Revolut, a UK-based digital bank, has not received a banking license to operate in Ukraine and has not started the compliance process to formally launch its services in Ukraine, according to the National Bank of Ukraine (NBU).
The NBU’s comments came after Revolut announced its operation in Ukraine on Feb. 11, according to Revolut’s site.
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But on Thursday, the NBU said in a press release that Revolut “is not undergoing the licensing procedure.”
“As of today, Revolut Bank UAB has not received any licenses or permits from the National Bank of Ukraine, has not submitted relevant applications, and is not undergoing the licensing procedure,” the press release says.
The NBU warned Ukrainians that Revolut does not fall under the country’s jurisdiction, meaning that Ukraine is not responsible for any issues that might arise from funds stored in Revolut’s bank accounts. “Revolut Bank UAB is a foreign bank registered in Lithuania that provides financial services under a license allowing it to operate in European Union countries. … Consumer protection laws for financial services and the deposit guarantee system do not apply to Revolut customers,” the NBU wrote.
Talks are in progress
However, after the NBU published its press release, Revolut’s press service told Forbes Ukraine the company “had previously informed the National Bank about our plans in Ukraine and our intention to obtain a Ukrainian banking license.”
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Revolut and the NBU “have begun a regulatory dialogue based on mutual requests from the company and the regulator,” Forbes Ukraine wrote, quoting a reply from the NBU.
Following this article’s publication, Revolut also contacted Kyiv Post to say that they “conducted a thorough evaluation before offering services to Ukrainian residents” and informed the NBU of its plans beforehand.
“Revolut prioritizes compliance with local regulations and conducted a thorough evaluation before offering services to Ukrainian residents on a cross-border basis... We have previously notified the Ukrainian regulator about our plans in Ukraine and we will seek a local license in due course and will work closely with the NBU to bring even more innovative financial services to Ukrainians,” Ingrida Daunaravičienė, Revolut’s communications manager, wrote in an email to Kyiv Post.
The NBU also told Forbes Ukraine that they are in touch with the Lithuanian regulator to understand how Revolut works under the Lithuanian license.
“We are open to dialogue with Revolut and ready to facilitate the start of the company’s licensing process in Ukraine,” the NBU’s press service told Forbes Ukraine.
With no local license, Revolut is only a payment service in Ukraine, not a bank
Opening accounts for Ukrainians in itself is not a violation – other financial services, such as Wise and Revolut itself in the past, have done the same, а former NBU employee told Kyiv Post.
However, what concerns the NBU is that Revolut announced its entry to Ukraine without undergoing the formal licensing procedure with the NBU, which could mislead consumers into thinking that Revolut operates like a regular bank in Ukraine, when in fact it isn’t – for now at least.
“Revolut may violate legislation on advertising financial services and misleading consumers with statements like ‘Revolut has entered the Ukrainian market.’ In reality, Revolut has not entered the Ukrainian market – it only opens accounts for Ukrainians but does not operate in Ukraine as other banks do,” the source told Kyiv Post.
When it started operating in Ukraine, Revolut launched a client check through Ukraine’s Diia eGovernment portal that allows citizens to verify their identities digitally rather than physically.
The NBU could potentially interpret collaboration with Diia as operating in Ukraine without a license, Kyiv Post’s source said.
“I think the National Bank is conducting a thorough legal review, just as Revolut is, to determine whether this could partially be considered business activity – since they conduct verification through Diia, using a Ukrainian counterparty,” the source said.
However, after the article was published, Revolut emailed Kyiv Post to say the company is not entering the Ukrainian market, and that it is only providing services to clients in Ukraine by offering “EU accounts only.”
“Revolut is currently providing services to Ukrainian residents through Revolut Bank UAB, based in Lithuania and supervised by the European Central Bank and the Bank of Lithuania. We offer EU accounts only and we are not planning to open Ukrainian accounts without further authorization. Revolut is providing services to hundreds of thousands [of] Ukrainian customers in the European Union and beyond. We offer instant fee-free payments between Revolut users that connect Ukrainian families around the world,” the email states.
Revolut’s possible Russian ties
Revolut’s possible ties to Russia – its founder being British-Russian businessman Nikolay Storonsky – have also raised concerns in Ukraine.
Russia-born Storonsky condemned Russia’s invasion of Ukraine, though he reportedly renounced his Russian citizenship. There is no publicly available evidence that Storonsky went through with the process.
Ukraine has also imposed sanctions on his father, Nikolai Storonsky senior, who is the CEO of Gazprom Promgaz, a scientific and research institute under Russian oil conglomerate Gazprom.
Storonsky’s Russian connection and sanctions on his father mean the NBU might refuse to grant Revolut a license.
Although the NBU only wrote that Revolut should undergo a compliance check that involves a background check on its founders, it is unclear if the ties would affect its decision.
“When reviewing an application for opening a branch or obtaining a license, the NBU conducts a comprehensive assessment of the founder’s business reputation, financial situation, and proposed business model,” the NBU wrote.
Kyiv Post’s source said the NBU needs to eliminate the risks Storonsky might pose for Ukraine, especially if the billionaire did not renounce his citizenship despite the public statements.
“No one is excluding or removing the reputational risks regarding the beneficiary. Of course, Revolut said the beneficiary renounced Russian citizenship. But that’s words. The National Bank will definitely scrutinize this under a microscope. Honestly, I’m not sure you can just renounce Russian citizenship that easily,” the source told Kyiv Post.
Revolut already had problems getting a banking license in the UK due to an “over-aggressive corporate culture” and “failing to conduct adequate money-laundering checks”, The Guardian wrote.
Storonsky criticised the British regulators, while Reuters wrote that Revolut delayed annual report filing for two consecutive years. However, after three years of regulatory scrutiny, Revolut received a UK banking license with some restrictions.
Meanwhile, the NBU insists that Revolut go through a compliance check in Ukraine, just like other Ukrainian banks on the market.
“We support open competition and the development of financial technologies, but we believe it is important to emphasize that all market participants must operate within legislative and regulatory requirements,” the NBU wrote.
Ukraine’s regulators also warned they would act if Revolut decided to deceive Ukrainians. The NBU said it would “take all necessary measures to ensure the stability of Ukraine’s banking system, respond to violations of the law, and protect the interests of depositors and bank clients.”
At the end of 2021, Revolut registered an office in Ukraine. In March 2022, it allowed Ukrainians abroad to access their funds by linking the app to Ukrainian bank accounts, Kyiv Post previously reported.
Now, Revolut issues virtual bank cards to Ukrainian and lets them make international transfers without fees.
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