End of Bank Secrecy

From now on tax people can "frisk" any business entity at any time on any pretext (especially when ordered from above). Remarkably this metaphor was confirmed to The Day by officials at one such district tax administration, although with reservations: to examine a business entity's bank accounts this entity must be guilty of some transgression (e.g., acting contrary to the law, evading taxes, having excess revenues or losses, etc.). Further conversation made it clear that the public prosecutor or other law enforcement authorities did not necessarily have to step in at that stage as they would be informed by the tax administration simultaneously with the bank. In other words, it would remain anyone's guess who exactly decided to check bank accounts, meaning that this decision could be made by anyone. Another inference: no one will now guarantee that such inspections will be made just to combat monetary outflow and other financial wheeling and dealing.

"This practice - over-regulation and excessive interference on the part of any fiscal authorities - will make businessmen move in the shadows, go illicit, because operating legitimately is becoming unbearable, and we have no strength left to fight the government machine. A businessman should not have to fight it. He should work, creating jobs placements, wages, and payments to the budget," The Day was told by Vyacheslav Kredisov, president of the Mezokred group of companies and member of the Coordinating Council of the New Formation Business Association.

Yet the banks have no alternative if they want to keep operating. They will provide such information, although Ihor Frantskevych, Chairman of the Board, Reiffaisenbank Ukraine, says that the banks will, of course, warn their clients about tax bloodhounds sniffing around. Incidentally, the question of how such information about bank accounts will be provided (tax people want it in the form of computer files) remains legally open. Mr. Frantskevych promised at a news conference that RU Bank, for example, would issue such information only as hard copies. Naturally, this, just like computer files, does not rule out leaks, an opportunity that will be pounced on by rivals, and other negative consequences that will do nothing to encourage business activity.