The National Bank of Ukraine (“NBU”) continues its efforts to relax currency restrictions within the insurance sector, as well as the regulation of operations related to the payment of interest on domestic government bonds (“OVDP”) to foreign investors.
Under the new rules, insurance companies will be able to make insurance payouts to non-residents, including the reimbursement of insurance premiums for early terminated insurance or reinsurance contracts. These provisions apply to reinsurance payments obtained by insurers after 24 February 2022, and extend also to cases where corresponding court rulings have been issued.
Currently, the following insurance payment operations are already permitted:
- Payments by authorised insurers on behalf of nuclear pools to foreign nuclear pools, as authorised by the Nuclear Insurance Pool Association;
- Payments under the Green Card international insurance agreements;
- Payments for non-life insurance agreements related to medical treatment abroad, transportation of the deceased, and funeral expenses; and
- Payments under insurance contracts for individuals traveling abroad.
In addition, the NBU has lifted restrictions on currency operations related to the payment of membership fees by insurance companies to international organisations and associations of insurers. The Motor (Transport) Insurance Bureau of Ukraine will also be able to conduct currency operations to pay membership fees to the Council of the Green Card International Motor Insurance System.
To facilitate the repatriation of funds received from interest payments on OVDP after 1 April 2023, an additional requirement has been introduced. Investors must have held the OVDP for a minimum continuous period of 90 calendar days prior to receiving the interest. This measure aims to prevent premature repatriation of investments by foreign investors.
It should be recalled that the NBU introduced the possibility of repatriating funds received from interest payments on OVDP after 1 April 2023 in order to incentivise non-residents to reinvest the principal amount and accumulated hryvnia funds in the primary OVDP market.
These changes are outlined in the resolution of the NBU Board dated 19 May 2023, No. 68, “On Amendments to the Resolution No. 18 of the NBU Board dated 24 February 2022” (“Resolution 68“). In particular, pursuant to Resolution 68 the NBU supplemented Clause 14 of Resolution No. 18 with Subclause 19-1 concerning insurance payments. Additionally, Subclause 21 of Resolution 18 was amended to include a requirement for the ownership of bonds for a continuous period of at least 90 days prior to the payment of interest income (coupon payment), which should be accounted for in the securities account of the foreign investor/non-resident or the nominal holder/foreign depository bank holding a securities account with the National Bank of Ukraine. The Resolution 68 comes into effect on 20 May 2023. The revised procedure for operations related to the payment of interest on OVDP to foreign investors will take effect on 22 May 2023.