Month: March 2026

Did you receive a tax violation notification letter after an audit? Did the Commission suspend the registration of tax invoices? Included in the list of risky ones? We have been working with such cases every day for the past 10 years, and we know how the State Tax Service justifies its decisions and where the typical weaknesses in their arguments lie.

Fedoryshyn & Partners specializes in tax and customs law. Our practice is built on two principles: deep specialization and focus on a specific result for the client – not on the number of consultations provided, but on solving the problem.

Need an assessment of the situation?

Send your documents and we will analyze your prospects for free within 1-2 business days.

+38 093 722 56 33 | fo@fedoryshyn.com

From the practice of Fedoryshyn & Partners

Over the years, we have handled hundreds of cases in tax disputes of various sizes – from appealing against fines for individual entrepreneurs to multi-million dollar tax violation notices for large taxpayers. Below are some examples.

Appeal against a tax violation notice for UAH 7.9 million – audit of the Office of Large Taxpayers

The Office of Large Taxpayers of the State Tax Service conducted a scheduled on-site inspection of a manufacturing company. As a result, an act was drawn up, which recorded the understatement of income tax and VAT. Based on the report, three tax violation notices were issued totaling UAH 7.9 million.

We analyzed the act and found that the STS’s conclusions were based on formal discrepancies in the primary documents, while the reality of the business transactions was confirmed by a full chain of documents – from contracts to acceptance certificates and bank statements. A lawsuit was prepared to the administrative court.

Result: all three tax violation notices were recognized as unlawful and canceled.

Appealing against a tax assessment notice on income tax: importer, foreign economic operations

The State Tax Service conducted a documentary scheduled audit of a company that carries out a full production cycle and purchases packaging from a counterparty in Turkey. The tax authority decided that the costs of prepress and typographic equipment setup were “not economically justified” and charged UAH 234 thousand in additional income tax.

At the stage of administrative appeal, the STS partially canceled the TND, recognizing the insufficiency of the evidence base for a number of counterparties. As for the rest, we prepared a lawsuit in which we proved that prepress costs are an integral part of the production cycle and are confirmed by contracts, acts and bank documents.

Result: The tax violation notice was canceled in full.

Appeal against a fine of UAH 23.7 million: actual inspection of the store

During the actual inspection of the store, the STS conducted a controlling settlement transaction and found that the entrepreneur allegedly did not keep records of inventory. The reason was the sale of sunglasses, which the tax authority classified as “medical devices”. On this basis, a tax violation notification letter was issued with a fine of UAH 23.7 million.

We appealed the decision, building our arguments on several levels: sunglasses are not a medical device within the meaning of the relevant legislation; the entrepreneur is not included in the list of entities required to keep commodity records; the inspection was beyond the scope of factual inspection; the grounds for its appointment were not proven.

Result: The court declared the tax violation notification letter unlawful and canceled it in its entirety.

Unlocking 8 tax invoices for an importer of industrial equipment

The Commission for Suspension of Registration suspended the registration of 8 tax invoices and adjustment calculations of a company that imports ventilation equipment from a German manufacturer and supplies it to Ukrainian buyers. The reason was that the UKTZED codes of the goods were missing from the VAT payer’s data table.

For each invoice, a separate package of explanations was prepared with complete primary documentation: a foreign economic contract, customs declarations, contracts with buyers, and invoices. After the commission’s refusal, a lawsuit was filed to recognize the decisions as unlawful and to oblige them to register the invoices.

Result: All 8 invoices were registered by court order.

Appeal against 11 decisions of the State Tax Service in the amount of more than UAH 1 million: unscheduled inspection of individual entrepreneurs

The STS conducted a documentary unscheduled audit of an individual entrepreneur after he had ceased his business activities. As a result, 11 decisions were issued – tax violation notices, debt payment requests and decisions on imposing fines – totaling more than UAH 1 million (personal income tax, VAT, unified social tax, military duty, penalties).

Підприємець дізналась про донарахування лише після відкриття виконавчого провадження – жодних повідомлень від ДПС вона не отримувала. Ми підготували позов, оскарживши всі 11 рішень, та обґрунтували порушення процедури повідомлення платника та неправомірність нарахувань.

