Ukrainian national bank passes measures liberalising the nation's foreign currency market


In a bid to further liberalise the functioning of the Ukrainian foreign currency market, the National Bank of Ukraine passed Resolutions No. 86 and No. 91 on June 27 and on 9 July 2019 respectively, which does the following:

  • cancels the EUR 12 million limit on the repatriation of dividends;

  • lifts the limit on funding by Ukrainian businesses of their foreign branches; and

  • simplifies the process for reinvesting foreign investor income generated by Ukrainian securities.

These developments are expected to improve the investment climate in Ukraine and simplify the ability of local companies and foreign investors to do business. More details on these resolutions can be found below.

Cancelling the limit on dividend repatriation

The NBU abolished all restrictions related to repatriation of dividends. Starting from 10 July 2019, dividends can be paid to a foreign investor’s account in the Ukraine or abroad without limits and for any year. As for investment repatriation, a limit of EUR 5 million still applies to the return of funds received from – among other things – operations on the sale of securities or corporate rights.

No limit on the funding of foreign branches

Ukrainian businesses can now fund their foreign branches without limits on the funding amount. This does not apply, however, to foreign branches operating in countries that do not comply with international money laundering and tax policies or are recognised by the Ukrainian parliament as an “aggressor state” or “occupying state”.

At the same time, to minimise the risks of the outflow of capital from the Ukraine, additional controls have been placed on the ability of Ukrainian businesses to transfer funds to foreign branches. For example, a servicing bank may request additional documents, outlining the comprehensive cost estimate, ownership structure, and source of funds, to verify the purpose of any transfer.

Ukrainian banks to assess the risk of foreign banks

The NBU will no longer maintain a list of “risky foreign banks” that Ukrainian banks were previously required to rely on. Servicing banks will now, at their own discretion, determine the risk level of conducting currency transactions with foreign banks, based on publicly available information and due diligence.

Ukrainian securities: reinvestment of foreign investor income

Foreign investors can receive income from Ukrainian securities in a foreign custodian bank directly to their own accounts in Ukraine. In these cases, the income payments must be made through the corresponding account of a foreign custodian bank opened in a Ukrainian bank. Such direct payments avoid losses due to FX currency rate fluctuations that foreign investors previously faced when they were required to transfer their income to foreign accounts first.

Paying consular fees in foreign currency

The NBU now allows the cash payment (in UAH and foreign currency) of consular fees to diplomatic missions or consular posts of foreign states. This applies to individuals, Ukrainian legal entities, and representative offices of non-resident legal entities.

The NBU also expanded the list of foreign-currency transactions that can be carried out domestically, which includes transactions between financial institutions and the Ukrainian Cabinet of Ministers. The purpose of this change is to foster international agreements related to loans and grants.

For more information on these resolutions and how they could affect your investments, feel free to contact one of the following local CMS experts: Ihor Olekhov, Kateryna Chechulina, Anna Pogrebna.

Legislation: Resolution of the National Bank of Ukraine No. 86 “On Amendments to Certain Regulatory Acts of the National Bank of Ukraine” dated 27 June 2019.

Resolution of the National Bank of Ukraine No. 91 “On Amendments to Certain Regulatory Acts of the National Bank of Ukraine” dated 9 July 2019.