НаціональнийбанкУкраїни National Bank of Ukraine 1 International money transfer systems in Ukraine: regulation, analysis of activity and oversight Elena A. Makhayeva Head of Payment Systems Oversight and Settlement Systems Division, National Bank of Ukraine, Ph.D in Economics. 20 May 2011

НаціональнийбанкУкраїни National Bank of Ukraine 2 Regulation of payment systems operation in Ukraine The Law of Ukraine “On payment systems and money transfers in Ukraine”, Payment systems (PS) created by residents of Ukraine Article Operating procedures of a PS are determined by its regulations set out by the payment organisation (PO) of this PS The rules of the PS must set out the following: the PS organisational structure, the terms of membership/participation in the PS, the order of joining/quitting the PS, the order of dispute settlement, the PS risk management, the PS information security system … 9.3. The rules of the domestic PS and international PS, whose PO are residents, must be agreed upon between this PO and the NBU

НаціональнийбанкУкраїни National Bank of Ukraine 3 Regulation of operation of members/participants of international payment systems The Law of Ukraine “On payment systems and funds transfer in Ukraine”, International PS created by non-residents Article Banks as well as NBFI that have a license granted by the State Commission on regulation of financial services markets in Ukraine for transferring funds, are eligible to enter into agreements with the PO of the IPS on membership or participation in these systems. Banks as well as NBFI are obliged to register the concluded agreements according to the procedure established by the NBU When registering agreements, the National Bank of Ukraine is entitled to request the documents showing the procedure of banks and NBFI for transferring funds within these IPS in the territory of Ukraine.

НаціональнийбанкУкраїни National Bank of Ukraine 4 Regulation of operation of domestic and international payment system Resolution on functioning of domestic and international payment systems in Ukraine (the National Bank of Ukraine resolution # 348 dated , amendment # 165 dated , amendment # 6 dated ) are applied to: PS, PO – residents of Ukraine (bank and non-bank institutions, domestic and international organisations, interbank clearing systems, card PS, systems of transferring funds between individuals, … ) Members/participants IPS, PO – non-residents (agreement with a non-resident) The NBU acts as an electronic register of payment systems and their members and participants

НаціональнийбанкУкраїни National Bank of Ukraine 5 International funds transfer systems created by non-residents Ukraine is the recipient of cross-border transfers of funds in millions of UAH (equivalent)

НаціональнийбанкУкраїни National Bank of Ukraine 6 International funds transfer systems created by non-residents I.Russia 1. Unistream7. InterExpress 2. CONTACT8. BLIZKO 3. LEADER9. ALLUR 4. Anelik10. Blitz 5. Fast mail11. Zolotaya Korona – Money Transfer 6. MIGOM II. USA III. Other countries 12. Western Union 17. Coinstar (Great Britain) 13. MoneyGram 18. Xpress Money (Great Britain) 14. VIGO 19. Money Exchange (Spain) 15. U.S. Money Express 20. MEEST (Canada) 16. RIA Financial Services 21. Faster (Kazakhstan) (RIA Money Transfer) 22. Caspian Money Transfer (Azerbaijan)

НаціональнийбанкУкраїни National Bank of Ukraine International funds transfer systems created by non-residents The breakdown of the international money transfer market by the volume of funds received in Ukraine in 2010

НаціональнийбанкУкраїни National Bank of Ukraine International funds transfer systems created by non-residents 2010 received sent Russia50 %Russia 42 % USA 9 %Georgia 6 % Italy 7 %Армения 4.5 % Spain 5 %Uzbekistan 4.5 % Great Britain 3 %USA 4 % Other countries26 %Other countries 39 % Average transfer amount USD 508USD 520

НаціональнийбанкУкраїни National Bank of Ukraine 9 Participants of international money transfer systems created by non-residents √ banks > 150 (85 %)22 systems VTB Bank Privatbank10 agreements Oshchadbank Wolksbank9 agreements Ukrgazbank SKB-bank8 agreements Ukrgazprombank √ non-bank financialUkrainian institutionsFinancial 6 Group √ State post enterpriseUSEP UKRPOSHTA 4

