While the domestic economy is supported by exports, international support and extraordinary currency control measures, some businesses continue to cynically export foreign currency. About this stated Deputy Chairman of the National Bank of Ukraine, Dmytro Oliynyk, directly pointing to two main schemes: non-return of foreign exchange earnings and fictitious imports.
During the war, currency control became a critically important tool for the survival of the state. Ukraine has introduced strict restrictions on the withdrawal of capital, the mandatory sale of a part of foreign exchange earnings and requirements for export-import transactions. However, even now, when every dollar counts, shadowy mechanisms continue to undermine the country’s economic stability.
As explained Oliynyk, one of the schemes works through exporters who ship goods abroad, but do not receive payment for them. At the end of the statutory period of 180 days, the company either disappears from the market or formally ceases its activity. According to him, there were cases when up to 40-50 companies were registered for one owner, and their shareholders were residents of homeless shelters.
Banks also created an additional loophole: some of them closed clients’ accounts without actual settlements under foreign economic contracts, which allowed the suspension of currency supervision and opened the way for firms to disappear with impunity. In order to stop these manipulations, the National Bank initiated changes in the legislation: now closing the account is no longer a reason for the automatic termination of currency supervision.
Another currency withdrawal tool pond fictitious import. The scheme was based on prepayment: Ukrainian companies transferred money for goods that almost never reached Ukraine. According to Oliynyk, in some cases up to 90% of the promised products were actually not delivered.
Separately he told and about the use of financial instruments to withdraw capital: for example, through the purchase of American government bonds for hryvnias. These securities were transferred to accounts in international depositories, and after the maturity date, payments were received in foreign currency directly abroad.
Unfortunately, similar schemes are also found in the field of government procurement for defense needs: inflated prices, fictitious deliveries or their complete absence have become another channel for financial fraud.
The National Bank has already strengthened control over currency supervision and significantly limited opportunities for capital withdrawal. However, the problem remains open: every scheme, every fictitious contract, every non-return of foreign exchange revenue is a direct blow to the economy of a warring country.
Against the background of the battle for the survival of the state, such operations can no longer be considered only an economic crime. This is a deliberate betrayal of the interests of Ukraine at the moment of its greatest vulnerability.
Scale of the phenomenon: how many and which companies appear
While the National Bank and the government are tightening currency control rules, the scale of abuse through non-return of foreign exchange earnings and fictitious imports is reaching alarming proportions. According to official estimates, in 2023 Ukraine did not receive through such schemes more than 8 billion US dollars – an amount that at the height of the crisis was almost a fifth of all foreign currency reserves of the state.
The agrarian sector, which became the locomotive of the Ukrainian economy during the war, at the same time turned out to be the most vulnerable to such manipulations. According to the Bureau of Economic Security of Ukraine, only grain traders could not to return foreign exchange earnings in the amount of more than 1.8 billion US dollars. As point out BEB analysts, agricultural products are often exported by shell companies that exist fictitiously, and their real owners are hidden in the shadows.
But the problem goes far beyond the boundaries of the agricultural sector. Fictitious importers and exporters also work in trade, IT, energy and even in such a critical area as procurement for defense needs. The exposed cases show that part of the state contracts are performed only on paper, accompanied by inflated prices and lack of real supplies, which creates new channels for the withdrawal of currency outside of Ukraine.
Against the background of these threats, the Verkhovna Rada approved the decision to create a temporary investigative commission to investigate frauds surrounding the non-return of foreign exchange earnings and fictitious imports. This decision was a response to public demand for transparency and responsibility in the field of foreign economic activity.
Geography of counterparties and “cover” countries
Hence, large sums of currency continue flow out abroad – and usually settle in countries with a dubious financial reputation. According to investigations and analytical reviews, Poland, Hungary, Turkey, the UAE and offshore jurisdictions, including Belize, Seychelles and the British Virgin Islands, are the most popular destinations for money laundering through bogus importation and non-repatriation schemes.
