"VISA FREE" CAPITAL AND CURRENCY MOVEMENT
One dream of business is the “visa – free” movement of capital and currency. The long- awaited revolutionary Law "On Currency and Currency Operations" is meant to provide just that: creating convenient conditions for doing business in Ukraine, while attracting foreign investors with its liberalism. However, investors’ intentions in 2019 depend on not only free currency movement. Making a decision on foreign investment, investors also analyze the level of corruption, the rule of law, and the experiences of others doing business over the past four or five years in the country. At the moment, banks and foreign companies involved in various spheres of the economy are in a positive mood, and expect an inflow of foreign investments into Ukraine.
With the implementation of the law from February 2019, the following changes are expected:
• the deadline for export and imports payments is prolonged to 365 days (currently
• currency controls are abolished for foreign economic activity up to UAH 150,000;
• Ukrainians are allowed to invest abroad without individual licenses, the system being replaced with e- limits;
• ineffective administrative pressure on banks and their clients is removed;
• sanctions are canceled in the form of termination of foreign economic activity the
case of violation of maturity dates;
• non- residents are given equal rights to residents of Ukraine in the sphere of cur
• cancellation of the registration of loans from non- residents;
• currency purchases made online by individuals – the same as the limit on cash
currency purchase (currently up to equivalent of UAH 150,000);
• repeal of the ban on making payments in currency for life insurance;
• residents can invest in securities in global markets and send funds to any bank
of the world;
• cancellation of licenses for currency transactions with securities for stock market
• only two types of licenses in place: bank ( includes currency licenses) and currency – for non- bank financial institutions.
Currency licenses will be issued without a set limit. Active licenses are valid until their expiration and a er expiry will be reissued. Postal operators will be able to conduct currency exchange transactions in cash and transfer funds.
The NBU is given seven months to adopt regulatory acts in accordance with the Law. Until the implementation of the Law, currency transactions are regulated by the Decree of the Cabinet of Ministers of Ukraine "On the System of Currency Regulation and Control" dated February 19, 1993, No. 15- 93, the Law "On the Procedure for Settlements in Ukraine" and a large number of instructions, regulations, letters and explanations from the NBU. From February 2019, these documents are terminated, and by this time the regulator plans to reduce their number as much as possible. It is planned that instead of the current 56 regulatory acts, there will be only seven, on: • Market structure and trade • Settlements, purchases and transfers • Cross- border transfers • Criteria for implementing protection measures, and their general list • Protection measures in the currency market • Other instruments for stabilizing the money market • Meeting of payments’ deadlines
Apart from the liberalization agenda, the NBU remains focused on fighting against money laundering and tax avoidance. As before, currency operations that exceed the threshold of financial monitoring limits are subject to controls.
The NBU confirms that not so many sanctions apply in the case of operational violations. Penalties apply if money laundering or tax avoidance is detected. Applying a risk- oriented approach, the NBU has reduced the number of illegal capital outflows abroad.
The new Law certainly expands the opportunities for business, and will contribute to the growth of the national economy. But along with this, the financial stability of the currency market in Ukraine depends on the requirements and restrictions of the NBU, so the NBU will strictly control all foreign exchange operations.