Result: All 11 decisions of the State Tax Service were recognized as unlawful and canceled. The enforcement proceedings were closed.

Is your situation similar to one of the above?

Send us an inspection report, tax violation notice or commission decision – we will assess the prospects for appeal within 1-2 business days. It is free and does not oblige you to do anything.

+38 093 722 56 33 | fo@fedoryshyn.com

Areas of practice in tax disputes

Appealing against tax assessment notices

TND is the main tool used by the State Tax Service to record additional charges. In-house, documentary, and factual audits – each may result in a tax violation notice with which you disagree. We analyze the tax audit report, prepare objections, go through an administrative appeal to the State Tax Service of Ukraine and, if necessary, conduct the case in court at all instances. We work with tax violation notices for income tax, VAT, personal income tax and unified social tax.

Suspension of registration of tax invoices

A blocked invoice is an unregistered tax credit for your buyer. A situation in which the counterparty does not receive a credit through your fault undermines trust and creates a risk of losing a partner for future deliveries. We prepare explanations and a full package of documents for the commission. If the commission refuses, we appeal in court. In our practice, in the vast majority of cases, registration can be restored – the question is at what stage.

Exclusion from the list of risky payers

Inclusion in the risky list means a de facto blockade of VAT work: every invoice will be stopped automatically. We prepare a table of the VAT payer’s data, appeal against the commission’s decision, and, if necessary, go to court.

Support of tax audits

The participation of a lawyer at the inspection stage is not a formality. We analyze the inspection order, monitor compliance with the procedure, record violations and prepare objections to the act. This significantly reduces the risk that the act will contain conclusions that will have to be challenged for months.

Tax debt, fines and claims of the State Tax Service

Tax claims, penalties, unified social tax charges, seizure of funds – all of these are appealable. If the State Tax Service has accrued a debt that you do not agree with or has imposed sanctions in violation of the procedure, there are grounds for defense.

When we don’t take a case

We do not take cases for the sake of process. If, after analyzing the documents, we see that the client’s position is objectively weak – for example, the reality of the transactions is not confirmed by documents, or the violation really took place – we say so directly. Sometimes the right strategy is not to appeal, but to negotiate an installment plan or minimize the consequences in other ways.

Our goal is the best possible result for the client, not litigation as an end in itself.

How to work

1. Analysis of the situation. You send the documents in any convenient way. Within 1-2 business days, we study the materials and provide a preliminary assessment: prospects for appeal, optimal strategy, estimated timeframe and cost. This stage is free of charge.
2. Making a decision. Based on the analysis, you decide whether we proceed. We communicate openly if we consider the position to be weak or if an appeal is inappropriate.
3. Execution. Preparation of procedural documents, representation of interests in the State Tax Service and courts at all instances. We work throughout Ukraine through the Electronic Court.
4. Feedback. At every stage, you are informed about the progress of the case. You always understand what is happening and what the next steps are.

About Fedoryshyn & Partners

Fedoryshyn & Partners specializes exclusively in tax and customs law. This is not just one of the areas of our broader practice – it is the only thing we do. More than 10 years of work in this area means that we know not only the legislation, but also the law enforcement practice: how the State Tax Service justifies its decisions, which arguments work in court and which do not.

Our clients include importers, manufacturing companies, IT businesses, large taxpayers and individual entrepreneurs. The geography of the practice covers the whole of Ukraine.

We assume that a client comes to us to solve a specific problem, not for a legal lecture. That’s why we speak in clear language: what are the risks, what can be done, what is the most likely scenario, and how much it will cost. Preliminary analysis of documents is free of charge.

Frequently asked questions

1. What are the deadlines for appealing a tax violation notice?

Administrative appeal (complaint to the State Tax Service of Ukraine) – 10 business days from the date of receipt of the tax violation notification letter. Filing a complaint within this period suspends the fulfillment of monetary obligations for the duration of the review. Court appeal – 1 month after the administrative procedure is completed, or 6 months without it. As for certain categories of decisions, the Supreme Court case law allows for a period of 1095 days (Article 102 of the TCU), but this position is not uniform – you should not delay.

