Restrictions on transactions in foreign currencies
On April 4, 2022 the Board of the National Bank of Ukraine by its Resolution No. 68 amended Resolution No. 18 dd. 24.02.2022 “On operation of the banking system during martial law” (hereinafter – the Resolution), which specified a number of restrictions on operations in foreign currency.
List of currency transactions for which banks conduct simplified currency supervision has been shortened
Previously, in its Resolution № 18 of 24.02.2022, the National Bank approved a list of currency transactions, which were subject to simplified currency supervision1.
However, Resolution № 68 of 04.04.2022 has significantly shortened this list.
The current list of currency transactions subject to simplified currency supervision includes the following types of currency transactions:
banks’ own operations, including settlements with international payment systems;
currency operations of residents on fulfillment of obligations secured by the state guarantee;
currency operations of IFOs, including representative offices of IFOs, as well as currency operations of residents and non-residents to transfer funds in foreign/national currency for the purpose of settlements with IFOs or their representative offices;
currency operations by residents and non-residents for mobilization and other measures (needs) determined by the laws of Ukraine governing relations in the areas of national security and defense;
on the basis of certain permits (decisions) of the National Bank of Ukraine, adopted on the basis of appeals of the Cabinet of Ministers of Ukraine, ministries and other state bodies of Ukraine;
transfers in favor of diplomatic missions, consular offices of Ukraine abroad and employees of the offices of military attachés and offices of representatives of the Ministry of Defense of Ukraine at foreign diplomatic institutions of Ukraine;
For other currency transactions not specified above, standard requirements for banks to conduct proper analysis and verification of documents (information) on currency transactions of their clients in accordance with the Regulations on the procedure of analysis and verification of documents (information) on currency transactions by authorized institutions are applied.
Deadlines for settlements of export-import transactions reduced
Settlement deadlines for export and import of goods/works/services transactions shall be 90 calendar days and shall apply to transactions made starting from April 05, 2022.
At the same time such limits do not apply to export and import transactions (including outstanding settlements under the transaction), the amount of which (in the equivalent at the official exchange rate of UAH to foreign currencies set by the National Bank of Ukraine on the date of transaction) is less than UAH 400 000 (insignificant amount), except split transactions for export of goods or split transactions in foreign currency.
N.B. Thus, persons engaged in foreign trade activities should pay attention to the payment deadlines for existing foreign trade contracts and check such deadlines when entering into new contracts. Please be reminded that the requirements for payment deadlines for export and import of goods prevail over the deadlines specified in the contracts.
In case of violation of the settlement time limit set by the NBU (despite the terms specified in the respective contract), according to paragraph 5 of Article 13 of the Law of Ukraine “On Currency and Currency Operations” a penalty is imposed for each day of delay in the amount of 0.3% of the uncollected funds under the contract (cost of undelivered goods). Furthermore, the maximum amount of accrued penalties may be up to the amount of unreceived funds under the contract (the value of undelivered goods).
Given the above, we would recommend to monitor the timing of obligations under future contracts, and if there are terms in the current contract, not corresponding to the deadlines for calculations established by the NBU, such contracts should be reviewed in detail with the possible introduction of appropriate changes.
Reduced restrictions on the execution of operations by persons associated with Russia or Belarus
The Resolution defines a number of exemptions for currency transactions. Restrictions on currency transactions, in which the participant is a legal entity or an individual having location (registered/permanent residence) in the Russian Federation or in the Republic of Belarus or in order to fulfill obligations to legal entities or individuals having location (registered/permanent residence) ) in the Russian Federation or in the Republic of Belarus or using Russian rubles and Belarusian rubles, shall not apply to the following transactions:
1) transfer of funds (except for Russian rubles and Belarusian rubles) to a special account of the NBU to collect funds for the support of the AFU and/or accounts of the CMU, ministries and other state bodies of Ukraine;
2) transfer of funds (except for Russian rubles and Belarusian rubles) to the residents’ bank accounts for operations on product exports, refunds for operations on product imports.
In case of receipt of funds from abroad in Russian Rubles/Belarusian Rubles on such transactions the bank is allowed to exchange these funds in the international currency market for another currency (except for Russian Rubles/Belarusian Rubles) for further crediting to the client’s accounts;
3) transfer of funds (except Russian rubles and Belarusian rubles) in Ukraine for the purpose of social payments, wage payments, payment of utilities, payment of taxes, fees and other obligatory payments;
4) transfer of funds (except Russian rubles and Belarusian rubles) on currency transactions of individuals, residents of the Russian Federation and the Republic of Belarus, contained in the list of the Security Service of Ukraine and/or state authorities of Ukraine, pre-approved by the Security Service of Ukraine, on the possibility of banks to conduct such transactions;
5) operations on crediting of cash receipts (including receipts in Russian rubles/ Belarusian rubles) from abroad to the bank’s correspondent account opened with another bank in Ukraine;
6) transfer of funds in the territory of Ukraine from the account of a legal entity/individual having location (registered/residence) in the Russian Federation or the Republic of Belarus [current, savings (deposit) account, escrow account] to another own current account of such entity (except funds in Russian rubles/Belarusian rubles);
7) transactions on sale of non-cash foreign currency in the territory of Ukraine by a legal entity/individual having a location (registered/permanent residence) in the Russian Federation or in the Republic of Belarus, except for Russian rubles and Belarusian rubles.
8) insurance compensation for harm to life, health, property of victims, caused as a result of an insured event, which occurred before February 23, 2022 (inclusive), under the contracts of compulsory civil liability insurance of owners of land vehicles;
9) payment of contributions to the centralized insurance reserve funds of the Motor (Transport) Insurance Bureau of Ukraine in accordance with the Law of Ukraine “On Compulsory Civil Liability Insurance of Owners of Land Vehicles”.
Other easings of currency restrictions
Authorized institutions are allowed to perform transfer of currency valuables / transfer of funds (including transactions on behalf of customers), on the following transactions:
Foreign currency transfer transactions initiated in order to contribute to the defense of Ukraine by an individual who is not a business entity, for goods contained in the List тof critical imports, if the amount of such transaction on a calendar month in the equivalent of less than 400,000 UAH (at the rate of the NBU):
- Power banks, electric batteries, including separators for them;
- Helmets, safety helmets, body armor;
- Military and tactical uniforms, protective clothing, military and tactical shoes;
- Optical tracking devices;
- Pilotless aircraft;
- Sleeping bags, sleeping mats;
- Means for medical assistance.
transfer of foreign currency for payment of pensions to Ukrainian citizens who have left for permanent residence abroad. Such payments can be made subject to restrictions on the prohibition of currency transactions:
– using Russian rubles and Belarusian rubles;
– where the participant is a legal entity or an individual with a location (registered/permanent residence) in the Russian Federation or the Republic of Belarus;
– to fulfill obligations to legal entities or individuals having a location (registered/permanent residence) in the Russian Federation or in the Republic of Belarus.
operations on sale of remnants of commemorative and investment coins of Ukraine, souvenirs in branches, departments of banks, if there is no direct threat to life and health of employees and customers, in compliance with the procedure for operations in a special period, determined by internal banking procedures.
1 In other words, without conducting additional analysis of documents (information) on currency transactions, the sources of origin of funds used to conduct them and other activities stipulated by the Resolution on the procedure for analysis and verification of documents (information) on currency transactions by authorized institutions.