From August 5, Ukrainian bank accounts began to be transferred to the European IBAN standard. It was expected that from November 1, the use of IBAN will become mandatory for customers of all banks of Ukraine when making money transfers in both national and foreign currencies, including cross-border transfers.
In early October, the National Bank extended the transition period for the implementation of IBAN until January 12, 2020.
An IBAN, or international bank account number, is a standard international numbering system developed to identify an overseas bank account. The number starts with a two-digit country code, then two numbers, followed by up to third-five alphanumeric characters. However, an IBAN does not replace a bank's own account number, as it’s only meant to provide additional information that helps in identifying overseas payments.
The IBAN number consists of a two-letter country code, followed by two check digits, and up to thirty-five alphanumeric characters. These alphanumeric characters are known as the basic bank account number (BBAN). It is up to the banking association of each country to determine which BBAN they will select as the standard for that country's bank accounts. However, only European banks use IBAN, although the practice is becoming popular in other countries. An IBAN number will be used when sending interbank transfers or wiring money from one bank to another, especially across international borders.
This standard is used in more than 60 countries in the world, which Ukraine will soon join.
The number comprises a maximum of 34 alphanumerical characters, which are structured as follows:
Two letters representing the home country of the account-holding bank
Two numbers that are a control key
Maximum of 30 alphanumeric characters that identify the bank and the ordinary account number
From November 1, 2019, IBAN was to become mandatory for customers of all banks of Ukraine when making money transfers in both national and foreign currencies, including cross-border transfers. That is, all transfers from November 1, 2019, were planned to be carried out only according to the IBAN standard.
In early October, the National Bank extended the transition period until January 12, 2020.
“When filling in the documents for transferring funds in the details of the payer/recipient, the client might fill in both some details (account number of the payer/recipient and the bank code of the payer/recipient), and the account number of the payer/recipient according to the IBAN standard," the National Bank of Ukraine reported.
The variation of filling in the details chosen by the payer cannot be the basis for returning a document for transferring funds without fulfilling or not crediting funds to the client's account.
After the end of the transition period, bank customers should indicate the payer/recipient account number only according to the IBAN standard.
Taking into consideration introduction of IBAN, the National Bank proposed starting from November 1 to exclude the requisite Bank Code from the settlement documents, "since the IBAN international bank account number already contains information about the bank code."
It is also worth noting that the transition to the IBAN standard does not imply the replacement of bank cards or changes in their numbers.
"All payment cards issued by banks to the client’s account remain valid, they are a payment instrument that provides the client with the possibility of using a payment device, in particular, initiate the transfer of funds from a bank account," the NBU said.
The National Bank of Ukraine believes that the transfer of bank accounts to the new standard will bring the Ukrainian payment space closer to the European one and will contribute to the further modernization of the electronic payment system. It is also noted that money transfers both within the country and abroad will be faster with the use of the IBAN standard.
In addition, thanks to the introduction of IBAN, it will be easier to identify the payer and recipient of funds, as well as the bank of Ukraine that serves them.
The NBU assures that with the help of the European standard it will be possible to avoid errors in account details due to a reduction in details in settlement documents. In other words, now the bank code, bank account, etc. will replace the bank account number according to the IBAN standard.