2. Is an administrative appeal to a court mandatory?

No. You can go to court right away. At the same time, the administrative stage is free of charge, suspends the execution of the tax violation notice and allows you to see the arguments of the STS, which is useful for preparing for court.

3. How much do the services cost?

The cost depends on the category of the dispute and the amount of additional charges. Preliminary analysis is free of charge. We agree on the exact price after reviewing the documents, before starting work.

4. Is it possible to appeal a TND if it has already been paid?

Yes. Payment does not terminate the right to appeal. In case of cancellation, overpaid funds are subject to refund.

5. Do you work only with large enterprises?

No, we don’t. We work with businesses of all sizes – from individual entrepreneurs to large taxpayers. The key criterion is the presence of grounds for appeal.

Time limits for appeal are limited

If you have received a tax violation notice, inspection report, decision to suspend registration or other document from the State Tax Service that you disagree with, send it for analysis. The preliminary assessment is free of charge.

Phone: +38 093 722 56 33

Email: fo@fedoryshyn.com

Fedoryshyn & Partners

Author: Viktoriia Staryk, lawyer at F&P

On March 31, 2026, the annual declaration campaign ends. By this date, every declarant – from a village council member to a deputy minister – must submit an annual declaration for 2025 through the Unified State Register of Declarations. There are less than three weeks left.

At first glance, the procedure is routine: open your account, fill in the sections, click “submit.” But it is this apparent simplicity that creates problems. Every year, the NACP finds thousands of declarations with errors, and some of them are subject to full audits that end in administrative or criminal proceedings. In 2024, the NACP resumed full audits in full, and this trend is growing.

This article is not a retelling of instructions from the NACP website. We will analyze specific mistakes in practice that actually lead to declarants being audited and explain where the line between inaccuracy and unreliability lies.

Mistake #1: “Not mine, but my mother-in-law’s” – ignoring the property of family members

One of the most common and dangerous mistakes. The declarant fails to indicate real estate, vehicles or bank accounts registered in the name of his/her spouse or persons with whom he/she lives together. In this case, a “family member” within the meaning of the Law “On Prevention of Corruption” is not only a registered spouse, but also a person who lives together, is bound by common life and has mutual rights and obligations (part 1 of Article 1 of the Law). A civil partner with whom you live together and run a common household is a family member for declaration purposes.

Practical advice: before filling out the declaration, make a list of all property, accounts, securities, and corporate rights of each family member. Ask them to provide bank statements. It is better to spend an hour on this than to explain yourself to the NACP later.

Mistake #2: Rounding and “approximate” amounts

The NACP distinguishes between “inaccurate” and “unreliable” information, and the line between them is 100 subsistence minimums for able-bodied persons. In 2026, this is UAH 332,800 (one subsistence minimum is UAH 3,328). If the discrepancy between the declared and the actual amount does not exceed this amount, it is an inaccuracy that can result in disciplinary liability at most. If it does, it is already inaccurate information, and a completely different story begins.

The problem is that “rounding” tends to add up. One bank account with a balance of UAH 50,000 was omitted, the cost of a car was rounded up by UAH 100,000, and income from renting an apartment was forgotten by UAH 80,000 – and the total discrepancy already exceeds the threshold of UAH 332,800. And if the amount reaches 500 subsistence minimums (UAH 1,664,000), this is already criminal liability under Article 366-2 of the Criminal Code.

Misconception #3: Cryptocurrencies and digital assets

This is an increasingly relevant topic every year. If the declarant or a member of his or her family owns cryptocurrency, it must be indicated in the Securities section (subsection “Other corporate rights”). The problem is that many people believe: “crypto is not regulated, so there is no need to declare it”. This is not the case. The NACP clearly states in its explanations that virtual assets are subject to declaration.

An additional difficulty is determining the value. The NACP recommends using the market rate as of December 31 of the reporting year. But which rate, from which exchange? There is no clear answer here, and this is a risk area: The NACP may estimate the value differently than you do.

