Regulation No. 160 extends the restrictions previously imposed by Regulation No. 758, but also creates the new ones. In particular, the following restrictions from Regulation No. 758 are extended by Regulation No. 160:
(i) the 90-day maximum term of payment under export and import transactions;
(ii) the requirement for the mandatory sale of 75% of foreign currency proceeds from abroad received by legal entities, representative offices and entrepreneurs; and
(iii) the prohibition on early payment under cross-border loan agreements (subject to certain exceptions) by residents.
The prohibition of certain foreign currency transactions is broadened and extended. Regulation No. 160 prohibits purchasing and transferring foreign currency under the following transactions:
(i) repatriation of funds received by foreign investors as a result of sale of the securities issued by Ukrainian entities (with an exception for debt securities sold on the Ukrainian stock exchange)
(ii) repatriation of funds received by foreign investors as a result of: (a) sale of corporate rights in Ukrainian entities (other than shares); (b) reduction of charter capital; or (c) exit of foreign investors from the companies;
(iii) repatriation of dividends to be paid to foreign investors; and
(iv) transactions authorised by individual NBU licences, although this is subject to certain exceptions. In particular, such prohibition will not apply to the transactions under (a) licenses issued to legal entities for depositing foreign currency funds into bank accounts abroad; and (b) licenses issued to a guarantor (surety) for payment under a guarantee (suretyship) securing obligations under a loan granted by the international financial institution or export-import agency.
Regulation No. 160 imposes the following new restrictions:
(i) authorised banks are prohibited from purchasing foreign currency per instructions of Ukrainian legal entities provided that such entities have foreign currency funds on their current and deposit accounts exceeding USD 10,000. This minimum does not include (a) pledged funds; (b) funds placed into the deposit accounts before the effective date of Regulation No. 160; and (c) funds deposited into accounts opened with banks declared to be insolvent. The client shall submit to the bank the information on the total amount of funds deposited on all of the accounts opened by the client with authorised Ukrainian banks;
(ii) authorised banks are prohibited from carrying out clients’ transactions if the NBU notifies the banks about its refusal to confirm such transactions. If a foreign currency transaction exceeds USD 50,000, the authorised bank shall submit to the NBU scanned copies of the documents serving as a basis for such transaction; and
(iii) authorised banks are prohibited from carrying out their own derivative transactions on stock exchanges, provided that the basic asset thereunder is foreign currency or its exchange rate.
The banks are still subject to the obligation to monitor foreign currency purchase transactions on a daily basis. The banks shall analyse such transactions and service only those that have an express legal basis. The banks shall also enhance controls over foreign currency purchase transactions on the basis of any new contracts being submitted to the banks by their clients for the first time. The NBU is granted the right to suspend any transaction suspected by the NBU as illegal and request additional documents regarding such transaction.
The above requirements evidence further toughening of the currency controls in Ukraine. This means that the likelihood of a bank's refusal to effect a payment which is not expressly referred to in the relevant NBU regulations is now even higher, since such payment might not be seen to have an express legal ground.