7 May 2020 21:46

Searches under way all over Ukraine in case dealing with money laundering, financing of terrorism - Security Service

KYIV. May 7 (Interfax) - The Ukrainian Security Service is conducting more than a hundred searches around Ukraine on Thursday as part of an investigation into the work of a currency conversion center under the protection of the State Tax Service, the Security Service told Interfax.

"The criminal investigation has been opened into the legalization of criminal proceeds and the financing of terrorism," the Security Service said in commenting on searches of former State Tax Service chief Serhiy Verlanov.

"More than a hundred searches are under way around the country as part of this investigation," it said.

The Security Service said later that it suspected former State Tax Service top officials of arranging a mechanism to illegally form tax credits amounting to billions of hryvni.

"The investigation has found that the heads of some local branches of the State Tax Service were also involved in the dealings. Special services concluded that, over a period of 2019-2020, officials, acting in collusion with the organizers of transit-conversion groups, set up a scheme to illegally form a VAT tax credit," the Security Service said in a statement on Thursday.

The Security Service said it has also uncovered facts of unsanctioned tampering with the Tax Service's electronic databases, including through amending the algorithm for automatic control of tax invoices submitted to the Unified Register by some business entities bearing signs of fictitiousness.

These actions led to the artificial formation of VAT tax credit sums, which were then recorded supposedly for business entities engaged in the real sector, the Security Service said. These actions committed by government officials constituted massive tax evasion and legalization of criminal proceeds, it said.

"At the Ukrainian Security Service's initiative and in close coordination with the State Monitoring Service, the bank accounts of business entities involved in the unlawful scheme have been blocked. In addition, the VAT tax limits of these business entities in the VAT administration electronic system have been frozen," it said.

A preliminary inquiry under a number of Ukrainian Criminal Code articles is continuing.

Verlanov had said earlier on Thursday that Security Service officials searched his home.

"Ukrainian Security Service officers came to search the apartment where I live together with my wife and little daughter this morning. They didn't say what they were looking for, but they apparently didn't find whatever they looked for. I will inform you of any further developments in the case and will protect myself and my family," Verlanov said on Facebook on Thursday.

The Security Service confirmed the fact of investigative procedures at Verlanov's apartment, saying that they were part of a criminal investigation involving other searches.

The government discharged Verlanov as head of the State Tax Service on April 24 and announced a tender for the post the next day.

Finance Minister Serhiy Marchenko said he saw reasons for the law enforcement to investigate Verlanov, as the business community has complained about delays in the automatic VAT refunds and unwarranted blockages of tax invoices. "People simply lose their businesses with this kind of approach. And this is happening instead of helping them survive in this difficult period," Marchenko said.