Mistake #4: Income that has been “forgotten”

The “Income” section should include ALL income, including those that have already been taxed. A common mistake: the declarant does not indicate the salary, believing that “it is already in the tax office”. Or they do not indicate income from the sale of movable property, gifts, inheritance, interest on deposits.

Separately, there are cashback, bonuses, cashback from banks, and payments from insurance companies. These are also income, and they need to be reported. Yes, this applies even to the National Cashback if the amount exceeds the threshold for notification.

Mistake #5: Failure to submit a notice of significant changes

This is a separate obligation that is most often forgotten. If during the year you or a member of your family received income or acquired property in an amount equivalent to or greater than 50 subsistence minimums (UAH 166,400 in 2026), you must report significant changes in your property status within 10 days.

We bought a car for UAH 200,000 in August – the notification had to be submitted by the end of August. Failure to do so is a separate violation, regardless of whether you fill out the annual declaration correctly.

Error #6: Ignoring the “Data for the declaration” function

The NACP provides a tool that many people ignore – the Data for Declaration certificate. It is generated in the personal account and contains information that

The NACP already has information from the registers: real estate, vehicles, corporate rights, bank accounts. In fact, this is a cheat sheet from the NACP itself: they show what they already know about you.

If your declaration differs from this data, it is an automatic reason for attention during the audit. Therefore, I advise you to generate the certificate BEFORE filling out the declaration and compare it with what you plan to declare. Please note: the certificate can be generated only once per reporting period.

What to do if you have already filed a declaration with an error

The law provides for the possibility to submit a corrected declaration within 30 days after submission. This is important: if you notice a mistake, do not wait for an audit, correct it yourself. Timely correction significantly reduces risks. When conducting a full audit, the NACP takes into account the explanations submitted before the audit.

If the 30-day period has expired, you can send a letter to the NACP via your personal email account, explaining the reasons for the error and attaching supporting documents. This is not a guarantee, but it is much better than waiting for the NACP to identify the discrepancy on its own.

Scale of responsibility: from a warning to prison

A practical checklist before submission

• Make a complete list of property, accounts, and income of all family members
• Generate the “Data for the declaration” certificate and compare it with your data
• Check whether all notifications of material changes were submitted during the year
• Specify crypto assets, if any
• Don’t round up: provide exact amounts from bank statements
• Use auto-complete in the draft – it reduces technical errors
• After submission, read the declaration again. You have 30 days to make corrections

If you have a complicated situation – many objects, foreign assets, questions about identifying family members, or you have already received a notice of a full audit – contact a lawyer before filing, not after. It is much cheaper to correct a mistake than to defend against its consequences.

Need help with declaration or protection during NACP inspection? Don’t hesitate to contact us.

Phone: +38 093 722 56 33

Email: fo@fedoryshyn.com

 

Author: Olena Andriyko, lawyer at F&P

Starting from January 1, 2026, banks will pay income tax at the rate of 50%. The Law of Ukraine No. 4698-IX dated 3 December 2025 “On Amendments to the Tax Code of Ukraine on Peculiarities of Taxation of Banks in 2026” came into force without a transitional period, which is already creating practical difficulties for financial institutions that had made plans for the year based on the previous 25% rate.

Below is not a retelling of the law, but an analysis of what it really means: which provisions are the most painful, where the legislator has deviated from the logic of the windfall tax, and what those who work with or invest in banks should expect.

What has changed: three key rules

The law contains three independent changes that together have an effect that is significantly different from a simple doubling of the rate.

The first is a 50% rate on all profits. In accordance with the amendments to Article 136 of the Tax Code, the profit of banks for the reporting (tax) periods in 2026 will be taxed at a rate of 50%. There are no thresholds, no progressive approach – the rate applies from the first hryvnia of profit.