This trend is particularly pronounced appeared through bogus import schemes. Agreements are often drawn up for the supply of equipment or machinery from Poland and Hungary, but in reality the goods either do not arrive at all or arrive in much smaller quantities. At the same time, the advance payment in full goes abroad and “disappears” there.
Turkey has become another major hub for dubious operations. Officially, it is a trading partner country, but in practice, transactions involving shell companies that mask the real origin and ultimate destination of the funds are often conducted through Turkish banks.
Another favorite destination for capital withdrawal is the UAE. Over the past two years, there has been a boom in the registration of companies in Dubai, which are used by Ukrainian entrepreneurs to transfer money under the guise of payment for non-existent contracts or investment projects.
Even more dangerous is the situation with offshore zones — Belize, Seychelles, British Virgin Islands. These jurisdictions have traditionally been used to mask the ultimate beneficiaries and withdraw large sums without proper currency controls. In the investigations, it is noted that many firms are participants in fictitious schemes have registration in these countries, which complicates the return of funds and prosecution of violators.
Such data show that the fight against currency manipulation is not only an internal issue of Ukraine. This is a global confrontation, where on the one hand there is a country that needs every dollar for defense and recovery, and on the other hand there is an extensive system of international pipelines and offshore oases that mercilessly drain Ukrainian resources.
The role of the banking system and new requirements for banks
While the country is fighting for every dollar of foreign exchange earnings, the National Bank is forced to strengthen the rules of the game. Over the past year, currency supervision has significantly changed in real control mechanisms.
First of all, banks can no longer turn a blind eye to the lack of foreign exchange earnings. They have been since February last year obliged to complete currency supervision only when the money has actually arrived in the account of the Ukrainian company in foreign currency. Recalculation in hryvnias or any other formal “repayment” is now no longer possible.
This rule is not just bureaucracy. Previously, due to such loopholes, dozens of companies shipped goods abroad, did not receive payment for them, closed their bank accounts and disappeared with impunity. That is why the National Bank changed rules: now closing an account does not remove currency supervision from the company.
In addition, a year ago the NBU confirmed plan of on-site inspections of banks and non-banking institutions. Financial institutions must now be prepared for regular audits of how they monitor their clients’ currency transactions and how they comply with sanctions legislation.
Another important change: in the conditions of martial law of the NBU updated financial monitoring rules. In particular, he simplified the procedures for identifying clients, but at the same time strengthened the requirements for updating information about those who conduct foreign economic operations.
Finally, they started in January of this year act new amendments to the Regulation on currency supervision. They harmonize the administrative procedures of banks with current legislation and international standards in order to close the smallest loopholes for fraud.
From now on, banks should not just formally accept clients’ foreign economic contracts, but carefully check settlement terms for export-import operations, counterparty risk and compliance of terms with actual product deliveries.
…Next time we will tell you what is only whispered in financial circles and which is already determining the face of the economy during the war. What sanctions threaten those who build schemes based on fictitious imports or hide foreign exchange earnings? Are there already high-profile cases, and not just behind-the-scenes hints? Have the courts reached real verdicts, seizure of property or blocking of accounts of companies and their owners?
We will tell you how the rules of the game are changing for businesses that work on exports and imports. What new requirements have already been introduced and what awaits us next: will there be additional filters, approval of large currency transfers, new restrictions for enterprises? And most importantly: does anyone think about those who play fair? How does the state plan to separate violators from bona fide businesses? Are there effective mechanisms for challenging the decisions of banks or inspections when a business falls under the repressive machine without grounds?
We will also explain how the systematic non-return of foreign exchange earnings, fictitious imports and withdrawal of funds abroad directly affect the hryvnia: why this is not only a “problem of the state”, but a daily risk for each of us. How does this affect the exchange rate, the currency reserves of the NBU, and the country’s ability to finance itself in wartime?
And in the end, does Ukraine act in isolation, or does it cooperate with FATF, Interpol, international banks, foreign investigators? We will show whether the global anti-corruption and anti-money laundering machine really helps uncover international schemes and who has already experienced its work.
Tetyana Viktorova
