{"id":2225,"date":"2019-02-12T06:35:11","date_gmt":"2019-02-12T06:35:11","guid":{"rendered":"https:\/\/mazurivanusa.com\/?p=2225"},"modified":"2021-03-14T17:21:47","modified_gmt":"2021-03-14T17:21:47","slug":"nbu-embarks-on-the-path-towards-free-movement-of-capital","status":"publish","type":"post","link":"https:\/\/mazurivanusa.com\/?p=2225","title":{"rendered":"NBU Embarks on the Path Towards Free Movement of Capital"},"content":{"rendered":"

On 7 February 2019, the new Law of Ukraine “On Currency and Currency Operations”<\/em> dated 21 June 2018 has taken effect.\u00a0 A set of implementing regulations which were adopted by the National Bank of Ukraine (“NBU”) in the beginning of 2019 have become applicable and more than 250 previous NBU regulations governing foreign currency control have now ceased to apply.<\/p>\n

The newly established Ukrainian foreign currency landscape is a first step towards free movement of capital which is offering the Ukrainian individuals, business community as well as foreign investors both significant relaxations and the possibilities which were not available previously.<\/p>\n

Some of the most significant novelties of the 8 key NBU Regulations governing currency circulation and trade are the following:<\/p>\n

    \n
  1. Cancellation of the Individual Licensing Regime<\/strong><\/li>\n<\/ol>\n

    The system of individual licensing<\/em> which applied to certain types of foreign currency transactions will be replaced with an e-limits <\/em>system.\u00a0 This means that the Ukrainian residents will be permitted to purchase and transfer foreign currency abroad without needing to obtain any license from the NBU subject to the compliance with the following aggregate yearly limits:<\/p>\n

      \n
    • \u00a0<\/strong>EUR50,000 for individuals – residents of Ukraine, in relation to payments under life insurance agreements, investing abroad and transfers of foreign currency to the accounts opened and maintained abroad; and<\/li>\n
    • EUR2,000,000 for Ukrainian companies and individual entrepreneurs for any payments made in the course of normal business.<\/li>\n<\/ul>\n

      Foreign currency transactions in excess of the above limits will not be permissible unless they fall under the established exemptions, which are, by way of example, settlements under export\/import contracts, payments under suretyships, loan agreements, repatriation of investments, payments to international financial institutions and other exempted transactions.\u00a0 The foregoing and other exempted transactions are not limited by the above e-limits and are permissible without any additional authorisation.\u00a0 At the moment, however, it would appear that any payments in respect of the transactions other than exempted transactions exceeding the established e-limits will not be possible unless the NBU will raise the above e-limits or will remove them entirely as, for example, a further relaxation measure.<\/p>\n

        \n
      1. Bank Accounts<\/strong><\/li>\n<\/ol>\n

        Under the new NBU Regulations, the Ukrainian companies and individuals will be able to open and operate bank accounts abroad without any NBU license.\u00a0 Likewise, foreign banks and foreign companies will be able to open accounts in Ukraine in foreign currency and in UAH and use these accounts either for making investments in Ukraine or generally, for other business purposes in Ukraine.\u00a0 Foreign banks will be permitted to extend loans in UAH from their correspondent accounts opened with Ukrainian banks.<\/p>\n

          \n
        1. Cross Border Lending<\/strong><\/li>\n<\/ol>\n
            \n
          • Cancellation of Mandatory NBU Registration<\/em><\/strong>: The notorious mandatory registration of cross border loan agreements with the NBU has been cancelled.\u00a0 Instead, the applicable NBU regulations provide for a simple electronic notification of the NBU by the Ukrainian bank which is servicing the loan.\u00a0 The NBU provided that all existing registrations of the cross border loan agreements automatically lost their effect on 7 February 2019 and all information on such registered loan agreements and all payments made thereunder must now be entered by the relevant Ukrainian servicing banks into the NBU notification electronic system;<\/li>\n
          • \u00a0<\/em><\/strong>Removal of the Cost-of-Funding Caps<\/em><\/strong>: Parties to cross border loan agreements will no longer be required to price the lending transaction based on the NBU requirements providing for the maximum cost of funding limits.\u00a0 These were applying to all actual and contingent payments which were to be made under the loan agreement including interest, any default interest, fees, costs and expenses and other payments provided by the loan agreement.\u00a0 Previously applicable NBU regulations strictly prohibited any payments under the loan agreement in excess of such limits; and<\/li>\n
          • Green Light to Prepayments<\/em><\/strong>: The new NBU regulations now do not contain any prohibition on prepayment under cross border loan agreements which until recently were applicable irrespective of their terms.\u00a0 Removal of this prohibition will now allow borrowers to perform their obligations under the cross border loans in accordance with their terms.<\/li>\n<\/ul>\n
              \n
            1. Hedging<\/strong><\/li>\n<\/ol>\n