The second is the prohibition of loss carryforwards. In 2026, banks will no longer be allowed to reduce their taxable income by the amount of negative tax losses from previous years. This is the most stringent rule for institutions that have suffered losses as a result of the full-scale invasion – write-offs of impaired assets, provisions for loan portfolios in combat zones, and loss of branches. In 2026, such banks will actually pay income tax without being able to take into account their actual previous losses. The right to carry forward losses will be restored only in 2027.

The third is an advance payment when paying dividends. The 50% rate applies to the advance payment of income tax that the bank is obliged to pay before paying dividends. We are not talking about taxation of dividends in the hands of the shareholder – this is a separate mechanism provided for in subparagraph 57.11 of the Tax Code. But in practice, this means that any dividend payment in 2026 will initially “burden” the bank with an advance payment of 50% of the payment amount, which significantly affects the decision on profit distribution.

Is it a windfall tax – and why the answer matters

The government positioned this measure as an analog of the windfall tax, which is the taxation of excess profits. In fact, there is a fundamental difference between these concepts that goes beyond a terminological dispute.

The classic windfall tax is a tax on excess profit, i.e., the part that exceeds a certain basic level (usually the average profit for the previous 3-5 years). This approach was applied by the UK to energy companies after 2022, and by the EU to electricity suppliers. The logic is simple: the state participates in the distribution of benefits from external circumstances beyond the company’s control.

The rule introduced by Law No. 4698-IX has a different nature: it taxes all profit without exception, regardless of whether it is “excessive” in any sense of the word. A bank that earns a profit equivalent to the average pre-crisis level in 2026 will pay the same 50% as a bank with record-breaking performance. This is a simple rate increase for fiscal purposes, and it should be called that.

Why is this important in practice? Because the argument “you already earn too much” does not fit well with the situation of banks that have turned a profit after several unprofitable years, but still fall under the same rate. The legal construction of the law does not provide for any differentiation depending on the level of profitability.

The fiscal effect and the real burden

According to various estimates, the increased rate should bring in UAH 15 billion to more than UAH 20 billion in additional budget revenues. These figures are realistic given the financial results of the sector in 2023-2025 – banks did demonstrate sustainable profitability even under martial law, which was the main argument of the legislator.

At the same time, the real tax burden is higher than just a comparison of rates. The prohibition of loss carryforwards actually increases the tax base beyond the “cleaned” profit – for some banks, this means that the effective rate will exceed 50% of their economic result. For most businesses in Ukraine, the corporate tax rate is 18%; banks in 2026 will find themselves in a fundamentally different regulatory dimension.

Market implications: what is already happening

The rate hike is likely to affect banks’ behavior in several ways, and some of these changes are already evident in the first months of the year.

Lending activity. The reduction in post-tax profit directly reduces Tier 1 capital. This limits the ability to increase the loan portfolio – not because of a lack of desire, but because of the NBU’s capital adequacy requirements. Banks that had plans to expand lending in 2026 are forced to revise them.

Asset structure. Investments in government bonds, which have traditionally been an attractive instrument for banks in unstable periods, become even more attractive when the decline in lending profits is already “built into” the increased rate. It is possible that 2026 will be marked by a further increase in the share of government securities in bank balance sheets at the expense of corporate lending.

Dividend policy. An advance payment of dividends at a rate of 50% is a significant deterrent to profit distribution. We should not expect active payments to shareholders in 2026: most bank boards are likely to decide to reinvest profits.

Cost of services. Banks are commercial institutions and will pass on part of the tax burden to their customers, either through commissions, margins, or the cost of credit. How quickly and to what extent will depend on the competitive environment and the NBU’s regulatory stance.

What it means for your business

For companies that interact with the banking sector, whether as borrowers, partners or investors, the new rules have specific practical implications.

