The Price of Transparency: What Will Small Businesses Pay for the Latest Effort to Combat Shadow Schemes in Ukraine?
21 May 16:00
ANALYSIS FROM 
Ukrainian officials are once again demonstrating their readiness to “bring out of the shadows” those entrepreneurs who are hiding there from the tax authorities. "Komersant Ukrainian" investigated who should be most concerned about this and why.
The mission to lead the fight against illegal shadow schemes has once again been delegated to banks, whose executives have signed an updated Memorandum on Ensuring Transparency in the Payment Services Market. The National Bank supported this initiative but again decided to remain above the process, within which new restrictions on transfers were established. In the 2025 version of the memorandum, the limits applied to financial transactions by individuals. In the updated document, they remain unchanged: for low-risk clients, the transfer limit is 100,000 UAH per month; for high-risk clients, 50,000 UAH per month. The new phase of the fight against “money mule” or “drop” schemes is planned to focus on legal entities and sole proprietors. It is they who will have to assess the full impact of the new limits.
Banks: Restrictions and Oversight
The update to the banking memorandum took place under the auspices of the National Association of Banks of Ukraine and the Association of Ukrainian Banks. When presenting the document, they assured that the memorandum does not introduce new legislative restrictions and does not tighten existing financial monitoring requirements. Instead, its purpose is to unify market practices and make them more understandable and effective for all participants in the payment services market, to prevent fraud, and to prevent the use of the financial and banking system for illegal purposes.
Who, first and foremost, does the banking community want to “catch red-handed” by imposing restrictions on monthly fund transfers? In addition to sole proprietors, heightened scrutiny is promised for legal entities as well. We are talking about high-risk companies: new ones (up to six months old) and “dormant” ones, regarding which more than two signs of a shell company have been identified. For example, there are doubts regarding the ultimate beneficial owner or place of registration, or the absence of production or warehouse facilities and financial statements, etc. For such companies, banks will set limits on transfers: starting September 1—up to 5 million UAH per month; starting December 1, 2026—up to 2 million UAH per month.
But it is sole proprietorships, in particular, and given their lack of legal protection, that may face the most difficulties. The category of particularly high-risk entities, those deserving of enhanced scrutiny, includes, first, newly established sole proprietorships (up to 6 months old), and second, “dormant” ones—that is, those that have been inactive for a long time but have resumed operations. They, too, will face two phases of restrictions. The first begins on September 1, 2026, and the transfer limits will then be:
- for Group 1 sole proprietorships—up to 600,000 UAH per month;
- for sole proprietors in Groups 2 and 3—up to 3 million UAH per month.
The second phase starts on December 1, and the limits will become even stricter:
- for Group 1 sole proprietors—up to 400,000 UAH per month;
- for sole proprietors in Groups 2–3—up to 1 million UAH per month.
For sole proprietors subject to these restrictions, an “increase limit” option is also provided. They will have the opportunity to submit a request to the bank to document the need for an increased limit. It is not hard to predict that this will not be easy. This is also emphasized by Nina Yuzhanina, a representative of the parliamentary committee on finance, tax, and customs policy.
“Businesses that currently cannot find a tax system that fits their financial model will come under increased scrutiny. This applies to those who split their operations through sole proprietorships (FOPs) or who conduct part of their services through FOPs. The limits on transfers will significantly complicate operations, especially for FOPs in the second and third groups, for whom the limit will be 3 million per month, and then the limit will decrease to 1 million. These sole proprietorships will face increased scrutiny, which means they will have to prove that the relevant transactions are not fictitious and that they relate to the activities of the companies they work with. “There are banks that are more attentive to the client, and there are those that demand a new set of documents every time to remove this red flag hanging over such a client. In other words, this will definitely complicate the work,” notes the MP.
She also has doubts about whether the aforementioned unified measures will stop various shadow schemes, particularly those specific to the gambling industry. Especially since, as the signatories of the updated memorandum acknowledge, fraud technologies and methods are rapidly evolving.
“With such memorandums, we are effectively taking over the role of both the Ministry of Finance and the State Tax Service. Because it is the Ministry of Finance that should be investigating and thoroughly studying these areas of activity where fragmentation occurs, determining which systems such taxpayers should transition to: is the general taxation system the only way to prevent such businesses from being fragmented through sole proprietorships, or should something else be proposed? “Here, we must focus on protecting our own economy, not simply destroying it,” she says.
In her view, the approach must be carefully and comprehensively thought out.
Sole Proprietorships: Fears and Misunderstandings
Dmytro Oliinyk, Deputy Head of the NBU, explained why sole proprietorships received the most attention in the updated Memorandum on Ensuring Transparency in the Operation of the Payment Services Market. According to him, “after restrictions were imposed on transfers between individual accounts, a significant portion of such schemes migrated to sole proprietorships.”
