Analysis of suspicious transactions in the tax sphere. Numbers and recent trends
The State Financial Monitoring Service of Ukraine within the specifics of its activities, as a national financial intelligence unit, conducts analytical investigations in order to form suspicions of committing a number of predicate offences, which result in legalization (laundering) of proceeds from crime.
The subject of investigations are criminal proceeds generated from corruption, human trafficking, drugs and weapons, terrorism and its financing, fraud, etc.
At the same time, the SFMS pays constant attention to the analysis of suspicious transactions of money laundering, which have signs of tax crimes, as one of the types of predicate offences.
In this regard, a number of large-scale financial investigations have been conducted, which have resulted in the submission of case referrals to law enforcement agencies.
The practice of investigations shows that “services” for tax evasion and receipt of cash, which are provided by transit-conversion groups, are in demand among Ukrainian taxpayers.
Tax evasion is carried out through the so-called "twists "(fictitious transactions related to VAT fraud), and wholesale and retail trade enterprises can be involved in receiving cash, which in turn “sale” unrecorded cash, conducting transactions of “counter flows”.
It should be noted that the so-called “sale” of unrecorded cash is carried out outside the banking system, which complicates its detection. Under such conditions, the identification of such schemes is facilitated by other sources of information and cooperation with law enforcement and intelligence agencies.
Since the beginning of 2020, the SFMS has submitted to law enforcement agencies 60 case referrals related to tax crimes using the mechanisms of “transit”, “twisting” and “counter flows”. The amount of money related to money laundering in these materials is UAH 29.9 billion. These case referrals were sent to:
- the Security Services of Ukraine - 34 case referrals worth UAH 16.3 billion;
- the State Fiscal Service - 21 case referrals worth UAH 7.3 billion;
- the Office of the Prosecutor General - 2 case referrals worth UAH 6.0 billion;
- the State Bureau of Investigations - 1 case referral worth UAH 0.2 billion;
- the National Anti-Corruption Bureau of Ukraine - 1 case referral worth UAH 0.04 billion;
- the National Police of Ukraine - 1 case referral worth UAH 0.04 billion.
In particular, based on the results of investigations into the activities of large-scale transit-conversion groups (with the participation of about 4,000 business entities), 31 case referrals with suspicions of forming an unjustified tax credit using the schemes of “twists”, “counter flows” and further legalization of criminal funds totaling UAH 13.6 billion were submitted to law enforcement agencies this year. During the analyzing of these case referrals, funds in the amount of UAH 28.2 million were blocked.
Separately, according to the results of the analysis of suspicious cash out transactions (involving about 4.5 thousand enterprises), since the beginning of 2020, the SFMS has submitted 28 case referrals with suspicion of money laundering for the total amount of UAH 13, 5 billion to law enforcement agencies.
Also, in this year, based on the results of financial investigations, a case referral was prepared and submitted to the law enforcement agency related to tax evasion through the organization of a “carousel” scheme of illegal export of grain and non-return of foreign exchange earnings to Ukraine for the total amount of UAH 2.8 billion.
Thus, in January-May 2020, 60 case referrals with suspicions in the tax sphere for the total amount of UAH 29.9 billion were submitted to law enforcement agencies.
At the same time, during 2019, the SFMS has submitted 893 case referrals to law enforcement agencies, in which the amount of financial transactions related to criminal proceeds and their laundering is UAH 92.2 billion, of which 137 case referrals worth UAH 26.9 billion are related to tax crimes.
The SFMS continues to work closely with law enforcement agencies to identify tax fraud and tax evasion schemes.