Evaluating the Impact of Ukraine's New AML Law: Insights from Ganna Buiadzhy, MP of VigoLex
Ganna Buiadzhy, Managing Partner at VigoLex Ukraine, discusses the challenges faced by the gambling industry, following the reintroduction of gambling inspections in Ukraine amid martial law
The Ukrainian gambling market has been under the spotlight due to its dynamic shifts and regulatory challenges. Last week, we published a piece on the intricacies of gambling taxation in Ukraine, providing clarity on the current state and future prospects of the sector. For readers interested in understanding these taxation challenges in detail, you can read the full article here.
Following Ukraine's latest legislation to combat money laundering and terrorist financing risks, gambling operators are now on high alert for both scheduled and unscheduled inspections. The law has clear parameters under which an operator may face scrutiny, but what is the legal perspective on this issue, and how can businesses best navigate this changing terrain?
This week, in a recent interview with Attorney and Doctor of Law, Ganna Buiadzhy, managing partner at VigoLex, we gained valuable insights into the implications of Ukraine's new AML law, the challenges it poses, and suggestions for operators to navigate the changing regulatory landscape.
Returning Inspections amid Martial Law
According to Ganna Buiadzhy, the recent reintroduction of gambling inspections, following the enactment of Law of Ukraine No. 3219-IX, puts certain businesses at an unfair disadvantage, especially given the ongoing martial law. She raises concerns about select businesses including gambling industry, producers and sellers of excisable goods, and financial and payment services that could become uncompetitive compared to other types of business, and may be subject to unauthorized influence of the inspection body.
Ganna Buiadzhy's prime concern revolves around the extensive number of unofficial gambling establishments operating without requisite permits or licenses. She emphasizes, "Legal gambling, in contrast, managed to pay about UAH 3 billion in taxes in just the first half of 2023." Oppressing these legitimate businesses, particularly during martial law, appears counterproductive. Instead, the state should focus on strengthening ties with legal businesses and actively combatting illicit gambling entities.
Navigating the Inspection Process: Tips for Operators
In light of inspections being permitted and conducted — as highlighted by an analytical report from the Saturday Team, which reveals that as of 1 May 2023, the STS conducted 4,487 tax inspections compared to 6,602 inspections for the entirety of 2022 — Ganna Buiadzhy offers practical advice for businesses to make the inspection process as comfortable as possible:
1. Review Inspection Timetables: Regularly review the inspection schedules published by the STS on its official website. It is worth remembering that changes to the schedule may be made monthly, taking into account force majeure circumstances, and the presence/absence of safe conditions for conducting inspections.
2. Unscheduled Inspection Procedures: If faced with an unscheduled inspection, operators should ensure that tax inspectors present a signed order from the head of the STS, detailing the grounds for the inspection, inspection date, and duration.
3. Compliance with Legislative Norms: Maintain rigorous compliance with all legislative norms, including the possession of necessary licenses, certificates, and permits. Furthermore, from time to time, it is worth conducting a professional tax audit of the company's activities and trying to avoid significant gaps in business operations that may be considered by the tax inspector as violations.
4. Counterparty Due Diligence: Operators should check if their counterparties are on any risky lists, given the possibility of sanctions against companies with ties to aggressor countries.
5. Exercise Your Rights: If operators believe an inspection was conducted with infringements, they have the option to appeal the results through administrative or judicial procedures.
In conclusion, while the shifting legal landscape in Ukraine poses challenges for the gambling industry, a proactive approach and keen awareness of rights and responsibilities can help businesses navigate these changes successfully. With experts by one's side, operators can better equip themselves to operate within the confines of the law and continue to contribute positively to Ukraine's economy.