Banks will identify tax evasion schemes among their clients

The NBU has provided banks and non-bank financial institutions with recommendations on identifying mechanisms of the so-called "business splitting".

The use of such mechanisms may indicate the development and use of tax evasion schemes involving the artificial distribution of a legal entity's business through other business entities, including the involvement of individual entrepreneurs who are entitled to apply the simplified taxation system.

This is stated in a letter from the NBU to banks, non-bank institutions, and banking associations.

Such schemes are characterized by certain features that may indicate a relationship between a legal entity and an individual entrepreneur (hereinafter referred to as the Group), examples of which are provided in the above letter.

As the NBU noted in the letter, if the analysis reveals that customers belong to the Group, there are grounds to believe that the business entity's activities may be related to tax evasion, financial institutions should notify the State Financial Monitoring Service of such financial transactions (activities) and make a decision on further business relations, taking into account the identified risks, in accordance with the procedure established by the legislation in the field of financial monitoring.

By following these recommendations, banks and non-bank financial institutions will be able to improve their internal systems for preventing and combating money laundering, terrorist financing and the financing of the proliferation of weapons of mass destruction and increase the efficiency of risk management.