Ukrainian officials these days haven’t exactly been kind to individual entrepreneurs. Just the attempts to impose VAT on them speak volumes. This idea found no support in society or in parliament. No parliamentary approval is needed to impose limits on transfers. Nor is support from small business representatives. They are reacting appropriately to this. For example, the Alliance of Regional Small Business Associations views the further tightening of restrictions on sole proprietors and small businesses negatively. Tetyana Slaschuk, a representative of the Alliance from Khmelnytskyi, says:
“It seems that micro-entrepreneurs are becoming the primary target of constant oversight, financial monitoring, limits, and audits, even though they are the most vulnerable segment of the economy. Small business owners are increasingly facing requests for documents, payment delays, the need to explain routine business transactions, and the risk of having their accounts frozen. This is especially true for newly established or temporarily inactive sole proprietorships. At the same time, for small businesses, irregular activity is standard practice: seasonality, breaks in operations, a change in business focus, or the launch of a new project,” explains Tetiana Slaschuk.
Her colleague from Lutsk, entrepreneur Lyudmyla Patiuk, emphasizes: if the goal of the new restrictions is to combat business fragmentation and tax minimization schemes, then doubts arise regarding the effectiveness of such mechanisms.
“What is the fundamental difference between a situation where 10 sole proprietorships operate with a monthly turnover of 1 million UAH each, and a ‘carousel’ scheme where significant turnover is systematically transferred from one sole proprietorship to another? There is a risk that organized schemes will simply adapt to the new rules, while legitimate small businesses will face additional barriers. A separate issue is the tightening of controls specifically on IBAN transfers. Direct non-cash transfers between citizens and sole proprietorships—that is, the most transparent segment, which the banking system already fully monitors—are subject to the strictest scrutiny. At the same time, large networks and major players have significantly more opportunities to structure payments,” the entrepreneur believes.
According to her, this creates a sense among small businesses of unequal rules and selective oversight. Another observation that resonates with the public was shared by Tetyana Kovalenko, a representative of the “ROMB Alliance” and an entrepreneur from Kropyvnytskyi.
“Against the backdrop of increased scrutiny of small business owners, there are regular public reports of large-scale money transfers, luxury purchases, or questionable financial transactions by members of the political and economic elite. This creates a sense of selective enforcement and undermines trust in the very idea of financial monitoring. In our opinion, the fight against schemes must be as targeted and risk-oriented as possible, focusing on large-scale schemes and the real shadow economy, rather than creating additional pressure on legitimate small businesses, which today ensure employment and the country’s economic stability,” emphasizes the small business representative.
Lesya Zolotaryova, an entrepreneur from Myrhorod, referring to the Memorandum on Ensuring Transparency in the Functioning of the Payment Services Market supported by bank representatives, points out that, in effect, part of the state’s control functions is being shifted to banks.
“Banks are increasingly acting not only as financial institutions but also as agents of tax and regulatory control. For large businesses, this is less critical, as they have dedicated financial departments and legal teams. In contrast, micro- and small businesses often operate independently and are far more severely impacted by any blockages or restrictions. An additional problem is the unpredictability of banking decisions: identical transactions at different banks may be assessed differently, and there are virtually no clear mechanisms for a quick appeal or the prompt unblocking of funds,” says the entrepreneur.
Delegating to banks the right to set universal restrictions on financial transactions raises questions not only among business representatives. These concerns are also shared by MP Nina Yuzhanina, who serves on the parliamentary committee on finance, tax, and customs policy.
“It seems to me that such a document, which sets out clear criteria that banks and payment service providers must follow, should be issued by the National Bank of Ukraine itself. Because very often, during inspections, banks are faced with certain demands regarding shortcomings in implementing a risk-based approach to clients, and banks do not know how to defend themselves. That is, they have their own policies and they implement them. “It would be advisable for the National Bank to define more detailed requirements so that banks are not at risk of fines due to vague criteria and requirements imposed on them,” she notes.
The fact that not all banks have signed the aforementioned memorandum at this time also speaks in favor of a more centralized approach. And if this document does not gain the support of all banks, then, as Nina Yuzhanina notes, this will mean that some will act within the framework of this memorandum, while others will not.
It is worth noting that the Memorandum on Ensuring Transparency in the Operation of the Payment Services Market is an open document, and banks may join it voluntarily. As of May 14, 25 payment service providers had signed the updated document. The National Association of Banks of Ukraine noted that the previous version of the memorandum was eventually signed by 50 banks and financial institutions. They expect that most market participants will also sign the updated document.
