Financial monitoring in Ukraine has been strengthened: risks of blocking accounts

Financial monitoring has been strengthened: who will be checked and when accounts may be blocked

Since 2 February, financial monitoring of business and citizen transactions has been strengthened in Ukraine. This was announced by MP Nina Yuzhanina, The company's CEO said that it will now be much harder to avoid controlling cash flows.

According to her, government agencies have been given greater ability to analyse financial activities, and suspicious transactions can lead to additional checks or even blocking of accounts.

When control and blocking is possible

Financial monitoring will pay particular attention to several key factors:

Suspicious financial transactions

A sharp increase in turnover or complex payment schemes can be a signal for an audit.

Signs of business fragmentation

Related individual entrepreneurs, shared IP addresses, staff and other signs of a single business will be analysed. Outlets can be considered as a whole, not separately.

Risky counterparties

Transactions with companies without staff, assets or real operations may raise additional questions from regulatory authorities.

Transactions with non-residents

Payments abroad, especially to high-risk jurisdictions, will be subject to in-depth analysis.

Cash registers, VAT and cash flows

Atypical ratios of turnover and tax burden may be the basis for an interagency inspection.

What it means for business

The strengthening of financial monitoring demonstrates the government's intention to reduce shadow turnover, increase tax revenues and strengthen control over financial flows in times of war and economic instability.

Experts advise entrepreneurs to be more attentive to the structure of payments, counterparties and tax burden to avoid blocking accounts or inspections.