CURRENCY CONTROL REFORM IN UKRAINE
The new FX regulation shall remove and easy over 20 currency control restrictions. The key novelties are the following:
- foreign currency may be purchased by individuals online or by using ATM (up to the equivalent of UAH 150,000 per day);
- the limits on remittances of foreign currency from Ukraine by individuals without opening a bank account were raised up to UAH 150,000 from UAH 15,000 a year;
- a resident may make FX payments for his/her life insurance purposes;
- certain types of hedging (e.g., by conclusion of forwards with Ukrainian banks) of currency risks under cross-border loans are allowed;
- the settlement period for export/import transactions is doubled up to 365 days;
- the FX supervision of export/import operations generating less than UAH 150,000 is cancelled;
- individual licenses to conduct FX operations are not required as they will be substituted by a system of e-limits (EUR 2 million a year for companies and EUR 50,000 a year for individuals);
Please note some restrictions will be maintained until their complete abolition, particularly:
- mandatory conversion of foreign currency at the level of 30%;
- cap on repatriation of proceeds from sale of securities, corporate rights, reduction of share capital and exit from Ukrainian companies' membership in the amount of EUR 5,000,000 per month;
- cap on repatriation of dividends in the amount of EUR 7,000,000 per month;
- repatriation of dividends, accrued until 2018 inclusive;
- granting loans to non-residents is subject to a EUR 2,000,000 cap.
- prohibition for residents to transfer funds to non-resident’s accounts by providing loans or to their own accounts operated in the aggressor state/occupant state, offshore zones and countries that do not comply with FATF recommendations.
Procedure for registration of cross-border loans is substituted with notification procedure via a servicing bank in Ukraine which shall inform the NBU on the loans and their details online within five days of the borrower's application. Thus the NBU will no longer review the hardcopies of loans as well as shall not request any extra documents.
The mandatory maximum interest rate limitation for cross-border loans (a cap for all payments under such loans) is also cancelled. Nevertheless, Ukrainian banks processing cross-border payments shall verify a market level of proposed interest rates and other payments under cross-border FX loan agreements by using various economic criteria for that purpose (for example, LIBOR, assessment of the country and a borrower’s related risks).
Now FX regulation requirements will not be applicable to loan transactions performed through offshore accounts, as well as to the loans attracted by Ukrainian banks or secured with crops' receipts.
It should be noted the loan agreement shall come into force as of the day of its signing (earlier it became effective from the day of its registration by the NBU).
LOANS REGISTERED BEFORE FEBRUARY 07, 2019
Please be informed starting from February 07, 2019 all records on cross-border loans duly registered with the NBU before will be transferred to the system automatically.
Should you have any questions with respect to above or require any additional information, please do not hesitate to contact Mr. Vladyslav Kysil (firstname.lastname@example.org) or Mr. Mykhailo Semka (email@example.com). We will be pleased to assist You. The information contained in this overview is not intended to provide legal advice and should not be relied on or treated as a substitute for specific advice concerning individual situations.