In order to improve foreign exchange regulation the Board of Directors of the National Bank of Ukraine has passed Resolution No 450 of 29 October 2012, amending certain normative regulatory acts. These amendments envisage:

1) further simplification of administrative procedures pertaining to electronic registration by the National Bank of Ukraine of agreements on foreign currency loans issued by nonresidents to non-bank resident borrowers.

In particular, there will be additional possibility for a resident borrower to submit to its bank a notice of loan agreement in electronic form (previously, resident borrowers could submit these notices in paper form only);

2) possibility for authorized banks to settle debt with payment organizations of international payment systems via correspondent accounts of nonresident banks in Ukrainian hryvnia.

It will help minimize foreign exchange risks in the banking sphere and reduce the use of foreign currency as a medium of exchange in Ukraine;

3) introduction of limitations on the use of foreign currency in cash in operations associated with foreign investments in Ukraine.

From now on, foreign investors will be able to fund their investment accounts only via cashless transfers.

Introduction of these limitations was necessitated by the task of making impossible the use in Ukraine of financial schemes which allowed for laundering and legalization, under disguise of ‘foreign investments’ , of proceeds from crime received abroad in cash.

It is also worth noting that introduction of the above limitations:

will in no way complicate operations of bona fide investors;

is in line with the latest worldwide trends of minimizing cash transactions;

is aimed at practical implementation of the Concept of Ensuring National Security in Financial Sphere (approved by Resolution of the Cabinet of Ministers of Ukraine No 569-r of 15 August 2012).

For your reference: in particular, the above Concept envisages lowering of the level of dollarization of Ukrainian economy, including:

legislative imposition of equal conditions for participation of residents and nonresidents on Ukraine’s investment market by obliging foreign investors to settle debts under investment operations in Ukraine in the national currency of Ukraine only;

minimization of the use of foreign currency in cash in Ukraine;

prevention of illegal use of foreign currency as a medium of exchange in Ukraine.