Establishing cooperation with companies from Moldova is associated with increased economic risk that accompanies every new contract with a foreign contractor compared to domestic companies. However, in the case of Moldova, this risk is particularly serious as the country is under strong influence from Russia, which is internationally embargoed for the attack on Ukraine. How to check a company from Moldova to find out if it is a reliable entity, but also to avoid possible sanctions?
Observing due diligence in verifying the contractor
In today’s world, starting a company is very easy. In many countries, you can do it without even leaving your home, through the Internet. Therefore, you can never be sure who is truly behind the registered name until you verify it. Verification involves commonly used actions of economic intelligence, starting with checking the reliability and up-to-dateness of the contractor’s documentation, such as KRS, NIP, REGON, permits, and certificates required for specific business activities.
Verification can be carried out by obtaining information from relevant individuals and institutions, such as registration courts, social security authorities, tax offices, or national and international chambers of commerce. It is worth delving into the history of the company and its owners, including opinions about the company, by searching the Internet or asking other entrepreneurs and contractors related to the entity, as well as directly asking the interested party. Failing to exercise due diligence in selecting a contractor carries legal consequences, such as accusations of knowingly participating in irregularities and the resulting tax and legal sanctions.
National and EU sanctions
For over a year, Polish companies have been even more cautious about cooperation with foreign, including Moldovan, business partners due to Russia’s military aggression in Ukraine. By the end of 2022, the European Union had imposed nine sets of sanctions on Russia. Poland also imposes its additional sanctions, including on key individuals in Russia, companies from Russia and Belarus. The trade of goods and services with Russian and Belarusian companies is prohibited. Violating this prohibition can result in financial penalties of up to PLN 20 million and up to 15 years of imprisonment for Polish entrepreneurs. However, Russian and Belarusian entrepreneurs have learned to circumvent international prohibitions by using complex holding structures established in other countries, where the true ownership structure is difficult to detect.
The threat arising from establishing cooperation with an unknown company from Moldova is significant, given the country’s strong ties to Moscow. There is an internationally unrecognized separatist quasi-state, Transnistria, operating on its territory, directly bordering Ukraine to the east. It is extremely difficult, therefore, to obtain one hundred percent confirmation of the ownership structure and actual beneficiaries of Moldovan companies.
Economic cooperation with Moldova
In 2022, Polish exports to Moldova amounted to 352 million euros, while imports reached 182 million euros. The most significant goods in Polish exports were industrial machinery and chemicals, as well as agri-food products. From Moldova, we mainly imported agri-food products and metallurgical products. Moldova pursues a liberal foreign trade policy, generally without any quantitative restrictions. According to the Ministry of Development, the prospective areas of economic cooperation are the transportation infrastructure, energy, digitization, and the agri-food sector. According to NBP estimates, Polish investments in Moldova reached 44.1 million dollars by the end of 2021.
In June 2014, the European Union signed an association agreement with Moldova (fully entered into force in July 2016). An element of this agreement is an enhanced and comprehensive free trade area, characterized by reduced tariffs and other trade facilitations, including the gradual alignment of Moldovan regulations, principles, and procedures, including norms, with EU regulations and procedures. Eight years later, in June 2022, Moldova obtained the status of a candidate country for the EU. In the relations with this country, the Polish-Moldovan convention of November 16, 1994, concerning the avoidance of double taxation and the prevention of tax evasion on income and property, is also significant for entrepreneurs.
National and EU informers
Detailed information on the type of economic transactions with Belarus and Russia subject to EU sanctions can be found on the websites of the European Council: https://www.consilium.europa.eu/. The Official Journal of the EU at https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A02014R0269-20220721 contains the list of individuals and entities subject to sanctions. The Polish Ministry of Internal Affairs and Administration also maintains an up-to-date register of entities subject to sanctions, where you can check the contractor, their connections, reasons for inclusion in the register, and applied sanctions: https://www.gov.pl/web/mswia/lista-osob-i-podmiotow-objetych-sankcjami.
Therefore, the first step in checking a company from Moldova is to see if it appears in any of the mentioned registers. Useful information can also be found in the Council Regulation (EU) 2022/576 of April 8, 2022, concerning restrictive measures in relation to Russia’s actions destabilizing the situation in Ukraine.
