Clean money: why does Ukrainian business need compliance?

Clean money: why does Ukrainian business need compliance?

Oleg Krot, the Managing Partner of TECHIIA holding, talks about the rules of the international business community, transparent investors, and difficulties due to Ukraine’s reputation.

Oleg Krot, the Managing Partner of TECHIIA holding

Compliance is an evolutionary step for the Ukrainian business. As soon as a company shows even a small international ambition, the implementation of the Western approach to reputation shifts from decoration to a necessity.

This is our case as well. Long before TECHIIA holding was created, my partner and I were organizing local esports tournaments. Right before one of such tournaments, the gaming gadget manufacturer learned about it.

We had a call from the British office with an offer of a quite impressive sponsorship package. When we said that we were working in Ukraine, this sponsorship was transferred to the local branch. And this offer decreased tenfold literally before our eyes. It turned out that the Ukrainian office operates with much lower budgets.

Two conclusions were drawn. One — you can earn money by organizing esports events, and this is actually the way one of our companies was created. Two — it makes sense to do such a business only if it operates worldwide. And to do this, it is necessary to introduce a global compliance system.

Guardians and Consultants

Pursuing a compliance policy, companies, among other things, assure environmental compliance, workplace safety, and operational activities. But above all western companies are interested in the source of business funding.

International banks act as guardians. If they don't like something about the history of money or its owner, they may simply not open the bank account for your business. The EU and US governments have mandated banks to verify counterparty cleanliness using the Base erosion and Profit Shifting Action Plan (BEPS) and the Foreign Account Tax Compliance Act (FATCA).

In Ukraine, we did not find any templates for compliance systems. Actually, the banks where we opened accounts became our main consultants. American Chamber Of Commerce and local consultants also helped us with their expertise.

Today, each new business of the holding, and they all operate globally, follow the throated path. We have a dedicated compliance service that implements and regulates anti-corruption practices.

Three pillars of our compliance

Ethics. The holding's value foundation is the Corporate Code of Ethics. It states the company's mission, the principles of its interaction with employees, partners, consumers, regulatory authorities, the community, and nature in the territories where our businesses operate.

This Code is a must in order to cooperate with Western companies. But in fact, we had all these principles long before that, the difference is that now we have them written down officially. For example, in TECHIIA, when hiring personnel, a mandatory step is to learn whether a candidate complies with the company's values. This way you can prevent random people from getting into the team, which can damage the reputation of the business and it is easier to work together.

Violations of the code of ethics are monitored by a special committee. It investigates incidents and provides protection to those who discover acts of corruption. Although, we have not yet had such cases.

Company architecture. The holding arranges processes in such a way that the number of people responsible for contact with the outside world is just right.

For example, TECHIIA has a unified procurement service. It clearly regulates the supplier interaction policy, such as selection criteria, tender procedures, and quality control. This is beneficial not only due to wholesale. Centralized procurement minimizes the risks of unwise savings and abuse because they are handled by a limited, balanced team.

Finally, when purchasing what is needed in large volumes, we work directly with manufacturers or their official representatives. That is, with partners that are reliable in terms of compliance.

Partner transparency. More than once we were offered a lot of money, the history of which could not be confirmed. Or "funds from the past", withdrawn from the country and now introduced in the form of foreign investment.

We do not take on board partners whose funds we cannot be sure of: this is a risk of going down with them. Therefore, the compliance and financial services carefully screen potential investors.

A new country image

Compliance is an additional effort and time cost. Usually, only the C-level understands its need. But we didn't spend a lot of time explaining these principles to the team. TECHIIA creates content, merchandise, and IT products, provides IT services, and opens offices around the world. This requires a strong reputation, and employees understand that they are responsible for it.

Another thing is that the country's rating strongly influences the company's reputation. Compliance officers of international banks check companies that have Ukrainian owners in their structure especially carefully, even blocking their accounts temporarily, if needed. Every step, even the smallest one, has to be verified. You can compare it with a customs control: one goes through a green corridor, while somebody else might be taken into a special room for an additional luggage check.

Even if you have a 100%-Ukrainian company that does not operate abroad, you still should consider compliance. Its target clients may include international businesses. And they, following the Know Your Customer rule, may refuse to cooperate if they consider the counterparty from Ukraine not reliable enough.

I hope that more and more companies will pay enough attention to compliance. We live in an interconnected system full of black swans and butterfly effects. The contribution of each influences both the position of Ukraine in the world and the speed of individual business growth.

Original article on

Subscribe to news
Latest news
Produced by WePlay Studios, the event was chosen as the best one by fans worldwide in the AI, Metaverse & Virtual — Entertainment, Sports & Music category.
WePlay Studios and Grammy Award-winning producer Larrance "Rance" Dopson are joining forces to create more content focusing on cultural themes.
Corporate Social Responsibility Report for 2020-2023