Following recent regulatory changes implementing the concept of escrow accounts into Ukrainian legislation, the National Bank of Ukraine (the NBU) developed a procedure for the opening and functioning of escrow accounts. The relevant novelties were introduced by the NBU Regulation № 133 dated 18 December 2017 (the Regulation).
The Regulation stipulates the following:
- The procedure for opening and closing escrow accounts
- The possibility of opening escrow accounts by non-resident legal entities (both in Ukrainian hryvnias and foreign currencies)
- An exhaustive list of transactions, which may be carried out through the escrow account, in particular:
- Crediting by the bank of funds received from the account holder and/or third parties, which may be transferred to the beneficiary(ies) or returned to the account holder, as established by the terms of escrow account agreement
- Transactions related to enforcement of the property rights to funds held on escrow account or account holder’s/beneficiary’s rights of claim to the bank under the escrow account agreement
- Fees payment to the bank for servicing the escrow account and maintaining operations with it, if such fee is arranged under the escrow account agreement.
The bank acting as escrow agent shall identify any beneficiary requesting funds from the escrow account and verify legal grounds for the release of funds from such an account.
The Resolution enters into force on 21 December 2017, giving the green light for Ukrainian business to use a flexible settlement tool, which at the same time minimizes counterparty risks of violation or non-fulfillment of contractual obligations.