Head of State Financial Monitoring Service told how businesses use “drops” and “scrolling” to evade taxes
Kyiv • UNN
Philip Pronin spoke about the use of individual entrepreneur networks for business fragmentation and cash withdrawal. In 2025, materials on the legalization of UAH 70 billion were submitted.
Financial schemes are evolving — from classic conversion centers to complex networks using individual entrepreneurs (FOPs). Filip Pronin, head of the State Financial Monitoring Service of Ukraine, told in an interview with the Sudovo-Yurydychna Hazeta about how financial criminals use FOP networks and "scam schemes" to evade taxes and withdraw cash, UNN reports.
Financial crime, like any other, is rapidly transforming under the influence of external factors, says Pronin.
Regarding the use of FOPs, the first thing the State Financial Monitoring Service pays attention to is the servicing of predominantly the same legal entity or group of entities by a group of FOPs.
If, during financial investigations, we see that a group of FOPs predominantly or exclusively serves one legal entity (group of entities), conducts its activities synchronously, through common authorized persons (who are often representatives of the legal entity – beneficiary), then suspicion arises that the specified entrepreneurial activity is carried out in favor of "big business" with the aim of tax evasion and cashing out funds
The involvement of FOPs in the "business splitting" scheme, as Pronin emphasized, is tax evasion. He spoke about one of the classic schemes using "drops."
For example, one of the classic schemes looks like this: a group of companies transfers funds for allegedly purchased goods to the accounts of a large number of FOPs. After that, most of the money is withdrawn in cash or transferred to personal cards. Moreover, the money is often withdrawn almost simultaneously, in the same ATMs and for the same amounts, so as not to fall under threshold financial transactions. At the same time, the FOPs themselves have common counterparties, sometimes family ties, and contracts with companies are drawn up under virtually identical conditions. All this together are typical signs of business splitting, when activities are artificially distributed among many FOPs to reduce the tax burden and withdraw money in cash
At the same time, Pronin noted that not all FOPs are used to minimize taxes, but any loophole in the legislation provides an opportunity for abuse.
According to him, the most common use of FOPs for "business splitting" is in the retail of electronics, food products, as well as in the hotel and restaurant and tourism businesses.
Unscrupulous dealers also use "scam schemes" mechanisms, which often involve FOPs. "Scam schemes" and "counter flows" are mechanisms of hidden conversion used by businesses to obtain significant amounts of cash. Such schemes involve real wholesale and retail traders of tobacco, alcoholic beverages, and food products who may have unaccounted cash. The schemes also involve enterprises that import used cars and spare parts with subsequent sale to the population for cash.
If we are talking about the conversion of funds through the banking system, the most common schemes are cashing out through controlled groups of FOPs or individuals. Usually, the mechanism of splitting amounts into insignificant payments is used to avoid financial monitoring, and "drops" are involved for cash conversion
It should be noted that cash operations are increasingly being replaced by digital assets, and financial flows passing through third countries and decentralized platforms significantly complicate their tracking.
For example, one of the identified mechanisms of hidden conversion looks like this. Funds from a large number of enterprises, FOPs, and individuals with various payment purposes — for tobacco products, building materials, services, loans, or financial assistance — are received into the accounts of a group of companies. Then these funds are transited to another group of companies, allegedly as payment for tobacco products. These enterprises operate in the wholesale and retail trade and have a wide network of cash sales. This makes it possible to manipulate sales volumes on paper and receive significant amounts of unaccounted cash. At the same time, intermediary companies have typical signs of fictitiousness: they do not have production or storage facilities, assets for conducting the declared activities, or licenses for trading tobacco products. Funds pass through their accounts in transit with minimal balances
In fact, according to him, such a scheme is used to conceal part of the income and convert non-cash funds into unaccounted cash through the mechanism of so-called "product twisting."
Pronin added that in 2025, the State Financial Monitoring Service submitted 118 materials to law enforcement agencies for almost UAH 70 billion with suspicion of money laundering.