Ukraine: NBU softens FX restrictions and limits the outflow of foreign currency to Russia

The National Bank of Ukraine (the "NBU") has recently issued two regulations which affect the Ukrainian currency control regime.

The NBU Regulation No. 13 "On Amending the NBU Regulation No. 410" dated 22 February 2017 liberalises the following FX restrictions and, thus, makes Ukrainian tenders more attractive for foreign participants:

• mandatory sale of 65% of the proceeds in foreign currency transferred by non-residents to Ukrainian bank accounts is no longer required if these funds secure (as a guarantee, pledge, deposit or down-payment) the obligations of non-residents in connection with their participation in the auctions, biddings or tenders which are held by Ukrainian residents; and
• Ukrainian banks can buy foreign currency for clients (except for individuals) if the clients hold funds in a foreign currency in their accounts in an amount not exceeding USD 100,000 or equivalent in another currency (previously, it was USD 25,000). Moreover, Ukrainian banks can now buy foreign currency for their clients (except for individuals) notwithstanding the amount of the clients’ own funds held in foreign currency in their accounts if these funds have been transferred to Ukraine from non-residents to secure their obligations in connection with the participation in the auctions, biddings or tenders.

The NBU Regulation No. 12 "On Amending Certain Normative Legal Acts of the National Bank of Ukraine" dated 21 February 2017 allows the NBU not to issue the individual licenses for certain foreign currency transactions (e.g., payments abroad) if the NBU reveals that a party to such foreign currency transaction is, or if the foreign currency transaction is for the benefit or in the interests of, an individual or a legal entity which is located or registered in a county-aggressor or a country-occupant. Russia was declared country-aggressor by Verkhovna Rada of Ukraine in 2015.

Legislation:

Regulation of the National Bank of Ukraine No. 12 " On Amending Certain Normative Legal Acts of the National Bank of Ukraine" dated 21 February 2017, effective from 23 February 2017.

Regulation of the National Bank of Ukraine No. 13 "On Amending the NBU Regulation No. 410" dated 22 February 2017, effective from 23 February 2017.

Law of Ukraine “On Safeguarding Citizens’ Rights and Freedoms and the Legal Regime on the Temporary Occupied Territory of Ukraine” No. 1207-VII dated 15 April 2014.

Resolution of Verkhovna Rada of Ukraine No.129-VIII dated 27 January 2015.

Resolution of Verkhovna Rada of Ukraine No. 337-VIII dated 21 April 2015.