• Review loan agreements. Pay attention to the terms and conditions regarding the revision of the interest rate due to changes in the bank’s expenses. Some agreements contain such clauses, and an increase in the tax burden may be grounds for revising the loan price even under the current agreement.
• Bank shareholders will receive a separate analysis. If your company is a shareholder of a banking institution or plans to receive dividends from it in 2026, the mechanism of advance payment requires a detailed calculation before the decision on profit distribution is made. What looks attractive “before taxes” may change significantly “after”.
• For banks themselves, it is an audit of the tax base. If you have accumulated losses from previous years, you need to clearly understand their amount and legal nature: which ones are subject to the prohibition of carryforwards in 2026 and which ones can be taken into account from 2027. This has a direct impact on current tax planning and provisions.
• Review the sources of funding. If your business is heavily dependent on bank lending, 2026 is the time to evaluate alternative instruments: bond loans, leasing, and capital raising. Not because bank lending will disappear, but because its terms and availability may deteriorate.

Law No. 4698-IX is a wartime decision, and this must be recognized directly. The state needs resources, the banking sector makes a profit, and the mechanism for raising funds is obvious.

But there is a question that remains open and has legal significance: is this rate a temporary measure with a clear horizon, or will it become a new “norm” for the sector? The law is formulated as a norm for 2026, but the lack of a clear mechanism for returning to the base rates and the precedent of a gradual increase (from 18% to 25% and then to 50%) is a signal that the market is already reading.

For banks, their shareholders and corporate clients, the next few quarters will be a time of adaptation. Those who do so consciously – with a full understanding of the regulations and their implications – will have a significant advantage over those who simply “wait and see.”

Author: Maryna Pokotylo, Partner at F&P

In today’s environment of increased attention to financial compliance and sanctions risks, businesses are increasingly facing situations where bank payments are suspended or do not go through at all. This can happen both in domestic banks and in foreign payment systems or in international transfers, and has its own legal grounds, consequences and algorithms for business.

Blocking a payment does not always mean a “ban” or a violation on the part of the client – it is more often the result of banks’ use of financial monitoring systems, AML/KYC checks and sanctions screening, which are mandatory requirements of both national and international law, as well as internal bank policies and correspondent bank requirements.

1. Causes of payment freezes

Compliance risks and internal monitoring systems of the bank. Commercial and international banks are required to control the movement of funds in accordance with AML (Anti-Money Laundering) and KYC (Know Your Customer) requirements. This means that any payment may be stopped if the bank finds inconsistencies in the data, inconsistencies in the client’s profile or atypical transactions, inconsistencies in the transaction with the client’s normal business activities, or insufficient documentary evidence of the economic content of the transaction.

Sanctions risks arise if the payment is related to a counterparty that is potentially or actually on sanctions lists (national or international). In practice, the risk may also arise if the payment is linked to a sanctioned jurisdiction, correspondent bank, beneficiary, commodity or purpose that is subject to sanctions restrictions or screening triggers.Banks automatically block or suspend transactions that fall under sanctions regimes to avoid fines and loss of access to financial markets.

Incorrect details or incorrect payment data – for example, inaccurate SWIFT codes, incorrect company names, or inaccurate payment purpose are also very common causes of hang-ups, especially in international transfers, where automated verification systems are sensitive to formal inconsistencies.

2. How business should act: a clear algorithm of steps

1) Find out why the payment was blocked

The first step should always be communication with the bank servicing the account:

• Ask in writing, through which mechanism and on what legal grounds the payment was stopped.
• The request should contain clarifications:
  – which transaction is considered risky,
  – which data or transactions are suspicious;

– whether it is financial monitoring, sanctions screening, currency control, internal compliance checks, or a request from a correspondent bank.

The bank is obliged to provide justification or at least indicate which documents must be provided for verification, to the extent permitted by law and internal disclosure procedures.

 

2) Prepare a list of basic documents for the bank

To ensure that the payment is unblocked, the business needs to provide a clear legal and economic basis for the transaction. The standard list of documents includes:

