Legal Alert: The National Bank of Ukraine Eased Currency Restrictions

On 21 April 2023, the National Bank of Ukraine (the "NBU") amended the currency restrictions imposed by Resolution No. 18 "On the operation of the banking system during the period of martial law" dated 24 February 2022 on transfers to the correspondent accounts of the foreign depositary bank.

Under the new rules, cross-border transfers in hryvnia to the correspondent account of a foreign depositary bank that has an account in securities with the NBU may be carried out under certain types of operations, including:

• Payments for the export and import of goods;
• Transactions under credit agreements/loan agreements;
• Currency trading operations;
• Transfer of funds from non-residents' accounts in Ukraine to their own accounts abroad.

(See the full list of operations in Paragraph 138 of Section XI of Regulations on measures of protection and determination of the procedure for carrying out certain operations in foreign currency, approved by the NBU Resolution No. 5 dated 2 January 2019)

From now on, it is possible to transfer funds in accordance with the Convention on Mutual Administrative Assistance in Tax Matters for the collection of tax arrears in international legal relations at the request of the competent authority of a foreign state.

Additionally, representative offices are allowed to make transfers to accounts of non-resident legal entities engaged in entrepreneurial activity on the territory of Ukraine through such representative offices, if such transfers are made in foreign currency received from transactions for the purchase and sale of goods in Ukraine, which are paid for by funds of international financial institutions.

Also, the so-called ‘electronic residents’ now have the right to transfer funds in foreign currency to their own accounts opened outside of Ukraine, subject to the following conditions:

• the funds must be received from non-residents abroad;
• the operation must be carried out after payment of taxes as required by Ukrainian legislation, and without the use of electronic payment instruments (payment cards and other payment instruments containing data in electronic form necessary for initiating a payment transaction).

According to the NBU, the above changes will facilitate currency operations for businesses and individuals.