Thousands of bogus Ukrainian companies involved in massive capital flight scheme, tax authority says

Ukraine’s tax authorities uncovered signs of a massive capital flight and money laundering scheme disguised as international trade involving thousands of fake companies, the country’s State Tax Service reported June 2.

More than 2,300 companies carried out over Hr 198 billion ($4.5 billion) in foreign trade transactions and then largely vanished, State Tax Service head Lesya Karnaukh wrote on social media. The majority — 1,243 companies — were involved in exporting goods.

The tax service discovered the potential scheme after reviewing reports from Ukraine's National Bank regarding violations of statutory settlement deadlines covering 2024 through the first quarter of 2026.

The bank maintains strict controls over cross-border currency transfers to keep capital in the embattled country following Russia’s 2022 full-scale invasion.

Authorities became suspicious after discovering that many of the offending companies’ owners also headed hundreds of other companies, indicating straw man directors connected to a scheme, Karnaukh said.

"This is hardly a scenario that would be expected in legitimate business," she wrote.

"We identified seven individuals, each of whom simultaneously serves as a director or founder of more than 500 companies. Altogether, more than 7,000 business entities are under their control."

Additionally, many of the bogus businesses used the same IP addresses, submitted reports from shared computer networks, and were registered at the same physical addresses. In Kyiv, one address was home to 20 companies, while in Lviv two separate addresses were registered to 10 and 13 businesses respectively.

"Most of the offending companies are concentrated in seven regions of Ukraine: Odesa, Kyiv, Dnipropetrovsk, Lviv, Kharkiv, Kyiv Oblast and Zaporizhzhia. Together, these regions account for 73% of all violators and 78% of the total volume of such transactions," the State Tax Service said.

The tax service said it is using all available tools to crack down on businesses that violate currency laws, levying more than Hr 70 billion ($1.6 billion) in penalties during the full-scale war.

However, investigators say the suspects in the scheme are becoming "increasingly inventive in concealing violations," Karnaukh said.

The tax service said it has prepared analytical reports on 557 offending businesses and will hand over its findings to the Prosecutor General’s Office to determine the next steps of the investigation.

No arrests have been made so far.