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CURRENCY REGULATION SYSTEM CHANGES
Asters Law Firm, Legal Alert
Kyiv, Ukraine, Thu, May 12, 2022
Responding to the current situation in the national economy and balance of payments, the National Bank of Ukraine promptly adjusts the pre-existing rules of operation of the banking system during the martial law period. Throughout April and in early May 2022, a trend has been observed of implementing new and adjusting the existing restrictions to "prevent unreasonable capital outflows" under the martial law.
Thus, on 10 May 2022 the Board's Resolution No. 96 of the National Bank of Ukraine dated 9 May 2022 came into force to amend Resolution No. 18 of the Board of the National Bank of Ukraine on the Operation of the Banking System under the Martial Law, dated 24 February 2022.
The novelties primarily relate to the operations of foreign investors who are now permitted to transfer abroad funds, which will be received after 1 April 2023, in connection with either redemption of, or payment of yield on, Ukraine's sovereign bonds subject to the terms of their placement.
On the other hand, restrictions have been imposed on the activities of Ukrainian investors abroad as temporary ban has been placed on foreign settlements for the purposes of purchase of securities, shares, and bonds, and payment of brokerage fee for such transactions with the use of payment cards issued by Ukrainian banks. The above restrictions do not apply to the use of payment cards abroad and in Ukraine for the purposes of payment for any other goods, works or services. Such settlements can still be made without any restrictions.
In addition, individuals are allowed to sell bullion, whether physically delivered to banks or not.
Interbank currency market
The NBU suspended daily non-cash transactions involving the purchase and sale of foreign exchange in Euros (which were allowed since the beginning of March 2022) but will conduct such transactions in US Dollars only.
Further, the Resolution has narrowed the scope of banks that are eligible to participate in such transactions. In accordance with the novelties, a bank will be entitled to conduct transactions with the NBU if it has been in compliance with the limit set for total long open position for ten calendar days preceding the date it applies to the NBU.
Adjustments have been made to presumably address some deficiencies identified in earlier restrictions. In particular, the Resolution:
- expressly provides for the right to make transfers abroad for the purposes of paying child support maintenance and allows non-residents to remit amounts of support received in connection with the death incident of a member of the military
- adjusts certain matters relating to the making of settlements under foreign trade transactions
- technically amends the NBU's procedures for issuing individual permits to transfer money abroad
- lifts the ban on some debit transactions in accounts of Russian and Belarusian residents and persons beneficially owned by them, and provides for the possibility of debiting such accounts under special permits from the NBU
For more detail, please contact Partner Oleksandr Onufrienko or Senior Associate Mykola Melnychuk