The National Bank of Ukraine (NBU) has recommended that banks strengthen checks on clients conducting import transactions and more carefully identify financial schemes that may be used for tax evasion, money laundering, or terrorist financing.
The regulator sent the relevant recommendations to banks in a letter dated July 14.
The NBU explained that during its supervisory activities it had identified financial transactions that may indicate the use of so-called “tax schemes,” “counter flows,” and shell companies. Banks were advised to take these indicators into account during customer financial monitoring.
According to the NBU, one of the most common schemes involves artificially changing the classification of goods during their documented movement between related companies. This allows businesses to create fictitious VAT tax credits, reduce tax liabilities, and in some cases illegally obtain VAT refunds from the state budget. Such operations are often accompanied by the use of shell companies and complex chains of financial transfers.
The NBU noted that such schemes most often involve newly established companies, businesses that have not actually operated for a long period, as well as legal entities showing signs of shell companies.
The regulator identified several common indicators of such companies, including a small number of employees, minimal authorized capital, lack of production facilities, warehouses or their own transport, multi-million turnover without real income, frequent changes of directors, owners or registered addresses, cooperation mainly with newly created counterparties, inconsistencies in information about ultimate beneficial owners, as well as the use of shared IP addresses, phone numbers, or accountants without clear economic justification.
A separate section of the recommendations concerns importers. Banks are advised to pay increased attention to cases where, for example, a newly established company makes multi-million payments for already delivered goods without advance payment; there are no documents confirming transportation or storage of products; the company has almost no expenses for rent, salaries, taxes, or utilities; and funds received are almost entirely transferred to foreign entities within several days.
Risk indicators also include payments received for products unrelated to the importer’s declared business profile, financing from high-risk financial companies, cooperation with newly created or suspicious counterparties, transit-like transactions, inconsistencies between incoming and outgoing payments, and contracts showing signs of being fictitious.
For businesses, this means banks may conduct more thorough checks of the source of funds, the economic purpose of transactions, supply documentation, ownership structures, staff availability, and material resources. Companies engaged in foreign economic activity, particularly importers, will receive the greatest level of scrutiny.
In addition, the NBU recommends that banks, both before establishing a business relationship and during ongoing servicing, determine who the final buyers of imported goods are, through which stores or online platforms products are sold, whether the company has sufficient warehouse capacity and resources for its declared activities, and how its business operations are actually organized.
The full list of indicators of potentially risky transactions is provided in the National Bank’s letter.