НаціональнийбанкУкраїни National Bank of Ukraine 10 International money transfer systems created by non-residents 2010cross-border transfers Currency code to Ukrainefrom Ukraine Number of transfers Total volume (in thousands of transfer currency units) +/- Number of transfers Total volume (in thousands of transfer currency units) +\- USD3,254,4881,801,322↑ 11 %526,079277,700↑ 18 % EUR946,417317,260↑ 19 %66,72433,610↑ 58 % RUB823,43410,979,570↑ 108 %130,9461,659,833↑ 75 % CAD3,6012,623↓ 9 % UAH120,704214,668↓ 69 %2,7737,519↓ 65 %

НаціональнийбанкУкраїни National Bank of Ukraine domestic transfers 11 International money transfer systems created by banks of Ukraine Name of system and payment organisation Currency code Number of transfers Volume of transfers (in thousands of transfer currency) AVERS, Finance and Credit Bank UAH 122,907 1,511,908 USD 2,426 7,521 Aval-Express, Reiffaisen Bank Aval UAH 562,970 1,259,537 SOFT, Ukrsotsbank UAH 313,542 1,881,757 USD EUR Privat-Money, PRIVATBANK UAH 2,453,147 6,158,953 USD 4,265 6,415 EUR TOTAL UAH 3,452, ,185 USD 6,702 13,963 EUR

НаціональнийбанкУкраїни National Bank of Ukraine 12 Cross-border transfers in 2010 including partner banks and partner systems 12 International money transfer systems created by banks of Ukraine Name of system and payment organisation to Ukrainefrom Ukraine Number of transfers Volume of transfers (in thousands USD) Number of transfers Volume of transfers (in thousands USD) AVERS, Finance and Credit Bank 130,662772,280 28,18919,502 Privat-Money, PRIVATBANK 319,775293,028120,30751,041 SOFT, Ukrsotsbank 99,171 49,796 24,87210,162

НаціональнийбанкУкраїни National Bank of Ukraine 13 The global trend isthe strengthening of the role of the Central Bank in the payment systems area Oversight as a function of the modern Central Bank The NBU Board approved the concept behind implementation of oversight of payment systems in Ukraine - the main NBU policy regulations on implementing the oversight - in their resolution # 426 dated Payment systems oversight is a function of the Central Bank on monitoring, evaluating payment systems operation and, if required, introducing changes into their activity The concept behind introduction of oversight in Ukraine

НаціональнийбанкУкраїни National Bank of Ukraine 14 Oversight in countries of the world Payment Systems Worldwide, WB, 2008 oversight is exerted by the Central Bank of the regular basis Central banks of the statesnumber% Total number (out of 128 central banks) 9272% By income level per capita High (41) 3688% Above average (27) 2281% Below average (37) 1951% Low (23) 1565% By regions of the world EC States-15 (15) 15100% New ЕС members (12) 867% Other developed states (14) 1286% East Asia and the Pacific countries (10) 880% Europe and Central Asia (16) 1275% Latin America and Caribbean countries (23) 1043% Middle East and South Africa (12) 650% South Asia (6) 350% Africa to the South of Sahara (20) 1470% By the number of population > 30 million (34) 2985% > 5 million, < 30 million (48) 3267% 5 million or less (46) 3167%

НаціональнийбанкУкраїни National Bank of Ukraine 15 Goals and objectives of the oversight reliability and effectiveness of Payment and Settlements systems the NBU establishes requirements for PS and SS and evaluates the system on this basis Oversight principles - transparency; - international standards; General principles for international remittance services BIS, World Bank, authorities and possibilities to conduct effective oversight; - consistency (the same requirements are to be applied to all PS, inclusive of the National Bank of Ukraine PS); - cooperation with other state regulators and the Central Bank Oversight is applied to: - systematically important PS; - systems of retail payments and settlements, payment means and payment instruments; - settlement systems on security agreements; - members and participants of international PS created by non-residents The concept behind introduction of oversight in Ukraine

НаціональнийбанкУкраїни National Bank of Ukraine 16 National Bank of Ukraine Thanks for your attention! “Payment systems”