Bank Trust: A New Business License

Without a bank’s trust, a business cannot operate: payments are held up, contracts fall through, and financing becomes unavailable. If a company cannot explain the source of funds or the purpose of a transaction, it is cut off from the financial infrastructure not by law, but by its own bank. In Ukraine, this is felt particularly acutely due to martial law, strict currency regulations, sanctions, and heightened financial monitoring.

As a result, banking compliance—that is, verifying that clients and transactions meet legal requirements—is no longer just an internal matter for banks. Business stability now depends on it. Let’s examine why banks have become more demanding, where reasonable oversight ends, what the courts are saying, and how companies can prepare.

Why Banks Have Become Stricter

A mistake in assessing a client is costly for a bank. This involves not only regulatory fines but also reputation, relationships with foreign correspondent banks, and the very ability to conduct international transactions. Thus, a bank today is no longer merely a payment infrastructure. It has become part of the system of financial security, sanctions, and currency control.

This is a direct consequence of the risk-based approach required by the National Bank and international anti-money laundering (AML) standards. Identifying a customer according to the KYC (Know Your Customer) principle is no longer sufficient. Banks must understand what a customer does, monitor their transactions, determine the source of funds, and identify payments that show signs of sanctions, regulatory, or reputational risk.

Therefore, banks are increasingly analyzing not just individual payments but the business as a whole, following the KYB (Know Your Business) principle. This scrutiny focuses on ownership structure and ultimate beneficial owners, financial flows, counterparties, geographic scope of operations, supply chains, and intra-group relationships. The bank wants to know not only what kind of payment you’re making, but also why, with what funds, and how it fits into your business model.

In practice, the bank evaluates three things:

• business rationale: a transaction that is atypical for your usual activities or lacks obvious commercial sense will almost certainly raise questions and cause delays;
• business environment: the risks of your counterparties automatically become your own;
• the transparency of each transaction: the cost of an error is too high for the bank, so it is more likely to block a transaction that is unclear or not supported by documentation than to process it.

The regulatory framework for these approaches consists of NBU Resolution No. 18 of February 24, 2022, on the operation of banks under martial law, Resolution No. 5 dated January 2, 2019, on protective measures and foreign exchange transactions; Resolution No. 65 dated May 19, 2020, on financial monitoring in banks; and Resolution No. 9 dated January 22, 2026 [specify what it regulates].

A separate note on counterparties. Working with companies that show signs of being fictitious or merely acting as intermediaries, have an opaque ownership structure, are subject to sanctions, or have a poor reputation may halt your payments. This can happen even if your own history with the bank is impeccable. Therefore, a manager should ask not “Have we checked the counterparty?” but “Can we prove to the bank that we’ve checked them thoroughly enough for this transaction?” The bank evaluates not only what you know about your partner but also whether you can substantiate it with documentation.

When the Bank’s Requirements Are Justified

Not every additional request from the bank is an overreach. For the most part, the bank is simply fulfilling its duty: to ensure that the transaction is legal, makes economic sense, and does not pose unacceptable risks to the bank. Questions regarding ownership structure and beneficial owners, the source of funds, the economic rationale behind the transaction, documentation of relationships with counterparties, and their sanctions status are typically justified. Similarly, questions about ties to high-risk jurisdictions, the reasons for atypical or large payments, and whether a foreign exchange transaction complies with NBU requirements are also justified.

The bank evaluates the logic of the transaction, not just the set of documents. Even a flawless contract will not dispel doubts if the payment does not match the company’s profile or lacks a clear economic rationale. Cross-border and foreign currency payments, settlements with non-residents, imports and exports, intra-group transactions, and payments to high-risk counterparties are scrutinized most closely.

In fact, the bank scrutinizes the company just as thoroughly as an investor or auditor would. Those who can quickly explain the essence of a transaction and back it up with documentation will pass the review faster and with fewer setbacks.

Where Excessive Compliance Begins

Even the strictest procedures must be proportionate to the risk. If the bank’s requirements lose sight of the specific risk or the restrictions do not align with the purpose of the review, that constitutes excessive compliance.

A risk-based approach does not mean avoiding any risk at any cost. The bank must assess the risk, manage it, and document its decision. The mere presence of a risk factor does not give the bank the right to automatically reject a transaction.

