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NBU Improves Conditions for Granting General Licenses for Foreign Exchange Transactions to Nonbanking Financial Institutions

27 December 2017

Press Release

 

The NBU approved the amended Regulation On the Procedure for Granting General Licenses for Foreign Exchange Transactions to Nonbanking Financial Institutions and State Post Office.

 

By this document, the NBU has loosened the conditions for granting general licenses for FX transactions. In particular:

·         The minimum equity requirement for performing FX operations has been reduced by half - to UAH 10 million, provided that such an institution carries out its activities through no more than 50 structural subdivisions. Each subsequent increase in the number of structural subdivisions by 50 units will require an increase in the minimum equity by UAH 10 million;

·         the requirement to the term of operation of the NBFI in the national currency has been reduced from 3 to 1 year for obtaining a general license for FX operations.

 

At the same time, the new Regulation sets stricter requirements for the financial standing and business reputation of managers and qualifying shareholders of NBFIs.

 

Therefore, in order to be eligible to perform foreign exchange transactions, NBFIs will have to meet the following requirements: have no cyclical ownership structure and have an approval of the competent authority for acquiring or increasing a qualifying holding in the NBFI.

 

The regulator will now be able to suspend or extend the timeframes for reviewing documents submitted to obtain a general license. And in case a NBFI commits a number of material violations or if the authorized NBU employees are prevented from inspecting a NBFI structural unit, the regulator will have a right to withdraw the general license. In order to ensure compliance with these requirements, the Resolution introduces a definition of a significant violation of the FX performance procedure and the requirements for protection of NBFIs premises.

 

The NBU also provided an option to grant a general license by entering an account in the electronic register and provided an opportunity for NBFIs to obtain an extract from this register through the NBU’s website.

 

For NBFIs that already have general licenses for FX transactions, a transitional period is set up to bring their activities in line with the new requirements. Thus, the NBFIs that already have the license shall:

-         within 2 months from the date of entry into force of the amendments, submit to the NBU a form with the information about the NBFI’s financial standing and financial liabilities, the business reputation of its managers and owners, relations with other parties;

-         within 6 months from the day of the entry into force of the amendments, bring its activities into compliance with the new requirements of the Regulation and submit to the NBU a written assurances that their activities are in conformity with the Regulation.

 

Said amendments were approved by NBU Board Resolution No. 137 On Amendments to Some Regulations of the National Bank of Ukraine dated 21 December 2017 and enter into effect on the day following the date of its official release.


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Last modification   27.12.2017