On 4 January, the National Bank of Ukraine (the "NBU") approved and published a number of regulations setting out a new legislative framework for Ukrainian currency control. These regulations will come into effect on 7 February 2019, along with a new law titled "On Currency and Currency Operations".

The previous outdated currency control regime was based on the principle that all currency transactions, save for a few exceptions, require a license from the NBU. The new law makes a long-awaited shift to the principle that all currency transactions are permitted unless expressly restricted by law. In parallel, the liberalisation of the currency control regime will, in effect, be replaced by financial monitoring, as well as a tightening of tax legislation, such as through BEPS and similar measures. 

This relaxation of currency control will be introduced gradually and with caution, in order to preserve the financial stability of the country. Some of the restrictions will likely be lifted only once Ukraine adopts the contemplated BEPS measures. As a result, some restrictions have already been completely cancelled, some have been modified and significantly simplified, while others have been retained for the time being.

Restrictions which have been Abolished and/or Modified

Among the most important developments introduced by the regulations are:

  • Extended term for settlement under export/import contracts. Extension of deadline for settlements under export/import contracts from 180 to 365 days, and abolition of foreign economic sanctions for breach of deadline.
  • NBU licensing/NBU caps. Abolition of individual NBU licences being replaced with a general cap (limit) for certain cross-border payments. The general cap for making payments to non-residents

Key changes relate to:

  • Abolition of individual NBU licences
  • Abolition of loan registration and cost of funding cap
  • Extension of deadline for settlements under export/import contracts
  • Opening of current bank accounts by non-residents
  • Ability to accumulate and hold funds in foreign currency
  • Possibility for non-residents to open current accounts in Ukraine

or to transfer funds abroad will be EUR 2,000,000 per year for legal entities and EUR 50,000 for individuals, but will be subject to a number of exemptions from this restriction, including:

  • settlements under export/import contracts
  • payments under guarantees, suretyships, pledges and reimbursement operations thereunder
  • payments under leasing, factoring, insurance/reinsurance, and lease agreements
  • payments under loan agreements, including from accounts opened abroad
  • repatriation of foreign investments, including dividends (for which a separate cap is established)
  • payments to international financial institutions of which Ukraine is a member

Payments subject to a cap will need to be notified to a Ukrainian account bank which will clear them with the NBU before releasing funds.

  • Loan Registration. Abolition of registration of crossborder loans with the NBU being replaced with notification procedure via a Ukrainian servicing bank. Basically, a cross-border loan will need to be notified by a borrower to its Ukrainian servicing bank (along with provision of the loan agreement), which, in its turn, will, within five days, record the particulars of the loan in the electronic records, maintained by the NBU. The NBU will no longer review an application or a loan agreement, or request additional documents from the borrower. Generally, the new notification procedure is expected to be much simpler, quicker and more straightforward.
  • Cost of funding cap. Abolition of the maximum interest rate (cost of funding cap) applicable to cross-border loans, and its replacement with general financial monitoring by a Ukrainian servicing bank for payments under cross-border loans in terms of pricing being at arm's length basis and corresponding to prevailing market conditions.
  • Early prepayment. Abolition of a ban on early prepayment of cross-border loans.
  • Building up deposits in foreign currency. Permission for borrowers to buy and accumulate foreign currency indefinitely on their onshore accounts in order to serve the debt under cross-border loans.
  • Hedging. Certain types of hedging (e.g., by conclusion of forwards with Ukrainian banks) of currency risks under cross-border loans is allowed.
  • Bank accounts in Ukraine for foreign entities. Possibility for non-residents to open current accounts in Ukraine, using any currency.

Remaining Restrictions

Several restrictions will be maintained, with the intention being to gradually lift these in the future, among which the most notable are:

  • Mandatory conversion of foreign currency at the level of 50%
  • Cap on repatriation of proceeds from sale of securities, corporate rights, reduction of share capital and exit from Ukrainian companies' membership in the amount of EUR 5,000,000 per month
  • Cap on dividends repatriation in the amount of EUR 7,000,000 per month and only for those up to the year 2017
  • Making investments abroad subject to a EUR 2,000,000 cap for legal entities and EUR 50,000 for Individuals
  • Preservation of a dedicated foreign currency purchase
  • Prohibition on purchasing foreign currency for the account of loan proceeds
  • Provision of loans to non-residents subject to a EUR 2,000,000 cap

NBU Anti-Crisis Measures

It should be also noted that the Law "On Currency and Currency Operations" vests the NBU with broad authority to introduce temporary (i.e., lasting up to six months) protective measures in case of unstable financial conditions in the banking system, a deterioration in the country's balance of payments, or other adverse events which might pose a threat to Ukraine's financial stability.


Given the extent and the number of the upcoming changes, we note that it remains to be seen how most of the above developments will work in practice and be interpreted by the NBU and Ukrainian banks responsible for conducting currency control and financial monitoring.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.