NBU Resolution No. 48 updated the terms of issuing licenses for using foreign currency as payment instrument. What changes are to be expected in practice for issuing such licenses?

Sergii Papernyk, Head of Banking & Finance and FinTech at Evris, gives his opinion exclusively for The Ukrainian Journal of Business Law:

On 5 May NBU Resolution No.48 of 3 May 2018 On Approval of Amendments to Regulation on the Procedure for Issuing Individual Licenses for Using Foreign Currency in the Territory of Ukraine as Payment Instrument came into effect.

By its Resolution the National Bank of Ukraine continues to liberalize foreign exchange legislation and introduce a risk-oriented approach to the banking system of Ukraine.

According to the changes adopted, in order to obtain individual licenses for using non-cash foreign currency on the territory of Ukraine as a payment instrument, it is no longer required to submit statements of authorized banks with the details of accounts which an applicant plans to use for conducting a foreign exchange transaction.

From now on, grounds for refusal to issue an individual license or its revocation are not mandatory for the regulator and shall be applied at its discretion. However, the list of such grounds was expanded. Now, liquidation of a license holder (legal entity) and location of a holder’s counterparty in the aggressor state (Russia), occupier state or state, and/or in a state which is included in the list of countries (territories) that do not comply with recommendations of international organizations carrying out activities on combating the legalization (laundering) of proceeds from crime, may also be the grounds for refusing or revoking a license.

When considering issuing a license, the National Bank now has the right to request and obtain from an applicant additional information, documents required to clarify the circumstances of foreign exchange transaction, its content and participants (counterparties), including beneficial owners (controllers). Furthermore, the regulator has the right to apply to state authorities, institutions, agencies, authorized banks and other business entities and individuals to obtain information, documents and findings regarding participants in a foreign exchange transaction.

The new Resolution is an important step towards simplifying currency regulation. However, the market requires a comprehensive solution, which would make foreign exchange transactions in Ukraine as accessible as they are in developed countries.