The National Bank of Ukraine has simplified the conditions for the sale of foreign currency by the clients of the banks in the interbank foreign exchange market. The amendments to the legislation are enshrined in the NBU Resolution No.7 of January 25, 2018 “On Amending certain normative legal acts of the National Bank of Ukraine” and entered into force on January 27, 2018.
The innovations provide mainly the following:

  • Clear definition of the client’s right to apply for the sale of foreign currency to any authorized bank by his choice (regardless of the availability of a current account in foreign currency in this bank).
  • Clarification of the terms of sale of foreign currency of the clients by the bank. We remind that an authorized bank is required by proxy of the client to sell its own funds in foreign currency no later than 5 banking days, starting from the day of writing off these funds from the client’s current account. The NBU clarified that in case of transfer of funds for sale by the client from another authorized bank, the sale of this currency is carried out within 5 days from the date of transfer of these funds to the correspondent account of the authorized bank.

The outlined measures for monetary liberalization are developed taking into account the proposals received from the business and market participants. The result of such steps will be the expansion of business opportunities for choosing the optimal currency selling rate. In addition, the above innovations will contribute to the formation of appropriate conditions for the development of economic competition in the interbank foreign exchange market of Ukraine. At the same time, the changes will not have negative impact on the currency market.

НБУ в Украине

Resolution of the Board of the National Bank of Ukraine №386 from 14.09.2016 year (here and after - the National Bank Ordinance) was suspended issuance of individual foreign exchange licenses to individuals.

This measure was introduced in order to significantly reduce the capital outflow from Ukraine. National Bank of Ukraine said that overseas investment is unproductive and negative impact on the economy as a whole.

Thus, in accordance with paragraph 7 of the Resolution of the NBU, "Individuals are prohibited to carry out transactions in cash on the basis of the National Bank of Ukraine of individual licenses."

However, there is an exception to the above, namely, the prohibition does not apply to the operations that are carried out on the basis of individual licenses issued before the entry into force of the Regulation of the NBU.

Also, the Resolution of the NBU has been extended a ban on purchases and transfer of foreign currency, which were held on the basis of the availability of individual licenses of the National Bank of Ukraine, except for such cases as:

a) placement of legal entities of currency values on accounts outside Ukraine;

b) execution of a resident guarantor (surety) secured by the guarantee (guarantee) obligations under the loan granted by an international financial institution or a foreign export credit agency;

c) payment of business entities-residents of entrance or membership fees in foreign currency for the current activities of non-resident legal persons;

g) to carry out operations of legal persons, provided that the total amount of transactions within a single individual license within one calendar month is less than 50 000 US dollars (equivalent in another currency at the official exchange rate of hryvnia to foreign currencies, which is set by the National Bank of Ukraine on the date of transfer).

In addition, it should be noted that the Resolution of the NBU had significantly increased the amount of cash in foreign currency, which the bank may issue a client for one day. Now the volume of granted funds may not exceed 250 000 hryvnia per customer equivalent at the official rate of the National Bank of Ukraine, on the day of the operation.

Please note that the NBU Resolution comes into force from 09.15.2016 years and is valid until 15.12.2016 year.

Our lawyers are closely watching changes in the current legislation of Ukraine. If you want to keep abreast of changes in areas of interest to you, we are always ready to provide you with qualified legal advice.

Author: Dmitry Batrakov

company lawyer Finance Business Service

NBU: Ukraine

National Bank of Ukraine has established an order for identifying the banks risk operations

From the first in September 2016 comes into force, established by the Board of the National Bank of Ukraine №369 from 15.08.2016, the order of the document analysis and verification by banks (information) on financial transactions and their participants (hereafter - the Order). In particular, the list of indicators of risk operations, as well as change some existing ones. Just would like to draw your attention that prior to the adoption of the above order, the identification of risk transactions were settled a few officials of the National Bank of Ukraine letters.

This Procedure adopted in order to prevent the commission of risky activities by banks, threatening the interests of depositors or other creditors of the bank and increase the effectiveness of risk management. It should be noted that the provisions of the Order are binding on all banks in Ukraine, as well as all the branches of foreign banks in Ukraine.

