Аrticles 25/02/2021 02/04/2021

An Unjustified Risk: What Is Dangerous about the Counterparty’s Risky Types of Activity and How to Check Them

Risky types of activity are one of the factors that the YouControl Express Analysis pays attention to while checking a counterparty. This factor "works out" in the profile of the company if one or more of its KVEDs (classifiers of types of economic activity) are included in the list of types of activity, conducting of which is a risky feature according to the National Bank of Ukraine (NBU). We explain why you need to be especially careful while working with such a counterparty.

What Types of Activity Precisely Does the NBU Consider Risky?

The NBU considers the types of activity that are accompanied by a high level of cash turnover, corruption and those that are difficult to confirm documentarily to be risky.

The cooperation with the counterparty, among whose KVEDs there is at least one of these types of activity, attracts the attention of the inspection authorities. This can provoke additional audits, and in the case of the slightest violations, even by the counterparty, fines, seizures of property, delays in fulfilling contractual obligations become possible.

The high level of cash turnover:

• Gambling, lotteries;

• Debt collection services;

• Trade in real estate, luxury goods, antiques, works of art;

• Trade in precious metals and stones;

• Production, trade in weapons, ammunition, military technology and military vehicles;

• Activity related to production, trade in materials of nuclear reactors;

• Activity of professional sports clubs;

• Intermediary services in foreign exchange trading (for example, Forex dealers).

Risky types of activity also include the provision of the services which it is difficult to confirm documentarily that they were actually provided:

• Advertising, marketing, consulting services, market research services, development and support of IT solutions;

• Legal, consulting, accounting services or services related to the establishment of business entities and their further conducting of activities, opening a bank account on own behalf for carrying out of financial transactions on behalf of the client;

• Trade in binary options;

• Activity related to virtual assets;

• Activity of non-profit organisations and political parties, charitable activity.

The activity related to a high risk of corruption:

• Production, trade in medicinal and narcotic drugs;

• Production, trade in weapons, ammunition, military technology and military vehicles;

• Mining of ores, precious stones;

• Extraction of crude oil and natural gas, production of petroleum products;

• Government procurement.

Sometimes the sanctions imposed on companies may apply to their counterparties. This can lead to financial losses, destabilization of business, negative reputational and legal consequences. To avoid such a situation and to predict risks, check a counterparty before starting cooperation.

How to Learn about Risky Types of Activity of the Company

Data on risky types of activity are shown in the profile of the company, primarily in the Express Analysis.

To start checking, enter the company name or its identification code (according to the Unified State Register of Enterprises and Organisations of Ukraine) in the search line on the main page.

When the profile of the company appears on the screen, the results of the Express Analysis will be at its very beginning – in the form of a list of risk factors and three tabs, one of which is called precisely "Financial Monitoring". This tab focuses on those factors that are relevant in terms of financial monitoring.

In this case the main KVED of the company is "Business and other management consultancy activities".

The data are relevant at the time of your request, so you can rely on the results of the Express Analysis while assessing the objective risks of possible cooperation. The system aggregates data from more than 100 open sources.

In such a way the process of checking and monitoring of counterparties becomes fast and convenient. More about the possibilities of the Express Analysis: Instructions.

This is just one of the articles about risk factors. Other articles:

1. What if Your Counterparty Does Not Have a Licence

2. Checking of the head before concluding an agreement with the company

3. How and Why to Check the Powers of the Director

4. Negative reputation as a risk – soon.

Start checking right now.

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