Economic intelligence: how to verify a contractor from Moldova?
The verification of a contractor can be entrusted to a professional economic intelligence agency specialized in carrying out such assignments. A private detective in Warsaw, Poznan, Wroclaw, or other cities will know how to obtain the necessary information to verify the current or future contractor.
The most important method of verifying the contractor and their potential connections with Belarus or Russia is to determine the entity that is the actual beneficiary and then check if it is listed in the aforementioned sanctions list maintained by the Ministry of Internal Affairs and Administration. This information can be obtained from the Central Register of Ultimate Beneficial Owners, managed by the Minister of Finance: https://crbr.podatki.gov.pl/adcrbr/#/wyszukaj.
Direct inquiry to the contractor
If difficulties arise in determining the ownership structure of a business partner through available registers, another method of verification within economic intelligence activities is to directly inquire with the contractor for confirmation of their ultimate beneficial owner. Of course, to validate the response, one can request the Moldovan entrepreneur to provide documents supporting their declarations.
A publicly accessible method of obtaining information about the contractor is to search the resources of the Internet. Verifying the company, checking if it has a website, and finding out opinions about it might lead to some publications related to it. It is possible to request references from other companies that have dealt with the contractor.
If we do not wish to do this ourselves for certainty, we can entrust the research to a detective agency specializing in professional economic intelligence. There are more sources of information than just the World Wide Web, and they can be provided, for example, by Polish-Moldovan chambers of commerce or the Polish Embassy in Chisinau.
Polish and EU registers
In the Public Information Bulletin of the Ministry of Entrepreneurship and Technology, as the minister responsible for the economy, a register of representations of foreign entrepreneurs is maintained. If we find the representation of our contractor in this register, we can assume that they still exist and conduct business.
Another register where one can check the contractor is the European VAT taxpayers’ register and the EORI register. Companies and individuals wishing to conduct commercial activities within the European Union must use the EORI number as the identification number in all customs procedures. The VAT Information Exchange System (VIES), a search engine operated by the European Commission, allows checking whether a given entity is registered as a participant in intra-Community transactions. This is essential, among other things, to apply a 0% VAT rate to a particular transaction. If VIES does not confirm the contractor’s registration, one can request verification from the tax office of the country where they are based. It is also worth checking whether the company has the required permits and certificates, if they are necessary in a given country.
The Register of Insolvent Debtors allows checking whether a given contractor is listed. There are also economic information bureaus that have detailed information about the activities of companies. BIK, the Credit Information Bureau, established by the Polish Bank Association, collects data on the credit history of bank customers, credit unions, and para-banking loan companies.
Moldovan business register
The official registry of companies in Moldova is the “State Registration Chamber” (Camera Înregistrării de Stat – CIS). It provides basic data about companies, such as registration number and date, full name, address, administrators, and shareholders, free of charge. Additional information about a company can be obtained for a small fee. Users can log in as guests to access more services or create an account. The website is available in Romanian, English, and Russian (http://webinfo.cis.gov.md/en/company-search).
Registrul de Stat al Achizițiilor Publice is the Moldovan registry of all public procurement orders. It can be searched by executing authority, state department, contract number, etc. The website is available in Romanian, English, and Russian (http://etender.gov.md/index#).
There is also the portal of the State Tax Service – Servicii fiscale electronice, which provides free access to basic company data, including names of administrators, registration numbers, and financial status. Searching is done solely by the company’s registration number. The website is available in Romanian, English, and Russian (https://servicii.fisc.md/contribuabil.aspx).
It is essential to thoroughly check the contractor
Before conducting transactions or entering into partnerships with a contractor from Moldova, it is crucial to conduct economic intelligence and thoroughly verify them, especially to ensure they are not connected to Belarus or Russia. Violating the imposed sanctions on trade with these countries may result in a financial penalty of up to 20 million PLN and imprisonment from 3 to 15 years. Besides, exercising commercial caution and due diligence in selecting a contractor are always necessary. These are obligations that entrepreneurs must fulfill every day, regardless of the current situation in Eastern Europe, as they are imposed by law on companies as professional entities in business dealings, with specific consequences for non-compliance.
Do you already know how to check a company from Moldova? If not or if you need more detailed information, we can assist you. Contact us.