News (#3 March 2018)



European Parliament simplified online purchases in EU

On 6 February members of the European Parliament adopted a resolution to ban geo-blocking by obliging retailers to provide people with access to goods and services on the same terms throughout the EU, regardless of the country where the purchase is made.

Geo-blocking is any restriction imposed by online shops on the basis of citizenship, place of residence or the place of connection of a customer.

Online customers in the EU face a range of problems when trying to buy in another country. For example, they are redirected to sites where certain types of goods or services are not available or offered at an unreasonably high price. Or sites do not accept credit cards from other EU countries or make registration impossible due to place of residence in another country.

The European Commission, having analyzed thousands of sites across the EU, found that only in 37% of cases were people able to make their purchases in another EU country and buy the goods they wanted.

New rules shall apply to a wide range of goods and services, including physical goods (furniture and electronics), online services such as cloud services or website hosting, and entertainment services (tickets to amusement park and concerts). The rules will come into force by the end of 2018.


AMCU recognized lottery industry regulation to be inefficient

The Antimonopoly Committee of Ukraine has refused to support license terms for lotteries proposed by the Ministry of Finance of Ukraine and recognized industry regulation to be inefficient in general. The authority emphasized that there has been a critical drop in revenues to the state budget from lotteries in recent years accompanied by the flourishing of the illegal market.

It said this is an illegal gambling market disguised as a lottery (the shadow sector is getting towards 80%), and noted the fall in budget revenues collected from lotteries: 2013 UAH 321 million, 2015 UAH 26.5 million, and chaotic location of lottery distribution and holding points, and lack of control over access by minors, a lack of independent control over equipment and software used by market operators, and much more.

The AMCU is currently preparing a list of proposals for submission to the Cabinet of Ministers, with particular attention being paid to the introduction of certified software for all market participants.

Banking & Finance

Banks began banning customers from buying crypto currencies with credit cards

Bank of America and JPMorgan Chase, American financial holdings, have begun rejecting payments for crypto currency carried out using personal credit cards.

JPMorgan began banning similar transactions on 3 February due to credit risk concerns, while Bank of America started its ban 2 February. The ban imposed by Bank of America is applied exclusively to credit cards. Clients who use debit cards can still carry out transactions.

Bank of America explained this decision by anti-money laundering, as well as by potential opportunity for conversion of stolen credit cards into crypto currencies.

Also, it became known that the Lloyds Banking Group, a British banking group, has banned clients from buying crypto currencies using their credit cards. Lloyds Bank, Bank of Scotland, Halifax and MBNA stopped accepting credit card transactions that involve purchase of a crypto currency.

Capital Markets

List of stock exchanges, which participants will be eligible to get permit to work in Ukraine, is updated

The National Securities and Stock Market Commission updated the list of foreign stock exchanges specifying listed securities by foreign issuers, intending to get permit for their securities circulation on the territory of Ukraine. Corresponding changes were stipulated by the decision of the National Securities and Stock Market Commission No. 870 of 7 December 2017, which entered into force on 6 February.

This list includes: Network of Stock Exchanges, part of Nasdaq, Inc., Stock Exchanges of the Member States of the European Union, New York Stock Exchange (NYSE), as well as London Stock Exchange, Hong Kong Exchanges and Clearing. Earlier, the list consisted of 69 foreign stock exchanges.


General Electric to produce railroad engines in Ukraine

The Cabinet of Ministers has, in cooperation with rail operator Ukrzaliznytsia, brought to a conclusion negotiations with American industrial giant General Electric on the program for UZ rolling stock renewal and production of connection rods.

Ukrainian Prime Minister Volodymyr Groysman has noted that, as agreed, production localization will be at least 40%; moreover, Ukraine will become an integral part of the American companys global production network. He has also claimed that the Beskydy Tunnel, which is the large infrastructure facility significantly expanding possibilities for using rail transport in Western Ukraine, will be commissioned into use this spring.

A reminder that the large-scale production of railroad engines is planned to be carried out using the capacities of the Kryukov Railway Car Building Works.


Cabinet of Ministers excluded three countries from offshore list

The Cabinet of Ministers of Ukraine has excluded Latvia, Estonia and Georgia from the list of countries, transactions with which residents were recognized as controlled ones.

