From 25 January 2013, the National Bank of Ukraine (the "NBU") started to ease the placement abroad of foreign currency by Ukrainian individuals and introduced a number of important clarifications into the requirements for obligatory sale of foreign currency earnings by Ukrainian residents.

The following is a brief summary of the major changes introduced by the NBU resolution (the "Regulation"[1]).

1.   No Limits on Placement of Funds Abroad 

The Regulation amends the current principal NBU regulation governing the procedure for issuing individual licenses to Ukrainian companies and individuals for placement of their foreign currency assets to bank accounts abroad[2].

Ukrainian nationals are no longer required to comply with an annual UAH 600,000 limit for the placement of funds in their foreign accounts (but the requirement for an individual currency license of the NBU remains). 

2.   Simplification of Regulatory and Administration Requirements

2.1  It will be simpler for the Ukrainian banks to exercise control over foreign monetary transfers. Ukrainian banks are no longer required to maintain the following documentation:

a)   the journal of placements in foreign currency outside Ukraine, and

b)   the journal of payments in national currency within Ukraine at the order of non-resident individuals.

These functions will be conducted electronically, which will substantially ease the accounting of such operations by banks.

2.2 NBU simplified the procedure of obtaining individual NBU licenses.[3]

The NBU no longer requires an expert opinion of the Ministry of the Internal Affairs and of the State Security Service to issue a currency license to an individual. Therefore the overall license issuance procedure will hopefully take less time and involve fewer stages.

3. Mandatory Sale of Foreign Currency from Foreign Accounts 

The Regulation provides that the foreign currency proceeds received by Ukrainian legal entities and private entrepreneurs on their foreign accounts (other than the funds transferred from their other accounts) are subject to mandatory sale either by:

a)   transfer  to an authorized bank in Ukraine; or

b)   sale of the same currency amount from the resident's account opened in an authorized bank in Ukraine, as specified in the license.

Presently Ukrainian legislation requires Ukrainian residents to sell 50% of such earnings in foreign currency[4]. This requirement is expected to be cancelled in May 2013.

It remains to be seen how the new regulations will be applied in practice and if the updated rules will simplify the placement of foreign currency outside Ukraine as intended.

Additional Notes

The LEGAL ALERT is issued to inform Baker & McKenzie clients and other interested parties of time-sensitive legal developments that may affect or otherwise be of special interest to them. The comments above do not constitute legal or other advice and should not be regarded as a substitute for specific advice in individual cases.

[1] NBU Resolution No. 531 "On Amendments to Certain Regulations of the National Bank of Ukraine" dated 14 December 2012.

[2] NBU Regulation No.485 "On Issuance by the NBU of Individual Licenses for the Placement of Foreign Currency Assets outside Ukraine by Ukrainian Residents", dated 14 October 2004.

[3] Regulation No. 500 "On Amendments to Certain Regulations of the National Bank of Ukraine on issuance of General and Individual Licenses".

[4] Regulation No. 479 "On the Amount of Obligatory Sale of Earnings in Foreign Currency", dated 16 November 2012.