Who are FOPs and why the NBU is changing the rules for all entrepreneurs
7 October 17:31
The National Bank of Ukraine is planning to change the rules for closing sole proprietorships to reduce the number of financial frauds. Recently, there have been more cases of entrepreneurs using sole proprietorships not to run a business but to launder money or evade taxes. Such persons are called “sole proprietorships”. According to media reports, this is stated in a letter from the NBU sent to the Ministry of Digital Transformation and the state-owned company Diia. Who are FOP-drops, how do they work, and why others may suffer because of them – found out
The scheme is simple: FOPs open many accounts in different banks, quickly conduct large transactions, and then close them just as quickly. At present, the law does not limit the number of accounts for sole proprietorships and does not require mandatory verification when closing a business. This allows fraudsters to exploit the system and avoid responsibility, the NBU believes.
This, in turn, undermines confidence in business and can harm public finances. Therefore, in 2026, changes are planned that will complicate the procedure for closing a sole proprietorship.
To eliminate the risks, the NBU proposes to introduce a phased closure of individual entrepreneurs:
- check financial transactions and the correctness of tax payments;
- automatically generate a liquidation declaration with all turnover for a certain period;
- to register the closure of a sole proprietorship only after the audits are completed and the declaration is submitted.
According to the regulator, the innovations will not create difficulties for bona fide entrepreneurs. The main penalty will apply to “sole proprietorships”.
What are sole proprietorships?
FOP drops are fictitious individual entrepreneurs that are set up specifically to conduct suspicious financial transactions (often for a small fee). Usually, several accounts are opened for one “drop” in different banks, which are used for money laundering, tax evasion, transferring large amounts between accounts without control, withdrawing cash, and concealing the real owners of funds or goods.
To do this, they find a person (most often for the money of a student or a Ukrainian who has fallen into a difficult financial situation), register a sole proprietorship for him or her. On his behalf, bank accounts are opened through which dubious transactions are conducted. And as soon as the “work” is completed, the sole proprietorship is closed. The “owners” themselves may not even realize all the consequences, such as the fact that they have debts or that a transaction is under investigation.
The advantage of a sole proprietorship is that you can conduct much more transactions through it than through an ordinary individual – the only limitation is related to the limit on the simplified taxation system.
The downside is the need to pay a single tax and military fee (6% of income in total) and unified social contribution (22% of the minimum wage or ≈ UAH 1,760 per month). But for large illegal amounts, these costs seem insignificant.
How do they fight drops?
This is not to say that the fight against drops is not ongoing. For example, starting from October 1, 2024, the National Bank banned card-to-card transfers of more than UAH 150 thousand per month, and from June 2025, it limited them to UAH 100 thousand.
And the result has even been achieved: according to the NBU, the volume of card-to-card transfers decreased by UAH 80 billion per month, from UAH 250 billion to UAH 170 billion, as a result of the restrictions.
In the future, it is proposed to create a special register of drops, which will include those who have provided their cards for financial transactions, so that the banking system can track such persons and prevent illegal transit of funds. The draft law on payment discipline provides for the creation of the register.
It was planned to launch the registry by the end of 2024, but the regulator is still working on proposals.
The National Police proposed to introduce criminal liability for drops. Issuing bank cards for remuneration or providing accounts for use to drops will result in up to 3 years in prison. For repeatedly committing such actions – up to 5 years.
What are the risks for sole proprietorships using drops?
If a sole proprietor transfers his account to others, he faces financial and even criminal liability, as all transactions through the account are considered his.
“The tax and financial monitoring authorities will come to the sole proprietorship and block the account first, and only then will they add it to the ‘drops register’ OF THE NBU. And after this person is “put on the list”, restrictions on banking operations and problems with opening new accounts will follow. This means that such a person automatically becomes a “risky client” for banks and the state. If someone is offered to become a “drop,” they should think carefully about whether it’s worth it,” says
[Kommersant] lawyer Valentin Serkov.
However, there is also criminal liability for money laundering or illegal gambling, although it is currently minimal. According to economic expert Yuriy Havrylechko, the NBU has not found a single individual entrepreneurial drop in all this time.
“There is not a single lawsuit against a sole proprietor that would be punished for financial fraud or fraud. The NBU has not filed any such lawsuit in court. Therefore, all the talk about fraud on the part of individual entrepreneurs is a lie. The fact of fraud must be proven. There are only talks about sole proprietorships, but there are no real facts, court decisions, etc.”, says Yuriy Havrylechko.
Complicating the procedure for closing a sole proprietorship is a big mistake. And the Ministry of Internal Affairs should fight against sole proprietorships, as this is their jurisdiction.
Author: Alla Dunina
