Currency transactions control
Tax & Legal Alert
06 March 2015
On 3 March 2015, the National Bank of Ukraine (hereinafter, the “NBU”) published a decree that regulates currency restrictions in Ukraine (Decree No. 160 dated 3 March 2015). The Decree took effect on 4 March 2015.
According to the Decree, up to and including 3 June 2015:
1. The following restrictions are extended:
- settlement deadline for import and export transactions remains limited to 90 calendar days;
- mandatory sale of 75% of foreign currency earnings (with limited exceptions);
- tightened control over currency transactions (including the prohibition on discontinuance of supervision over export operations on the grounds of documents confirming the discharge of obligations through the offset of similar counterclaims);
- ban on early repayment of loans, credits in foreign currency under agreements/contracts with non-residents;
- sale of foreign currency cash to one individual on one business day in one banking institution remains restricted to the equivalent of UAH 3,000;
- foreign currency remittances by individuals from Ukraine abroad remain limited to the equivalent of UAH 15,000 on one business day in case of transfers without supporting documents, and to the equivalent of UAH 150,000 per month in case of remittances made on the grounds of supporting documents;
- cash withdrawals through cash desks and ATMs remain limited to UAH 150,000 per day per client;
- prohibition on cash withdrawals within Ukraine by electronic payment instruments issued both by residents and non-residents in any currency other than Ukrainian hryvnia;
- total long term foreign currency exposure of banks (H13-1) is limited to 1%;
- cash withdrawals in foreign currency or precious metals from current and deposit accounts of clients remain limited to the equivalent of UAH 15,000 (at the official exchange rate of the National Bank of Ukraine) per day per client;
- banks are allowed to issue registered savings (deposit) certificates denominated both in the national and foreign currencies, with a maturity of not less than six months; however, the banks should suspend the issue of bearer savings (deposit) certificates;
- right of banks to return ahead of schedule any foreign currency deposits (except deposits confirmed by savings (deposit) certificates with a maturity of not less than six months) in Ukrainian hryvnia at the forex purchase rate set by the respective bank as of the day of transaction;
- obligation of banks to include the book value of purchased government domestic bonds, along with the indexed value reduced by the coupon, in the calculation of the total foreign currency exposure;
- obligation of banks to place funds in hryvnia to a separate analytical account first and transfer such funds for the purposes of purchasing foreign currency no sooner than the fourth banking day;
- obligation of banks to keep a foreign currency purchase register that shall be submitted to the NBU.
Innovation: if a request is equal to or exceeds USD 50,000, banks should submit, along with the register, copies of documents based on which forex transactions are performed. At that, the NBU developed a list of additional documents, such as a certificate of no arrears issued by the State Fiscal Service, a certificate of the National Committee of Securities and Stock Market confirming non-fictitious nature of transactions involving purchase and/or transfer of foreign currency received from the sale of debt securities by a foreign investor in the stock market, etc.
Please note that sale and/or transfer of foreign currency for the purposes of making advance payments under import contracts is regulated by the Decree of the NBU No.124 dated 23 February 2015;
- ban on the following foreign currency transactions:
- payment of funds to foreign investors abroad following the over-the-counter sale of securities of Ukrainian issuers;
- payment of funds to foreign investors abroad following the sale of equity rights other than in the form of shares (innovation: the ban also applies to a reduction of authorized share capitals of legal entities, exit of foreign investors from business companies);
- payment of dividends to foreign investors abroad (innovation: the ban also applies to dividends on exchange-traded securities);
- foreign currency transactions performed under the NBU’s individual licenses (some exceptions apply);
- requirements to confirm transfers of charitable aid by charitable institutions and transfers of the Ministry of Health of Ukraine made outside Ukraine.
2. Additionally, the following restrictions are introduced:
- limitation of the balance of surplus of the total volume of currencies and bank metals purchased by bank transfer in hryvnias over the volume of their sale within the bank’s own operations at the end of each banking day;
- prohibition on granting loans in national currency if clients secure the loans with property rights to foreign currency funds deposited with banks;
- prohibition on banks to purchase foreign currency on the instruction of resident clients (other than individuals) having foreign currency funds on current and deposit accounts opened in this bank and/or other authorized banks (the prohibition does not apply if the total amount of foreign currency on the client’s accounts is less than USD 10,000);
- prohibition on banks to transfer funds in hryvnias from the investment account for the purposes of purchasing government bonds of Ukraine by a foreign investor (some exceptions apply);
- within one calendar week a client (legal entity or individual entrepreneur) may purchase no more than 3.216 ozt of gold or the equivalent in other bank metals by bank transfer in hryvnias in the same banking institution (some exceptions apply).
From 4 March 2015, the Decree of the NBU No.161 dated 3 March 2015 that amends the Decree No.124 dated 23 February 2015 and Decree No.597 dated 30 December 2003 also takes effect.
Under the Decree No.161:
- The set of documents submitted to the NBU in order to confirm possibility of foreign currency purchase or sale should also include a certificate of no arrears in taxes, charges and payments issued by the State Fiscal Service of Ukraine and, in some cases, a respective cost examination certificate issued by the State Information and Analytical Center for Monitoring International Commodity Markets.
- The threshold for obligatory cost examination by the State Information and Analytical Center for Monitoring International Commodity Markets, introduced by the Decree of the NBU No.597 dated 30 December 2003, has been reduced to the equivalent of EUR 25,000.
- In accordance with the Law of Ukraine “On measures concerning stabilization of the balance of payments of Ukraine in compliance with Article XII of the General Agreement on Tariffs and Trade 1994”, a requirement to use letters of credit for payments under import contracts with the total value over USD 500,000 does not apply to purchases of essential goods until 3 April 2015.
The Decree of the NBU No.154 dated 2 March 2015 also increases the discount rate up to 30% per annum starting from 04 March 2015.