In line with the currency liberalization and further improvement of the business environment, the National Bank of Ukraine (NBU) has cancelled a range of restrictions that inconvenienced Ukrainian companies, foreign investors and diplomatic missions.
First, considering the numerous requests from businesses engaged in foreign trade, the limit on funding representative offices and other standalone units abroad has been lifted. Previously, fund transfers to abroad branches were limited for legal entities on foreign investments to EUR 2 million per year. From now on, direct transfers to accounts of foreign units are no longer subject to the limits and will not be restricted as to amount.
In order to mitigate risks of unproductive capital outflow, the NBU has also set additional requirements to currency supervision under such operations. In particular, banks are committed to receive – from Ukrainian companies intending to fund foreign units – a comprehensive cost estimate and other documents supporting such transactions.
Furthermore, the mentioned easing shall not apply to fund transfers to aggressor and occupant states, offshore zones and countries failing to comply or deficiently complying with FATF recommendations.
Second, reinvestment of return on Ukrainian securities of foreign investors has been streamlined. Nonresidents are permitted to transfer income on securities recognized in the foreign custodian bank from the correspondent account of this institution into their own account in Ukraine. This will eliminate situations, when investors lose money on additional FX exchange since a direct deposit in hryvnia cannot be made into the UAH account.
Third, restriction has been lifted on payments in foreign cash by individuals and legal entities for consular fees on legalizations of shipping documents at diplomatic missions and consulates of the states that failed to adhere to the Hague Convention Abolishing the Requirement of Legalisation for Foreign Public Documents of 5 October 1961. Such states are Algeria, Afghanistan, Vietnam, Egypt, Indonesia, Jordan, Iraq, Iran, Cameroon, Canada, Qatar, Kuwait, Lebanon, the UAE, Saudi Arabia, Syria, the Sudan, Thailand, and Uruguay.
Forth, the list of transactions that are allowed to conduct in foreign currency in Ukraine has been expanded by transactions between a financial institution and the Cabinet of Ministers of Ukraine in line with international agreements on loans, grants, and borrowings. This will lower currency risks to the state in the course of such operations.
Fifth, the risk-based supervision of banks has been improved regarding inspections of foreign counterparty banks that receive transfers from Ukrainian companies. From now on, banks will, at their own discretion, determine the risk level of foreign counterparty banks as to currency transactions, based on the information from public sources. Previously, banks applied the list provided by the NBU, based on the information form the State Financial Monitoring Service.
The aforementioned amendments were approved by NBU Board Resolution No. 86 On Amendments to Some Regulatory Documents of the National Bank of Ukraine dated 27 June 2019 that comes into effect on 2 July.