The National Bank of Ukraine (NBU) has published new recommendations for banks and non-bank financial institutions regarding the detection of possible tax evasion schemes aimed at artificial "business fragmentation". Such recommendations will help financial institutions more effectively counter tax evasion schemes. This was reported by the press service of the NBU.

According to the regulator, "business splitting" is a scheme according to which legal entities distribute their activities among various economic entities, most often involving individual entrepreneurs (PEOs) working on a simplified taxation system. This mechanism allows businesses to minimize their tax liabilities, as sole proprietorships have a lower tax burden than legal entities. The NBU believes that such practices violate the principles of fair competition and harm the state budget.

The NBU has identified a number of signs by which banks and financial institutions can detect such schemes. In an official letter sent to banking associations and non-banking institutions, the National Bank of Ukraine cited examples of connections between legal entities and FOP groups that may indicate such manipulations. Financial institutions should consider these signs to analyze customer activity and identify potential risks.

If the analysis shows that the client's activities may be related to tax fraud, banks must report such transactions to the State Financial Monitoring Service. In addition, institutions should evaluate the expediency of further cooperation with similar clients, taking into account the level of risks that may threaten their reputation and compliance with financial monitoring regulations.

These measures are part of the NBU's broader strategy to strengthen control over financial transactions in Ukraine. The regulator emphasizes that strict compliance with the recommendations will allow banks and non-banking institutions to improve the effectiveness of internal systems to prevent money laundering, as well as to counter the financing of terrorism and the proliferation of weapons of mass destruction.

The NBU is confident that the new approaches will also contribute to increasing the overall transparency of the financial system and strengthening trust in it on the part of international partners.