NBU implements the new steps of currency liberalization

On 15 January 2021 the NBU adopted Resolution No.3 «On *Amendments to Certain Regulatory Documents of the National Bank of Ukraine*» («Regulation No.3») in order to expand the FX-risk-hedging capabilities of businesses and individuals and cancel some obsolete restrictions. In particular, the NBU allowed:

• forward FX sale for legal entities;
• forward FX purchases and sales by individuals for Hryvnias, to buy and sell foreign currency and banking metals on marginal trading terms and to make FX payments when buying FX government securities;
• swap transactions with individuals where the first part of the transaction involves the sale of foreign currency or banking metals to customers.

 

In Ukraine the possibility of online currency exchange is in effect from February 7,2019. In addition to the existing mechanics, the NBU also has allowed banks and non-banking financial institutions to purchase cash  foreign currency for non-cash Hryvnia from individuals through self-service terminals and has approved a procedure for carrying out such transactions.[[1]](https://www.integrites.com/publications/nbu-implements-the-new-steps-of-currency-liberalization/#_ftn1) More specifically, the NBU has determined that after a sale of foreign currency through a payment device, Hryvnias will be credited to the individual’s current account.[[2]](https://www.integrites.com/publications/nbu-implements-the-new-steps-of-currency-liberalization/#_ftn2) Note that such transactions must comply with AML legislation.

Transfer of funds from the current foreign currency accounts of resident-individual entrepreneurs to the current foreign currency accounts of such individuals for their own needs is still prohibited. However, the remaining funds can now be transferred from such account, in case the bank receives information from the supervisory authorities about the termination of business activities of this individual entrepreneur and its verification in the USR or detection by the bank of such information in the USR and closing by the bank of the current foreign currency account of an individual entrepreneur[[3]](https://www.integrites.com/publications/nbu-implements-the-new-steps-of-currency-liberalization/#_ftn3).

Regulation No.3 allows individuals to use their digital passports in the mobile app “Diya” during the FX transfers from Ukraine and the receipt of FX transfers from abroad.

The NBU obliged financial institutions to adopt internal documentation for the above transactions with the currency using risk-oriented approach. Such documentation (bylaws, programmes, regulations, charts etc.) must include[[4]](https://www.integrites.com/publications/nbu-implements-the-new-steps-of-currency-liberalization/#_ftn4) :

• procedure for decision-making regarding the grounds to request documents from the clients  (including additional information, if any);
• procedure for detecting doubtful currency transactions and sub-standard transactions that do not meet the currency legislation requirements;
• procedure for decision-making regarding preventing or refusing to conduct currency transactions (i.e., in case they do not meet the requirements of the law).

Financial institutions must harmonize internal documents with the requirements of the updated regulation by April 1, 2021.

[[1]](https://www.integrites.com/publications/nbu-implements-the-new-steps-of-currency-liberalization/#_ftnref1) Section 13 of Part 1 of the NBU Resolution No.1 “On Approval of the Regulation on the Currency Market Structure of Ukraine, Terms and Procedure for Foreign Currency and Bank Metals Trade on the Currency Market of Ukraine» as amended

[[2]](https://www.integrites.com/publications/nbu-implements-the-new-steps-of-currency-liberalization/#_ftnref2) Section 161 of Part 3 of the NBU Resolution No.2 «On Approval of the Regulation on carrying out transactions with currency values» as amended

[[3]](https://www.integrites.com/publications/nbu-implements-the-new-steps-of-currency-liberalization/#_ftnref3) Paragraph 3 of Section 113 of the NBU Resolution No.5 “On Approval of the Regulation on the Protective Measures and Procedures for Certain Transactions in Foreign Currency» as amended

[[4]](https://www.integrites.com/publications/nbu-implements-the-new-steps-of-currency-liberalization/#_ftnref4) Section 7 of Part 1 of the NBU Resolution No.13 «On Approval of the Regulation on the Currency Control» as amended