Bank secrecy is abolished: how the state wants to take control of the financial life of citizens
The notion of banking secrecy in Ukraine is becoming more and more conventional every year. What until recently was kept under the seal of confidentiality – data on personal accounts, safes, electronic wallets – can now become the object of centralized collection, administration and analysis by the fiscal authority. The government has already approved the draft law, and if it is adopted, the format of relations between the citizen and the State Tax Service will change: tax officials will collect and systematize information about the banking infrastructure of each individual. Moreover, they will not only get access to these data, but also the status of their holder, administrator and controller. That is, both the right to privacy and the general foundations of trust between financial institutions and their clients are under attack.
What does the new draft law mean?
The Ukrainian government took another step towards joining the European SEPA payment area — it approved the draft law developed by the State Tax Service. This was reported by the representative of the government in the Verkhovna Rada, Taras Melnychuk. This document has a long and abstract title: “On Amendments to Certain Legislative Acts of Ukraine on Ensuring Compliance with the Acts of the European Union and the Relevant Criteria Established by the European Payments Council, with the Purpose of Joining Ukraine to the Single Euro Payments Area (SEPA)”. However, it can be translated more simply: in exchange for access to convenient European transfers, the tax office will look not only into the bank accounts of Ukrainians, but also into their safes. So, at first glance, the legislative initiative looks like a technical adaptation to EU standards, but in fact it opens a window to the tax authorities into your banking world.
The draft law provides for the creation of a special register that will collect information on all bank accounts and individual safes of individuals. It will be administered by the State Tax Service, and it will have the authority to accumulate and analyze this information. Translated from legal language: banking secrecy is a thing of the past — banks are obliged to hand over all data to tax authorities. According to the draft law, the National Bank, all banks, financial institutions, non-bank payment providers, issuers of electronic money will be obliged to transfer to the DPS information on the opening and closing of accounts, the conclusion or termination of lease agreements for individual safes, circulation of electronic wallets. It is not about technical cooperation, but the introduction of a regulatory obligation that turns financial institutions into auxiliary links of tax monitoring.
In addition to the register of accounts and safes, the document also obliges to create a database of ultimate beneficiaries of trusts and similar entities — the so-called actual owners of assets. All this is complemented by a mechanism for verifying this data. In addition, information from the registers will be available to a number of state bodies in a “special order”, i.e. automatically, without a court or a separate request. The tax office will not only get access to information that was previously only available to special bodies in the framework of criminal or financial investigations, but will also be able to assess the reliability, legality and integrity of this information independently — without court authorization.
At the level of a legislative initiative, such a change means the introduction of a new model of state control, in which the tax service is no longer just a tax administrator, but a full-fledged operator of personalized banking analytics. All data transmitted to the DPS can be compiled into complete financial files, which allow tracking the ownership structure, sources of funds and the nature of activity of even the smallest payers.
In addition, the draft law regulates the expansion of powers in the field of financial monitoring, new duties of whistleblowers, mechanisms of control over trusts and responsibility for submitting false information. The correlation of this initiative with the European integration context, the National Income Strategy and risks for citizens’ financial autonomy will also be considered.
Another interesting element is the introduction of whistleblower status in the field of financial transparency. The law establishes not only his rights, but also mechanisms of protection. Strict sanctions are also provided for violation of requirements: in particular, for untimely or false submission of information about beneficiaries.
The official reason for the preparation of this draft law is to ensure compliance with EU legal acts for joining the SEPA payment area. Unofficial — establishment of systematic control over financial flows within the framework of combating the shadow economy, increasing tax discipline, implementation of the National Revenue Strategy and financing conditions from the European Union. But the state provides this financial transparency not only for itself, but also at the expense of citizens, who must change their perception of the privacy of finances.
Double messages: the government approves and the parliament opposes
After the Cabinet of Ministers approved the draft law, Danylo Hetmantsev, head of the Parliamentary Committee on Finance, Tax and Customs Policy, was one of the first to react publicly. His statement contrasts sharply with the government’s position: “There is no chance for the tax authorities to reveal bank secrecy in the near future.” – he stressed, clarifying that there are no relevant draft laws in the committee, and there are no prospects for their support in the hall of the Verkhovna Rada of this convocation either.
This position looks not only strange, but also as an attempt to distance oneself from the initiative of the executive power. The paradox of the situation is that until the government approved the draft law, Hetmantsev himself denied even the fact of its existence. And after public approval by the Cabinet of Ministers, he actually admitted that he does not expect this document to pass through the parliament. In the public sphere, there is an impression of inconsistency between the government, which fulfills international obligations, and the parliament, which is preparing for the election cycle and does not want to take political responsibility for unpopular changes.
It should be noted that the real motivation of the draft law lies not only in Ukraine’s European integration aspirations, but in specific financial agreements. According to the Ukraine Facility Program Implementation Plan, Ukraine undertook to implement the Unified Register of Bank Accounts as a prerequisite for receiving tranches of financial assistance from the European Union. It is about technical reforms, political compliance, and the fulfillment of detailed conditions, without which funding is blocked or revised. Therefore, the draft law, which provides for the creation of a register of accounts, safes and trusts with open access for the DPS, is an element of the external financial architecture. Moreover, the external incentive here is directly tied to money, and that is why the government does not have a leeway – it fulfills the agreements that have already been signed. At the same time, political considerations are still active in the parliament: the new register is not something convenient to flaunt in front of voters against the background of social and economic losses of the war.
