Chasing taxes: why banks are willing to part ways with their clients and what the NBU has to do with it.

To increase tax revenues in Ukraine, there is a renewed effort to reduce limits on money transfers, along with a serious crackdown on tax optimization using individual entrepreneurs (FOPs). What this entails, how justified and timely it is, and what the consequences might be, – read in the article by RBC-Ukraine editor Ruslan Kislyak.

The mission behind the latest "tightening of screws"

Will there come a time when Ukrainians realize the necessity of paying taxes? It seems that even a full-scale war, which threatens the survival of Ukrainians as a nation, hasn't served as a wake-up call for many, who continue to conduct business as usual.

In an attempt to foster greater social responsibility among citizens, the government has once again decided to "tighten the screws" on the financial and tax front by initiating new restrictions through representatives of the banking system.

On December 10, four systemically important banks – PrivatBank, Oschadbank, Raiffeisen Bank, Universal Bank, along with two banking associations – the Independent Association of Banks of Ukraine and the Ukrainian Banking Association, signed a Memorandum aimed at ensuring transparency in the market for payment services. The pioneering banks are urging the remaining 57 banks, as well as representatives of non-banking financial organizations, to join this collaborative initiative.

Formally, the National Bank has no direct relation to the initiative of its supervised entities. However, it is the state regulator that has actually initiated the strengthening of tax discipline among financial market participants, and through them – all their clients, as the services of banks are utilized by every Ukrainian. The regulator publicly stated its role in this process during the signing of the Memorandum in the presence of journalists. Notably, the signing took place at the National Bank's premises.

The mission of the initiative to improve the transparency of the payment services market appears logical, justified, and timely – ensuring additional tax revenues for the state budget by establishing order in areas where such order should inherently exist, as banks are, by definition, subjects of primary financial monitoring and are obliged to verify the legality of their clients' payments. And, let’s not forget, the clients of banks literally include all citizens of Ukraine.

Formally, with the signing of the Memorandum, the operations of banks and non-banking financial organizations do not seem to change much – they still must simply fulfill their regulatory obligations. However, it’s likely that not all market participants adequately perform their assigned functions of financial monitoring of client transactions. Moreover, clients are not always willing to "disclose" their financial operations, thus avoiding paying taxes to the state budget. In this scenario, it’s probable that all participants in the process – banks, their clients, and possibly even some hypothetically unscrupulous representatives of the National Bank – can profit. The only guaranteed loser is the state, and therefore – all of us, Ukrainians. And during wartime, this is not just a statement.

How these "screws" will be tightened

To comprehensively restore order in the sector, the decision was made to hit two targets with one shot – to compel banks to more closely monitor not entirely legal operations of their clients, sometimes possibly against their own financial interests, while also finally attempting to impose order on the vast field of tax abuses in business. Order will be established through new restrictions on money transfers for all bank clients and a new wave of combating tax abuses by businesses using FOPs.

Regarding how exactly bankers intend to limit clients and combat FOP abuses, RBC-Ukraine reported in detail on the day the Memorandum was signed.

For now, let’s focus on some key aspects of the upcoming changes and the not always public but very telling reactions from financial market participants regarding these innovations.

From the author's evaluative perspective, it can be stated that the so-called "initiative of the banks themselves" to enhance financial monitoring of their clients has not particularly pleased bankers. Nevertheless, all market participants present at the signing of the memorandum clearly expressed their support, denying any pressure from the regulator.

The NBU has become the actual initiator of new restrictions (photo: Vitaliy Nosach / RBC-Ukraine)

It is worth noting that the innovations are purely recommendatory in nature and do not foresee any measures of influence from the regulator on banks that refuse to operate under the new rules. At least, the head of the NBU, Andriy Pyshny, publicly denied the prospect of potential consequences for "evasive" banks. However, it is not entirely clear why. It would be logical to foresee possible consequences for those market participants who refuse to comply with regulations that, by the acknowledgment of the bankers themselves, are not new to the regulation of their activities. At the same time, for reasons unknown, the regulator evidently does not want to take responsibility for the formalization of new restrictions in the financial market.

Bankers themselves claim that punishment for the disobedient will occur naturally – clients will simply migrate from banks that sign the memorandum and implement enhanced financial monitoring methods to those banks that do not adhere to these strict restrictions. Consequently, they will automatically fall under the scrutiny of the regulator's banking oversight, with corresponding consequences as stipulated by law.

How money transfers will be restricted

According to the text of the Memorandum available to RBC-Ukraine, banks and non-banking financial organizations that joined the initiative agree to implement standardized approaches in their operations, particularly regarding the following processes:

• proper verification of clients at the stage of establishing business relationships;
• monitoring financial transactions in clients' accounts;
• establishing automated round-the-clock monitoring rules for payment transactions, with particular attention to monitoring and restricting operations during nighttime (from 00:00 to 06:00) to identify instances of atypical financial behavior and combat fraudulent schemes, including theft of funds through social engineering, and preventing clients' participation in "drop" schemes;
• information exchange between banks participating in the Memorandum regarding clients and their activities that exhibit signs of suspicion.

Banks will not impose limits on transactions for clients with verified sources of income (including salaried clients and other clients with confirmed income), as well as volunteers.

Documentary confirmation of income includes obtaining documents in electronic form, such as: certificates OК5 and OК7 generated by the client, tax declarations, payroll records, confirmations of payments from government bodies, confirmed income of family members, and proof of volunteer activities.

If there is no documentary confirmation of income, banks are obliged to set limits (which will apply to transfers by IBAN details) on operations:

• from 01.02.2025 – for "high" risk clients – in the amount of up to 50,000 UAH/month;
• for "medium" and "low" risk clients – according to the limits and timelines for phased implementation:

from 01.02.2025 – in the amount of up to 150,000 UAH/month;

from 01.06.2025 – in the amount of up to 100,000 UAH/month.

Limits will not apply to transactions involving transfers between two accounts that the client has opened at the same bank.

Additionally, during service, a client has the right to request an increase in the established limit, provided they present documentary confirmation of the funds.

In the future, banks and non-banking financial institutions that are participants in the Memorandum want to gain access to official information about clients through the online government services portal "Diia," including information about clients' income, legal cases, etc.

A centralized registry of suspicious clients is also planned to be created, particularly with the "drop" marker*, as an additional source of information for studying clients. However, the National Bank noted that this is not a quick process. The creation of the registry is stipulated by Ukraine's commitments to the IMF. The corresponding draft law is to be developed by the end of the current year. Subsequently, the NBU expects about six months for its adoption. Then, another six months will be needed for the technical development and launch of the registry itself. Approximately another six months will be required to fill the registry with data. Ultimately, the full operation of the registry of suspicious clients is likely not to occur until the second half of 2026.</