              NBU has permitted to enter into forwards with Ukrainian banks in order to hedge currency risks related to payment obligations such as those arising under cross border loan agreements and, notably, under export\/import transactions.<\/p>\n

                \n
              1. Extension of Final Term for Settlements under Export\/Import Contracts<\/strong><\/li>\n<\/ol>\n

                NBU extended final term for settlements under export and import contracts from 180 days to 365 days.<\/p>\n

                  \n
                1. Remaining Restrictions<\/strong><\/li>\n<\/ol>\n

                  There still are remaining the following restrictions and limitations:<\/p>\n

                    \n
                  • Purchase of foreign currency from the proceeds of loans borrowed in UAH is prohibited;<\/li>\n
                  • Mandatory sale of 50% of foreign currency proceeds continues;<\/li>\n
                  • It is prohibited to extending loans to non-residents of Ukraine in UAH;<\/li>\n
                  • Servicing of cross border loans can be performed solely through one and the same servicing bank. For these purposes, the term “servicing bank” means a borrower’s home bank in Ukraine with which the borrower must specifically agree to service the payments under a particular cross border loan agreement.\u00a0 Ultimately, it is a way of controlling the payments under the loan agreement and ensuring the sharing of this information with the NBU via the online electronic system; and<\/li>\n
                  • There still remains an in-depth currency control of set-off cross border transactions in foreign currency.<\/li>\n<\/ul>\n
                      \n
                    1. Relevant Legislation:<\/strong><\/li>\n<\/ol>\n
                        \n
                      • Law of Ukraine No. 2473-VIII “On Currency and Currency Operations”<\/em>\u00a0dated 21 June 2018;<\/li>\n
                      • Regulation of the NBU 1 “On the Structure of the Currency Market of Ukraine, Terms and the Procedure for Trading in Foreign Currency and Bank Metals on the Currency Market of Ukraine”<\/em>, dated 2 January 2019;<\/li>\n
                      • Regulation of the NBU No. 2 “On Performance of Transactions with Currency Values”<\/em>, dated 2 January 2019;<\/li>\n
                      • Regulation of the NBU No. 3 “On Cross-Border Movement of Currency Values”<\/em>, dated 2 January 2019;<\/li>\n
                      • Regulation of the NBU No. 4 “On the List of Protective Measures, the Procedure and the Criteria for their Introduction, Prolongation and Early Termination”<\/em>, dated 2 January 2019;<\/li>\n
                      • Regulation of the NBU No. 5 “On Protective Measures and the Determination of the Procedure for Conduct of Certain Foreign Currency Transactions”<\/em>, dated 2 January 2019;<\/li>\n
                      • Regulation of the NBU No. 6 “On the Procedure for Providing Information by Banks to the National Bank of Ukraine relating to Agreements for the Fulfilment by Residents of Debt Obligations towards Non-Resident Creditors under Credits, Loans”<\/em>, dated 2 January 2019;<\/li>\n
                      • Regulation of the NBU No. 7 “On the Procedure for the Currency Supervision by Banks over the Adherence by Residents to the Final Terms for Settlements under Transactions for the Export and Import of Goods”<\/em>, dated 2 January 2019;<\/li>\n
                      • Regulation of the NBU No. 8 “On the Procedure for the Analysing and Verification of Documents (Information) related to Currency Operations by Authorised Institutions”<\/em>, dated 2 January 2019.<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"

                        On 7 February 2019, the new Law of Ukraine “On Currency and Currency Operations” dated 21 June 2018 has taken effect.\u00a0 A set of implementing regulations which were adopted by the National Bank of Ukraine (“NBU”) in the beginning of 2019 have become applicable and more than 250 previous NBU regulations governing foreign currency control […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"class_list":["post-2225","post","type-post","status-publish","format-standard","hentry","category-news-insignts"],"yoast_head":"\nNBU Embarks on the Path Towards Free Movement of Capital - Mazur Ivanusa, LLC<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/mazurivanusa.com\/?p=2225\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"NBU Embarks on the Path Towards Free Movement of Capital - 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