Signs of excessive compliance emerge when a bank:

• repeatedly requests documents that you have already provided;
• demands information unrelated to a specific transaction or risk;
• delays a decision on a payment without explaining why;
• changes the list of required documents in the middle of the review without justification;
• rejects a transaction without a clear explanation;
• applies cookie-cutter and disproportionate restrictions instead of analyzing the specific situation.

In such cases, compliance no longer protects but actually causes harm: it delays payments, disrupts contracts, and damages relationships with partners. A risk-based approach works both ways. The client provides sufficient information, and the bank is responsible for ensuring that its requirements are consistent and proportionate. The result comes not from confrontation, but from a professional dialogue based on facts, documents, and legal reasoning.

What the Courts Say

The Supreme Court’s practice in recent years offers three lessons for businesses.

First: courts generally allow banks to block transactions if a client’s behavior appears suspicious or if the transaction involves sanctions risks. Suspicion may be raised, for example, by atypical transit transfers or the use of sole proprietor accounts for corporate purposes.

Second: to legally deny a client service, a bank does not need a criminal conviction. A documented internal risk analysis is sufficient.

Third, and most importantly: a bank’s right to terminate a contract is not absolute. If a bank acts arbitrarily and cannot prove the client’s riskiness with sufficient evidence, the court will rule in favor of the business.

These conclusions are based on Supreme Court rulings in cases No. 757/7769/23-c, No. 645/5124/23, No. 759/1627/25, No. 910/18504/20, No. 910/18889/23, No. 910/6311/24, and No. 910/10855/21.

What Businesses Should Do

The “submit documents when the bank asks” approach no longer works. Companies that prepare their supporting documentation in advance come out ahead.

The minimum requirement for any company:

• an up-to-date, documented ownership structure of the group and documents regarding ultimate beneficial owners;
• a description of the business model and main sources of income;
• documents regarding the origin of funds and sources of financing;
• internal procedures for verifying counterparties and the results of their sanctions screening.

Holding companies, exporters, importers, and companies with a high-risk profile should also include:

• a justification of the economic rationale for large or atypical transactions;
• a risk map of key business processes;
• a systematic archive of documents related to foreign exchange and cross-border transactions;
• internal procedures for responding to inquiries from banks and regulators;
• regular review of counterparties’ risk profiles and monitoring of sanctions changes.

Explain the transaction before the bank even asks about it. Contracts, invoices, and statements are often not enough: the bank wants to see the legal nature of the transaction, its economic rationale, compliance with foreign exchange regulations, and the absence of sanctions risks. The winner isn’t the one who submits the most paperwork, but the one who builds a coherent case—from the business objective to the choice of counterparty, jurisdiction, and sources of funding.

A general example from real-world practice. An equipment manufacturer signs its first major contract with a supplier from a jurisdiction that banks scrutinize particularly closely. Even before the payment is made, the company explains the commercial rationale behind the deal to the bank: why this particular supplier was chosen, how the price was determined, and what funds are being used to finance the transaction. It includes the results of sanctions screening with the explanation. The payment goes through without a hitch, whereas similar transactions without such preparation can be “stuck” in review for weeks.

The tone of communication also matters. Act consistently, not emotionally: document the bank’s requests, provide structured responses, and clarify the legal basis for any additional requirements. If a request is disproportionate, point this out directly. The best time for a legal analysis is not when the account has already been frozen, but during the preparation phase of a major transaction or at the first signs of heightened scrutiny from the bank.

Conclusion

Today, banking compliance determines how quickly payments are processed and whether an international project can be implemented and financing secured. Case law reinforces this reality but provides businesses with a defense mechanism: every decision made by a bank must be well-founded, proportionate, and documented.

A transparent structure, vetted counterparties, clear operational logic, and the willingness to verify the source of funds are no longer mere formalities. They are prerequisites for stable operations. You cannot buy a bank’s trust with a complete set of documents. It is shaped by the quality of corporate governance and a business’s ability to convincingly demonstrate the transparency of its operations. It is precisely this transparency that will increasingly influence a company’s competitiveness.

The article was written by:

Yaroslav Baienko, Senior Associate at Litigation and Dispute Resolution practice at GOLAW, Attorney at law

Tetiana Opanasiuk, Attorney at law at Litigation and Dispute Resolution practice at GOLAW