On the basis of the provisions of the Order, any bank is obliged to provide a comprehensive analysis and verification of documents (information) on financial transactions (ongoing and / or that the client intends to implement) the bank's customers, and information about their parties, which are aimed at such cases as:

  1. purchase of foreign currency for the purpose of transfer outside Ukraine;
  2. translation of foreign currency outside Ukraine;
  3. transfer of funds in UAH to non-residents through the correspondent accounts of non-resident banks opened with the Bank;
  4. transfer of funds to non-residents through bank branches opened in other states;
  5. granting consent to the contract operations services (including in the case of changes in the contract), which includes a number of residents of the debt owed to non-residents from non-residents attracted loans, loans in foreign currency;
  6. crediting of funds in rubles and foreign currency investment accounts that are open to non-residents investing in Ukrainian banks, as the return of foreign investment and profits, revenues and other funds received by a foreign investor from the investment activity in Ukraine, and others.

Analysis of the documents shall be on the basis of which the corresponding financial transaction should be carried out, as well as information about the customer and his business.

Such an analysis of documents may include the following actions on the part of the institution:

  1. the study of the nature and purpose of the financial transaction;
  2. the establishment of compliance or non-compliance of financial operations essentially maintenance activities of its members;
  3. establishing the presence or absence of economic feasibility (sense) of a financial transaction;
  4. establishing sufficiency or insufficiency of real financial capacity to carry out (to initiate) the transaction on the relevant amount;
  5. the study of information about participants in a financial transaction, of their activities and business reputation;
  6. establish the source of funds (assets), which in particular may include: salaries of physical persons, the income received from the sale of products, services rendered, work performed, the sale of the property, of inheritance, the acquisition of the rights to the treasure;
  7. establishment of ultimate beneficial owners of the participants of a financial transaction.

Also, it should be noted that the collection of the above information, banking institutions are entitled to use public sources of information, as well as the Internet. In addition, banking institutions have the right to ask for information of interest to other financial institutions.

For each of the tests carried out banking institutions need to make an informed determination on the sufficiency or insufficiency of the suspicion that such an operation could be a potential threat to depositors or creditors or the presence or absence of evidence of the commission of the risk operations of banks.

Detailed with a list of the indicators of risky financial transactions, as well as a list of documents that may be required by banking institutions on the basis of the identified indicators can be found in the annexes to the Order on the official website of the National Bank of Ukraine.

Author: Yuriy Krasilnikov

managing partner Finance Business Service

Ukraine symbol

In August 2016 the Board of the National Bank of Ukraine has taken a number of decisions, which are quite important.

In particular, significant changes have touched: the procedure for the exchange of currency, lending practices by non-residents and residents of the order of transfer of funds, both in national and in foreign currency to non-residents.

Next, we will focus in more detail on each of the following changes.

Currency exchange

An important and fundamental change, published 03.08.2015, the Instruction on the organization of currency exchange operations in the territory of Ukraine is the abolition of the requirement of a resident of documents confirming identity in carrying out various operations on the exchange or conversion rates.

However, I would like to clarify that the changes do not cancel, and allow banking institutions not to require proof of identity of the resident in the commission of the following operations:

  1. Sale of foreign currency in the amount not exceeding the equivalent of 150 000 (one hundred and fifty thousand) hryvnia;
  2. The purchase of foreign currency in the amount not exceeding the equivalent of 150 000 (one hundred and fifty thousand) hryvnia;
  3. Conversion of one foreign currency into another foreign currency in the amount not exceeding the equivalent of 150 000 (one hundred and fifty thousand) hryvnia.

Thus, it can be concluded that the financial institution reserves the right to require or not require documents confirming the identity of the resident during the above operations, and in the case of failure to submit these documents on demand - to refuse to perform an operation.

Lending to residents by non-residents

The main change in the procedure for obtaining loans residents in foreign currency loans from non-residents have become innovations in the order of registration of contracts and registration of changes to them on these transactions.

In accordance with the amendments to the contract registration (registration of changes in the contract) the resident borrower must submit a bank that serves it, the notice of the contract (notification of changes in the contract). This notice may be filed in paper form and in electronic form on the prescribed form. In addition, the notification shall be accompanied by the original or a copy of the contract together with all additional agreements (if any), as well as documents on the implementation of the agreement and implementation of foreign exchange transactions. Copies of such documents may be submitted in hard copy and electronic form. Documents in a foreign language, to be translated into the Ukrainian language, which shall be signed by the translator (the authenticity of the translator's signature certified by a notary) or a notary public. Documents drawn up in Russian or the text of which is set out at the same time foreign and Ukrainian / Russian languages, the translation is not required.

