of non-bank financial establishments:
- The new law enables relevant state agency, the National Commission on control over financial services market, to influence financial pyramids, including infamous Kings Capital. In fact, the draft bill has been developed in fulfillment of an article of the State program on economic and social development of Ukraine for 2010. According to the article 5 of the law "On financial services and state control over financial services market", the right to carry out financial activities is granted to financial establishments, and if expressly provided by law, to individual entrepreneurs. The exclusive right or other restrictions on separate services are determined by the laws on activities of a relevant financial establishment and enactments of state regulators.
However, there are cases of rendering services, which are fundamentally financial, but are not qualified as such and are not regulated by the law. Such state of things weakens consumer protection, as people risk falling across scammers and financial pyramids. The new law fixes all gaps.
Volodymyr Chernyak, Doctor of Economics:
- Of course, it is necessary to fight financial scams and to regulate the market of financial services. The question is how. Following THIS law, there is a risk of corruption, when officials will abuse their right to issue licenses. Moreover, officials may try to bypass the defined list of financial services, which will also cause negative consequences. The intentions are good, but in my opinion, the market of financial services should be controlled by right of licensing. However, the licensing procedure must be improved first: to include restrictions preventing financial scams, to make it transparent on the basis of competitive bidding, not express prohibition.
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