Updating the procedure for granting separate permits for cross-border transfer of currency values

On April 20, 2024, the National Bank of Ukraine updated its procedure for the currency transaction permit that is based on a relevant instruction of the Government of Ukraine.

Consequently, currently the outbound transfer of foreign currency and hryvnia (UAH) will be permissible, inter alia, on the basis of individual permit (decision) issued by National Bank of Ukraine (NBU), which the NBU may issue only after the instruction of the Cabinet of Ministers of Ukraine (CMU), provided, however, that the issuance of such permit (decision) does not hinder the NBU’s primary goal of ensuring the stability of Ukrainian Hryvnia and align with the NBU’s objectives of price stability, financial stability, reliability and stability of the banking system, macrofinancial stability during the period of martial law. The permit should be furthermore coordinated with the NBU’s own strategy for easing of the currency restrictions, transitioning to greater exchange rate flexibility, and returning to inflation targeting; the strategy was approved by a separate decision of the Board of the National Bank of Ukraine in 2023.

Starting from November 2023, the outbound transfers were permitted based on permits issued by NBU pursuant to instruction of the Cabinet of Ministers of Ukraine. The Law of Ukraine "On Currency and Currency Transactions" explicitly mandated the NBU to issue a permit to a bank of the applicant for the outbound transfer where the CMU had already considered the application and issued an instruction. Worth noting that permit had thus become a technical document while the National Bank of Ukraine had its decision-making autonomy restricted.

However, the obligation to issue permit lasted less than four months (11.2023 – 04.2024) and has now been repealed.

As a result, a permit for a cross-border transfer still requires that the CMU issues an instruction, based on which, the NBU no longer have to, but may issue a permit for a cross-border transfer.

While previously the Government's instruction was the sufficient basis for the NBU to allow currency transaction, it is now only a necessary pre-condition for the NBU to commence independent analysis that must account for quantitative and qualitative effect of the transaction in question as well as consistency of the effect with the stability objectives of the NBU.

We note that as at 30 April 2024, the aforementioned amendment has not been incorporated into the NBU Resolution No. 18 on the website of the Verkhovna Rada of Ukraine.