Within the last month the National Bank of Ukraine (the “NBU”) adopted several resolutions aimed at further liberalization of the existing currency control restrictions.
Settlements under export and import contracts
Effective as of 26 May 2017, the NBU lifted its temporary restriction on the timing for settlements under export and import transactions. In particular, the shortened period of 120 days previously set by the NBU is no longer in force, instead, a standard 180 day period set forth by Ukrainian laws applies.
Repatriation of foreign investments
The NBU softened the restriction on repatriation of foreign investments. Effective as of 12 June 2017, foreign investors are permitted to buy foreign currency and transfer abroad the funds received from sale of securities and/or corporate rights, as well as from capital reduction or withdrawal from Ukrainian companies.
Repatriation of investments due to sale of securities, corporate rights, reduction/withdrawal is subject to the following restrictions:
- the amount of foreign currency bought and transferred abroad may not exceed USD 5 million (or its equivalent in other foreign currencies) per one calendar month;
- the relevant transactions shall be made via a single Ukrainian bank only; and
- the currency shall be bought and transferred either by a foreign investor or relevant Ukrainian residents.
The above restrictions, however, do not apply to return of funds from sale of (i) government bonds traded both within stock exchange and over-the-counter market and (ii) listed securities traded within stock exchange.
Early repayment of loans
Effective as of 12 June 2017, the NBU introduced another exemption from the prohibition of early repayment of foreign loans whereby early repayment restriction shall not extend to loans either secured by or extended involving international financial organizations (including guarantees, counter-guarantees or stand-by letters of credit) through servicing banks and/or foreign banks.
Establishment of correspondent accounts
Commencing on 12 June 2017, Ukrainian banks are allowed to open correspondent accounts in hard currencies (such as USD, EUR, GBP, etc.) with foreign banks in countries with soft national currencies (belonging to the second or third group of the NBU foreign currencies classifier).
Transfer of funds abroad
Effective as of 12 June 2017, the NBU lifted restriction which was applicable to Ukrainian individuals for transfer abroad of funds exceeding UAH 150,000 per month while conducting non-trade transactions.
Purchase of currency
Effective as of 31 May 2017, Ukrainian residents are allowed to purchase foreign currency for their respective cross-border transactions, notwithstanding that they may have own foreign currency funds on their accounts.
Commencing 12 June 2017, Ukrainian legal entities are permitted to make investments abroad in an amount not exceeding USD 2,000,000 per one calendar year under one individual license for making investments abroad (the “Investment License”) (as against previously effective restriction of USD 50,000 per one calendar month which remains effective for funds transfer under certain other individual licenses issued by the NBU).
Furthermore, the NBU set separate list of documents to be submitted for obtaining of the Investment License depending on the amount to be so invested:
- simplified list of documents for investments not exceeding USD 50,000; and
- full list of documents (including information on economic justification of a transaction, ultimate beneficial owners, appropriate financial sources etc.) for investments exceeding USD 50,000.
The NBU though extended the list of grounds for refusal in issuance of such licenses. It being understood that rather broad interpretation of such newly introduced ground as insufficient economic justification gives NBU vast discretion to refuse in issuance of Investment Licenses.
Effective as of 03 July 2017 Ukrainian individuals may obtain electronic individual licenses (the “E-licenses”) allowing for transfer abroad of foreign currency in an amount not exceeding USD 50,000 for the following transactions:
- making investments abroad;
- placing of funds on foreign accounts; and
- performing of obligations to non-residents under life insurance contracts.
The transactions under such licences were also exempted from temporary restriction on purchase of foreign currency and transfer thereof abroad with the above FX operations.
The NBU also introduced an obligation whereby Ukrainian servicing banks are required to verify information on ultimate beneficial owners (the “UBO”) of foreign lenders at the time of registration of certain loan agreements and/or amendments thereto (including as a result of assignment).
However, such obligation to verify and monitor information on UBOs has already been introduced within financial monitoring regulations a while ago and remains applicable to Ukrainian banks under anti-money laundering and financial monitoring laws.