Ukraine has failed to collect approximately 50 billion in taxes due to the prevalence of drug trafficking and associated illegal activities.

Ukraine has failed to collect approximately 50 billion in taxes due to the prevalence of drug trafficking and associated illegal activities.

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At a parliamentary VSC meeting, reps from the National Bank disclosed the increase in shady financial practices known as drop schemes. Since 2023, authorities have been cracking down on miscoding operations, which has caused drop schemes to flourish.

Unwitting Ukrainians sometimes join in these criminal activities, while others voluntarily open bank accounts and hunt for "employers." These illicit drop schemes can pose as benevolent volunteers too.

To crack down on this criminal behavior, a registry of compromised accounts would be handy. Tightening financial monitoring, imposing limits on turnover without income verification, restricting the quantity and volume of P2P transfers outgoing, and refusing new clients at financial institutions unable to manage these processes, along with the use of technical card usage monitoring tools, could help.

In the broader context of drop schemes, governments employ various strategies to combat them, such as:

1. Enhanced regulatory oversight, strengthening anti-money laundering frameworks, and suspicious transaction monitoring.
2. Implementing borrower-based macroprudential tools like loan-to-value (LTV) or debt-service-to-income (DSTI) caps to manage risks.
3. Addressing non-performing loans (NPLs) through stricter credit risk assessments and balance sheet cleanup.

Though not specifically mentioned in the documents, these measures aim to stop the criminal use of drop schemes as part of money laundering or financial crime operations. For Ukraine-specific information, recent reports from the IMF or National Bank of Ukraine would offer more detailed insights.

1. The UKrainian government is considering the introduction of a registry of compromised accounts to effectively combat the rising drop schemes in the banking-and-insurance industry.
2. The National Bank has proposed tightening financial monitoring by restricting the quantity and volume of P2P transfers, imposing limits on turnover without income verification, and refusing new clients at financial institutions unable to manage these processes.
3. General news reports suggest that the financial sector is under scrutiny, as authorities are increasing regulatory oversight and strengthening anti-money laundering frameworks to curb drop schemes.
4. In the broader industry, governments are also employing borrower-based macroprudential tools like loan-to-value (LTV) or debt-service-to-income (DSTI) caps to manage risks associated with drop schemes.
5. Recent crime-and-justice reports have highlighted the need for addressing non-performing loans (NPLs) through stricter credit risk assessments and balance sheet cleanup to prevent drop schemes from being used as part of money laundering or financial crime operations.

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