According to certain standards of the Tax Code of Ukraine, these categories of countries include states and territories where corporate profit tax rate (corporation tax) is 5 percentage points or more lower than the same in Ukraine. Moreover, Ukraine also considers such states and territories as also providing preferential tax treatment to business entities or, in fact, allowing them not to pay the specified tax or to pay it at a lower rate if compared to Ukraine.

However, the three countries mentioned provided Ukraine with information that their tax system stipulates corporate profit taxation at a rate of 15-20% when paying out income, which does not meet criteria for the creation of the Ukrainian list of countries with controlled transactions.

Trade Policy

Export Credit Agency

At the initiative of the Ministry of Economic Development and Trade, the Cabinet of Ministers of Ukraine has decided to establish the Export Credit Agency and approved its constituent documents.

The Agency will act as a private joint-stock company (PJSC). The Ministry of Economic Development and Trade has been appointed that is responsible for implementing activities related to the placement of shares of a private joint stock company.

The ECAs authorized capital will be UAH 200 million and will be provided from State Budget funds.

Within the framework of this decision, the government approved the Charter of Export Credit Agency PJSC, Regulations on the Supervisory Board, the Board, the Audit Commission of the Agency, procedure for competitive selection of candidates for positions of members of the ECA Supervisory Board.

The Export Credit Agency will carry out insurance, reinsurance and provision of guarantees under agreements ensuring export development. It will also participate in implementation of programs for partial compensation of interest on export credits and will provide advice to exporters.


Organizations at high risk of cyber attacks

According to the recently published 20th annual EY Global Information Security Survey (GISS), Cybersecurity regained: preparing to face cyber attacks, organizations believe that todays cyber threat landscape places them at a high risk of experiencing cyber attacks.

The survey of nearly 1,200 C-level leaders of the worlds largest and most recognized organizations, examines some of the most urgent concerns about cybersecurity and their efforts to manage them.

The findings show that 56% of those surveyed are making, or planning to make, changes to their strategies and plans due to the increased impact of cyber threats, risks and vulnerabilities. The rapid acceleration of connectivity within their global organizations fueled by the growth of the Internet of Things (IoT) has introduced new vulnerabilities for increasingly sophisticated cyber attackers to exploit. The report reveals that common attacks cyber attacks carried out by unsophisticated, individual attackers successfully exploited vulnerabilities that organizations were aware of, which indicates a lack of rigor in implementing standard security procedures.

The findings also reveal that most organizations continue to increase their spending on cybersecurity, with more than 90% of respondents saying they expect higher budgets this year. With mounting cyber threats demanding a more robust response, 87% say that they require up to 50% more funding. However, only 12% expect to receive an increase of more than 25% this year. Paying regard to the current situation, 75% of heads of information security departments of Ukrainian organizations said they will approach management with a suggestion to increase their IT budget by 50% or more.

76% of respondents say the discovery of a breach that caused harm is most likely to trigger the increased allocation of budgets. By contrast, 64% (compared to 62% last year) said that an attack that did not appear to have caused any harm would be unlikely to prompt an increase in cybersecurity budget, despite the reality that harm caused by a cyber attack may not be immediately obvious.

Many respondents also recognized that the lack of adequate resource allocation can increase cybersecurity risks, with 56% saying that they have made changes or are reviewing changes to their strategies and plans to address this. However, 20% admit that they do not have enough appreciation of current information security implications and vulnerabilities to undertake such a review.

When fighting back against an advanced attack those carried out by sophisticated and well-organized groups many organizations have serious concerns about the level of sophistication of their current cybersecurity systems. A total of 75% of respondents rated the maturity of their vulnerability identification as very low to moderate. A further 12% say they have no formal breach detection program in place, while 35% describe their data protection policies as ad-hoc or non-existent, and 38% either have no identity and access program or have not formally agreed such a program.

The report highlights that organizations with good governance processes underlying their operational approach are able to practice security-by-design building systems and processes that can respond to unexpected risks and emerging dangers. However, the findings also show that there is a long way to go before this becomes standard practice.

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