Continuation of the currency market liberalization
Within the framework of its gradual liberalization policy the National Bank of Ukraine ("NBU") introduced certain changes to the applicable currency legislation. The relevant changes were approved by NBU Resolutions No. 372 dated 18 August 2016 and No. 375 dated 23 August 2016, which came into force on 18 August and 01 September 2016, respectively.
- The requirement for Ukrainian importers to obtain statements on the expert assessment of market prices statements from the State Information and Analysis Center for Monitoring of External Commodity Markets (SE Derzhzovnishinform) was cancelled. Such statements were neccessary to pay for services (works and intellectual property rights) purchased from a non-resident entity in an amount over EUR 50,000.
- It is now permitted to shorten the periods set for a resident non-bank entity to repay loan or credit in foreign currency to a non-resident entity (creditors) in order to restructure its debt where the claims of the creditor in respect of the principal amount accounted as an additional contribution that creditor into the equity capital of the resident entity. Technically such provision will be in effect until 14 September 2016, i.e. until the expiration of the applicable "Anti-crisis NBU Resolution No. 342, but it likely will be extended into any extension of the Anti-crisis NBU Resolution.
- The requirement for a bank to form a register and obtain approval from NBU to make advance payments on behalf of a client for imported goods total price of which is over USD 50,000 (or its equivalent) has been amended. Now banks may deliver for NBU approval the information about two and more such transactions of a resident entity with the same non-resident entity to get approval for such transactions. Formerly, the restriction limited the approval to only one transaction a day.
We remind you that previously NBU extended the period for payments for the transactions related to export and import of goods from 90 days to 120 days, thus liberalization the conditions for advance payments, decreased the discount rate from 16,5 percent to 15,5 percent and permitted individuals to exchange foreign currency in the amount up to UAH 150,000 without holding a passport.
Introduction of indicators of a risky financial transaction
Together with the above measures of liberalization a requirement was introduced for banks to carry out additional inspection of their clients and additional documents (information) about financial transactions demonstrating clear indicators of a risky financial transaction. Based on the results of such inspection the banks may decline such financial transactions. NBU Resolution No. 369 dated 15 August 2016 lists the following as indicators of a risky financial transaction, inter alia:
- Incompliance between the substance of financial transactions to the subject matter of the client/counterparty’s activity or ordinary course of business activity of a client;
- Transfer of funds under the agreement outside of Ukraine for the benefit of a third party;
- Transfer of funds under the agreement are made:
- By a surety under surety agreements;
- For the benefit of the party that obtained the rights as a result of assifnment of the right of claim under the payment obligation;
- By the party that acquired the obligations as a result of a debt transfer;
- Using setoff of similar counter claims;
- Extending a loan / credit to a resident borrower through payment by a non-resident lender for the obligations of such resident to the non-resident exporter without depositing into of the loan amount to the resident’s bank account in Ukraine;
- The party to a financial agreement is registered in a country specified as an off-shore jurisdiction by the Cabinet of Ministers of Ukraine;
- Payment of dividends to a foreign investor;
- Transfer of funds from permanent representative offices of a non-resident entity to the account of such non-resident entity;
- Other indications of a risky financial transaction (at the bank’s discretion).
The provisions of Regulations No. 369 do not apply to the financial transactions (save for purchase/transfer of foreign currency outside of Ukraine for the purpose of payment dividends to a foreign investor), in particular carried out:
- For the benefit of the state or under state guarantees;
- By resident entities with the international financial institutions where Ukraine is a member thereof or which are established under international agreements signed by Ukraine;
- To implement the agreements entered into by resident entities with international companies (including their subsidiaries and affiliated companies) entered into the list of 2,000 largest public companies globally (Forbes Global 2000);
- For the amount not exceeding UAH 150,000 (or its equivalent).