NBU further prolongs capital control regulation restrictions

CMS Cameron McKenna, 
Kyiv, Ukraine, Friday, March 28, 2014

Published by U.S.-Ukraine Business Council (USUBC),
Washington, D.C., Thursday, April 10, 2014

On 28 March 2014 the NationalBank of Ukraine (the “NBU”) issued Regulation No. 172 “On Regulating ofFinancial Institutions’ Activities and Performance of Currency Operations”(“Regulation No. 172”), which replaced the NBU Regulation No. 49 dated 06 February2014 (“Regulation No. 49”). Regulation No. 172 will remain in effect until 01May 2014. 

Regulation No. 172 slightlysoftens the restrictions, previously imposed by Regulation No. 49, and aims toensure the stability of the Ukrainian national currency and sustainability ofthe banking system in Ukraine. 

Under Regulation No. 172: 

1. The rule under which legalentities and private entrepreneurs are required to credit the relevant amountin UAH to the bank's nominated internal (analytic) account in order to buyforeign currency, is prolonged. However, as of 01 April 2014, the period forwhich the bank must hold the relevant amount in UAH was reduced to two businessdays. 

2. Individuals are now allowed tosell foreign currency up to an amount that does not exceed 150,000 UAH, withouthaving to present identification documents. 

3. The purchase of foreigncurrency by individuals is restricted to the equivalent of 15,000 UAH per onebusiness day within the same banking institution.

4. The 15,000 UAH per day limitfor withdrawal of foreign currency from current and deposit accounts isprolonged. However, this restriction applies to the withdrawal of cash bothwithin and outside the territory of Ukraine regardless of the number ofaccounts that the customer has with the same banking institution.

5. The limitation, according towhich foreign currency deposits may only be withdrawn early in UAH at theforeign currency sale rate of the respective servicing bank as of the day ofsuch withdrawal, is prolonged. The same applies to early payments under depositcertificates nominated in foreign currency.

6. The prohibition on earlyprepayment by residents under cross-border loan agreements is broadened andprolonged. While Regulation No. 49 only prohibited prepayment undercross-border loan agreements through foreign currency, Regulation No. 172completely prohibits such early payments, including through a company’s ownforeign currency income.

 7. The restriction on foreigncurrency purchases for the purposes of making investments abroad and coveringpart of insurance reserves by insurers is abolished.

 8. An individual (resident ornon-resident) can buy foreign currency at the equivalent of up to 150,000 UAHper month, upon providing relevant documentary evidence, exclusively from hisor her current account. An individual resident can also buy foreign currencywithout relevant documentary evidence (from a foreign currency account orotherwise) up to an amount not exceeding 15,000 UAH per month.

 9. The issuance of saving(deposit) certificates by banks is suspended.

 Legislation: Regulation of theNational Bank of Ukraine “On Regulating of Financial Institutions’ Activitiesand Performance of Currency Operations” No. 172 dated 28 March 2014. 

Authors: 

VictoriaKaplan, Senior Associate, victoria.kaplan@cms-cmck.com

TetianaMykhailenko, Lawyer, tetyana.mykhailenko@cms-cmck.com