Ukraine legal developments series: Currency control regulations

Effective from 24 February 2022, the National Bank of Ukraine (the “NBU”) passed a special resolution detailing how foreign currency market and cross-border payments will work in the state of martial law. In a nutshell, the resolution prohibits:

• the purchase of foreign currency in Ukraine (conversion of Ukrainian hryvnias to foreign currency); and
• cross-border FX payments,

both save for certain exemptions. Although the limitations on UAH/FX conversion and cross-border payments are still in place as of the date of this newsletter, the NBU is slowly, but steadfastly, easing-off the set-out limitations.

Currently, the NBU allows, amongst others, the following cross-border transactions:

• operations of Ukrainian banks, including payments in capacity as borrowers (subject to certain limitations);
• payments in favour of international financial institutions and their representative offices;
• repayment of interest under cross-border loans accrued for the period from 24 February 2022 to 10 August 2022 (subject to certain limitations); and
• payments allowed by an individual permit of the NBU based on an instruction from the Cabinet of Ministers of Ukraine (i.e. the Ukrainian government).

In addition, the NBU resolution allows cross-border payments for certain imported goods and services according to the list approved by the Ukrainian government. However, it is worth noting that the so-called 180 days settlement rule applies to export and import transactions of Ukrainian residents starting from 5 April 2022. If payment by a Ukrainian resident is made in advance for goods to be imported to Ukraine, the delivery of those goods to Ukraine must occur within 180 calendar days after the date of advance payment. In the case of exporting goods from Ukraine, the payment to a Ukrainian party must occur within 180 calendar days after the delivery date.

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