From a technical point of view, the document is much broader than a simple transfer of tax information about accounts. First, it is envisaged to create several registers at the same time — from bank accounts to beneficial owners of trusts. Secondly, it lays down a legal mechanism for the verification of this data: the tax office will have the right not only to own masses of information, but also to check how accurate it is.
A separate legal area is the power of attorney for actions with bank safes. According to the logic of the development and adoption of laws in our country, an accompanying bill on responsibility for attempting to use another person’s safe on the basis of a fictitious power of attorney will be expected. It is also likely that the tax office will have access to the power of attorney register — this will allow automatic identification of who, when and under what right used the safe or banking instrument.
Thus, the space for avoiding accounting, for example, opening an account for a third party or using an electronic wallet instead of a bank, is significantly narrowed. If the law is passed, any attempt to remove assets from the control of the fiscal authority will be equated with fraud, even if it is not about tax evasion, but about basic privacy.
Consequences for citizens
The new register of accounts and safes is both a tool for the unification of information about the banking infrastructure and a step towards changing the entire logic of relations between a person and the state. The tax service is able to see the fact of opening an account or concluding a contract for renting a safe, as well as behavioral trends: the frequency of account changes, the transfer of funds, the presence of several electronic wallets. This is data from which you can build models, form suspicions and run checks without direct contact with the person.
This data architecture makes it possible to establish a complete financial profile of the payer without his participation, explanation or request. If before that disclosure of bank secrets required the participation of the investigation, the permission of the court or a substantiated submission, now, in the case of the adoption of the law, all this becomes superfluous. The law delegates the tax role of analyst, verifier, administrator, controller — at the same time.
Especially vulnerable will be those who run a small business in flexible, often informal conditions. Individual entrepreneurs (PPOs), who, for example, use the same account for personal and business purposes, risk becoming the object of fiscal suspicion even without obvious violations. The movement of funds, which for the bank is only a fact of the transaction, for the tax office can be a signal for verification or a reason for additional accrual of liabilities.
And the presumption of innocence will not work here – the DPS receives not only information, but also tools for evaluating this information according to its own criteria. The problem is compounded by the lack of a real mechanism for appealing or revising an assessment made by an automated system. FOP actually falls into a zone of constant fiscal uncertainty.
In addition, in the context of the mass migration of Ukrainians after the start of a full-scale war, it is important to take into account the problems of those who keep accounts in Ukraine while working abroad. Such people often do not have a clearly defined status as a payer in Ukraine, but at the same time they can send money to their relatives, pay for services, and support their families.
From the point of view of the new registry, this will look like atypical financial behavior. If a person does not declare income in Ukraine, but his accounts are filled with money, the tax office can record this as a break in the tax chain, even if there are no formal grounds for claims. This creates a risk not only for citizens, but also for banks, which will be obliged to explain these transactions during inspections.
A separate layer of dangers opens up for those who use proxies to work with financial instruments, for example, safes, wallets or accounts. The expected “companion law” on liability for fictitious powers of attorney may create legal pitfalls: each action on behalf of a third party risks becoming the object of separate scrutiny. This changes both banking practice and the structure of legal relations between citizens. Added to this is the increase in the role of primary financial monitoring: specially defined entities (in particular, those who administer trusts or similar entities) will receive new responsibilities, and the Ministry of Justice will receive supervisory powers. However, these obligations themselves remain legally vague, and the sanctions are potentially disproportionate.
It is worth noting that joining the Single Euro Payments Area (SEPA) remains the cornerstone of the government’s public arguments. But in this case, the price of such integration is the internal dismantling of the basic principles of banking privacy. In order to receive external funds, Ukraine agrees to internal disclosure: not only of financial information, but also of the way it is used. At the same time, access to SEPA opens up new opportunities — simplification of calculations, cheaper transfers, better conditions for business. However, at the same time, it creates a space where any transaction can be read not as financial activity, but as a signal for fiscal intervention. This turns the very idea of integration into a tool of control, not just facilitation.
Therefore, even if the draft law on the transfer of information about personal accounts and safes to the tax office will not be adopted in the coming months, its very appearance and approval by the government demonstrates changes of a deeper order. They are a signal of another technical norm and transformation of relations between the citizen and the state. Financial privacy is losing its inviolable status. An account, a safe, an electronic wallet – all this ceases to be a personal tool and becomes data that is carefully studied, evaluated and can be used against the taxpayer, even without his knowledge. In a country experiencing war, emigration, falling incomes and unstable employment, the introduction of such a model of control can have unexpected consequences: from mass distrust of banks to forced withdrawal from the financial system as a form of self-defense.
Against the background of the desire to become part of SEPA, where cross-border payments in euros are made as easily as domestic ones, Ukraine is making strict commitments to financial transparency. But the question arises: will this transparency become another tool of fiscal pressure on the average Ukrainian? A step towards Europe is indisputable. But also control over everyone’s wallet.
