Business Launch Hurdles
Former Ukrainian MP Viktor Chumak has detailed the significant obstacles his wife encountered while trying to launch a business, primarily due to extended bank checks linked to their Politically Exposed Person (PEP) status. Although his wife sought to establish a limited liability company (LLC), the process of opening a corporate bank account proved unexpectedly difficult.
Banks demanded extensive documentation, including detailed professional experience in the chosen economic activity codes (KVED), and even asked about future business partners and the production process for a company that did not yet exist. Chumak noted that despite his wife's considerable experience, knowledge, and skills in managing various businesses, the banks' requirements were excessively complex.
Chumak emphasized that full information regarding the couple's income and assets was provided for the account opening. The process even required a three-hour bank visit solely to obtain an extract detailing Chumak's pension history from previous years.
Calls for Systemic Reform
After seven days of processing, the bank had still not reached a decision on the account application. Both Viktor Chumak and his wife hold PEP status, which complicates financial procedures. Chumak added that his wife was previously a director of a public joint-stock company where the state held a 51% share.
He has since appealed to the National Bank of Ukraine and the State Financial Monitoring Service, proposing the creation of a unified PEP registry to standardize requirements and clearly define risk levels.
In conclusion, Chumak stressed the necessity of standardizing due diligence requirements and publishing a clear checklist of verifiable items. This, he argues, would simplify the business launch process for individuals designated as Politically Exposed Persons.
Viktor Chumak
The challenges faced by Chumak's wife reflect broader issues for entrepreneurs in Ukraine, particularly those with PEP status. Such protracted banking verifications can hinder the growth of small and medium-sized businesses, which are vital for the country's economic development.
Standardizing requirements and establishing a PEP registry could be important steps toward streamlining business processes and improving Ukraine's investment climate. This is especially relevant within frameworks like the '5-7-9%' program, which offers zero-interest loans for generators and batteries.