Transfer of funds to non-residents

Resolution of the Board of the National Bank "On the Repeal of certain legal acts of the National Bank of Ukraine", by removing the requirement that the act provides for the price of examination of the State Information and Analytical Center for the import payment services residents. These changes, according to NBU, due to the fact that the pre-existing requirement lost its effectiveness as an effective tool to combat the outflow of capital.

Prior to the adoption of the aforementioned decree, acted requirement that the resident to pay for services, as well as work and intellectual property rights, acquired from a non-resident (if the total value of these services is more than 50 000 euro), was supposed to get an act of the State Information and pricing expertise analytical monitoring center outside commodity markets. This act was a declaration of conformity in the contract prices for the services of market conditions.

As reported by the National Bank, this requirement is abolished under the progressive liberalization policy.

Author: Olena Kutova

senior lawyer of the Finance Business Service company

    NBU

    June 7, 2016 the National Bank of Ukraine approved the Decree № 342 "On the settlement of the situation in the monetary and foreign exchange markets of Ukraine" (hereinafter - the "Regulation"), according to which continues a gradual mitigating the regime of currency regulation in Ukraine.

    Thus, according to the provisions of the Regulation:

  • lowered from 75% to 65% the limit of the mandatory sale of revenues from abroad to accounts in foreign currency;
  • twice increased the purchase limit of cash currency - from 6 to 12 thousand UAH per day;
  • twice increased the issuance limit (receipt) cash from current and deposit accounts in foreign currency or banking metals - from 50 to 100 thousand UAH per day;
  • abolished the restrictions on the volume of cash in national currency, which still amounted to 500 thousand UAH per day.

In addition, the Resolution established limiting sizes and conditions for foreign currency transfers. For transfers that do not exceed the equivalent of 15 thousand UAH per day, can be performed without confirming documents and do not require the account opening. If the transfer of foreign currency exceeding the equivalent of 15 thousand UAH, it can be done only with the current account on the basis of supporting documents. But the amount of such transfers can not exceed the equivalent of 150 thousand UAH for a month.

No less important in the Resolution of the National Bank is a permission to repatriation of dividends accrued to foreign investors for the years 2014-2015. Limits established on transferring funds abroad for one person per month in the amount of 1 million USD or 10% of the total amount of dividends payable abroad. But if the 10% dividends amount to more than 5 million USD (equivalent), the maximum amount of repatriation of dividends during a calendar month may not exceed 5 million USD (equivalent).

In the Decree stated that buy and transfer foreign currency for the payment dividends abroad can depository institution that caters the accounts of a foreign investor, the issuer of corporate rights and shares, according to which the dividends are paid either directly to foreign investors. With that, dividends which were accrued over the period to 2014 and for 2016 are not allowed to repatriate.

This Regulation entered into force on 9 June and in regard to the payment of the dividends to foreign investor - from June 13 and will run until 14 September.

Author: Olena Kutova

senior lawyer of the Finance Business Service company

Resolution 308

National Bank of Ukraine mitigates previously established restrictions on certain foreign exchange transactions on May 11, 2016. Thus, in the decision NBU number 308 of May 5, 2016 "On amendments to some legal acts of the National Bank of Ukraine" (hereinafter - the "Decree № 308"), it is assumed that now the company does not need to sell in foreign currency received for foreign investment in Ukraine. So this operation does not apply to the requirement for compulsory sale of funds in foreign currency at a rate of 75 percent as it was before. This rule will be in effect until June 8, 2016.

Also the Decree number 308 reduced time for operations to reserve funds authorized banks in the national currency and for the transfer of funds in national currency on correspondent accounts of foreign banks from four to three business days. So now inclusive of the June 8, 2016 the National Bank of Ukraine will confirm the information within 3 days that the competent authorized banks in foreign exchange transactions will make the register.

Besides this lifted the ban on the purchase of foreign currency funds for the products that had been imported to Ukraine before January 01, 2015, provided that there was a replacement of the part in the undertaking. We must bear in mind that only the transfer of funds in the national currency is permitted - the national currency in favor of non-residents through the correspondent account of a foreign bank opened with authorized Ukrainian bank.

According to the National Bank of Ukraine these steps will contribute increase of the cash flows to Ukraine as well as improving the conditions for settlement in the performance of foreign currency contracts without creating imbalances in the market.

Author: Sergey Panov

managing partner Finance Business Service