On 18 September 2012 Verkhovna Rada adopted the Law of Ukraine No. 5284-VI “On Amendments to Certain Legislative Acts of Ukraine” (relating to the Functioning of Payment Systems and Development of Cashless Settlements) (the “Amendments”) which introduced substantial revisions to the legal framework governing payment system activities in Ukraine.  The Amendments became effective on 18 October 2012 and are intended to expand the use of cashless settlements in Ukraine.

In particular, the Amendments confer wider regulatory authorities on the National Bank of Ukraine (the “NBU”).  The effect of the Amendments may depend on the approach the NBU takes during implementation.  Essentially, the Amendments leave room for the NBU to introduce detailed rules concerning certain matters market participants must comply with.

The Amendments, inter alia, introduce the following important changes:

(i)     all payment systems and infrastructure institutions aiming to carry out their activity in Ukraine must be registered with the NBU;

(ii)    banks are expressly allowed to issue co-branded payment cards subject to agreements with the payment systems which own the respective trade marks;

(iii)   banks are required to pay to the operator of a payment system for services rendered in Ukraine in Hryvnia;

(iv)  banks are required to place collateral to secure their obligations within the payment system only in Hryvnia, either with a Ukrainian bank or with the NBU;

(v)   the NBU is authorized to introduce limitations on cash payments; and

(vi)  “e-money” may not be issued by any one except for commercial banks in Ukraine.

Additional notes
This LEGAL ALERT is issued to inform Baker & McKenzie clients and other interested parties of legal developments that may affect or otherwise be of 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.