1. Contracts and agreements with the recipient of funds (with translation if the payment is international), as well as additional agreements, specifications, orders, and other documents that specify the subject matter and terms of the transaction.
2. Invoices, certificates of work performed/services rendered (Invoice, Bill of Lading, etc.), shipping documents, customs documents (if any), transportation documents, certificates of origin or quality (if necessary).
3. An explanatory note setting out
   the purpose of the payment with a description of the economic content,
   compliance with the agreement and legislation (wording without legal jargon),
   the logic of the business transaction, its connection with the company’s core business, the grounds for choosing a counterparty, and the practical purpose of the payment.
4. Extracts from the registers, KYC documents of the counterparty, including statements on beneficial owners, ownership structure, registration documents, confirmation of the actual location and, if possible, absence of the counterparty from the relevant sanctions lists.
5. Documents confirming the legitimacy of the source of funds (financial statements, payment documents, budget certificates), as well as documents confirming the business purpose and financial capacity of the transaction.
6. If necessary: internal company documents (compliance policies, counterparty verification procedures, authorization questionnaire, due diligence results) if the bank requests confirmation of the appropriate level of internal control.

Tip: It is important to prepare all documents in the formats accepted by the bank and coordinate the list with the bank’s financial monitoring specialist in advance, as well as submit them in one structured package with a cover letter and a list of attachments.

 

3. Sanctions risks as a separate area of compliance

Sanctions compliance management is a separate branch of risk management that involves verification:

• whether the counterparty is on any sanctions lists (UN, EU, OFAC, etc.).
• whether it has any hidden beneficiaries related to sanctioned persons.
  
• whether the transaction or business structure does not create grounds for blocking payments due to sanctions risks;
• whether the payment goes through banks, jurisdictions or supply chains that may be classified by the bank as high-risk.

Even an unconfirmed suspicion about a counterparty can lead to a blocked transaction, and bank compliance systems often operate on the principle of “better to stop and double-check,” which, from a practical point of view, requires businesses to prepare an evidence base in advance regarding the transparency of the counterparty and the economic substance of the transaction.

 

4. What to do if the blocking lasts longer than the set time limit

If a payment is being blocked, it is advisable for businesses to act consistently and with proper documentation of each step.

In this situation, you should:
– contact the bank again in writing with a request to provide clarification on the status of the transaction and the list of documents required to complete the audit;
– clarify the stage of the review (internal audit of the bank, additional compliance analysis, review by a correspondent bank, etc.);
– submit documents in one structured package with a cover letter and a list of attachments;
– record all communication with the bank (letters, responses, requests, list of submitted documents, dates of sending and receiving).

If the bank does not provide a meaningful response or the audit continues without proper communication, it is advisable to proceed to pre-trial settlement:
– send an official complaint to the bank;
– contact the bank’s compliance/financial monitoring unit separately;
– if necessary, initiate consideration of the appeal through the bank’s management or the relevant customer complaints unit.

At the same time, it is important to note that in certain cases, a bank may be restricted from disclosing full information on the grounds for suspending a transaction due to the requirements of financial monitoring legislation and internal compliance procedures.

If there is no result after the pre-trial stage, the business may consider judicial protection of its rights, in particular, regarding the proper fulfillment of contractual obligations by the bank, provision of information within the scope of permissible disclosure and removal of unlawful restrictions on the transaction. In this case, a properly formed evidence base and a complete chronology of interaction with the bank will be of key importance.

 

5. Risk prevention: how to avoid problems with payments

• Implementing internal compliance in business is not a formality, but an effective mechanism to prevent the risks of blocking payments and other negative consequences.
• Regular checks of counterparties against sanctions lists and transparency of ownership structure significantly reduce the risk of delays, especially for international transactions, new counterparties, and atypical payments.
• Having a clear AML/KYC policy in place increases bank confidence and facilitates internal financial monitoring procedures, as well as reduces the time required to prepare a response to a bank’s request.
• It is practical to form a “compliance file” for key counterparties in advance: a package of registration, corporate, authorization and operational documents that can be promptly provided to the bank without wasting time.

 

Conclusion.

Compliance and sanctions risks have become an integral part of financial relations in modern business. If a payment is delayed, it is not the end of the world, but a signal to act: to analyze, prepare documents and communicate clearly with the bank. The key task of a business in such a situation is not only to formally submit documents, but also to provide proper legal justification for the economic content of the transaction, its compliance with the company’s business profile, and the absence of sanctions triggers. Legal support at every stage will help not only to unblock the transaction but also to create an internal system that will help avoid similar situations in the future.