Associate at Spenser & Kauffmann tells about how to obtain e-licence to move currency out of the country

The National Bank of Ukraine (NBU) is praising new liberal rules of issuing licenses to transfer foreign currency abroad that came into force in the early July 2017. According to banks, the system works – licences are effectively issued to individuals.

Money magazine (Issue No. 17(355)) asked Olga Pygol, associate at Spenser & Kauffmann, to explain how one could obtain a licence and transfer money abroad.

The expert told the magazine that the NBU issues e-licences for three types of foreign currency transactions:

– investing in foreign countries (for instance, the purchase of corporate rights or real property);

– placing money in an individual’s own foreign accounts;

– transferring money to perform obligations to non-residents under life insurance contracts.

However, Ms Pygol noted that not all persons are eligible to be given such licences. First, this instrument has been designed for individuals only (excluding private entrepreneurs). Second, the amount of a foreign currency transaction should not exceed USD50,000 or an equivalent amount in any other foreign currency within a calendar year. Technically, any transaction the amount of which exceeds the above threshold should be performed under a hard copy licence, but practice has shown that it is impossible to obtain such licences as provided by a resolution of the National Bank.

To obtain an electronic licence, an individual is required to file the below documents with the authorised bank where such individual’s account (to be used for the purposes of the transaction) is opened:

– an application for the licence to be submitted to the NBU;

– documents (information) confirming that the applicant’s income is sufficient to perform the transaction (such documents include, without limitation, tax returns endorsed by controlling authorities, statements (certificates) of income and taxes paid as issued by tax inspectorates, and information specified in asset and income declarations made available on the official website of the National Corruption Prevention Agency, which declarations have been filed by the individual in accordance with the legislation on the prevention of corruption);

– original documents or copies evidencing the purpose of transferring money from Ukraine (agreement, invoice etc) except where money is placed in the individual’s account outside Ukraine.

After the receipt of such documents, a bank is required to verify if they are true and meet applicable legal requirements. Then, it has either to transfer such documents to the National Bank of Ukraine, or to reject them. It is worthy to note that law does not provide for a period during which the bank is required to make a relevant decision.

Before, banks have not been involved in the process of issuing individual licences and, therefore, it is impossible to predict a possible period at the moment. The bank may refuse to transfer an individual’s request to the National Bank of Ukraine if:

1) provided documents do not satisfy legal requirements for some reason or other (the set of documents is incomplete, documents have been executed, certified or signed improperly);

2) provided documents contain misleading information, or information specified in the application for the e-licence is in conflict with documents submitted by the applicant;

3) the foreign currency transaction is prohibited and/or restricted by Ukrainian law;

4) documents are provided by an individual who has been hiding from pre-trial investigation, investigation, court and/or government authorities according to the information placed on the official website of the Ministry of Internal Affairs and/or the Uniform State Open Data Web Portal;

5) provided documents contain information showing that a party to, or a beneficiary of, the foreign currency transaction is a legal entity or an individual residing in a country recognised by the Ukrainian Parliament as an aggressor/occupier state; and/or

6) there is information/signs/suspicions that the nature or consequences of the financial transaction may put the authorised bank at a threat of being involved in the commission of criminal offences and/or risky activities that could jeopardise the interests of depositors or other creditors of the bank.

If the customer passes successfully such a thorough check of the bank and obtains the licence from the NBU, he/she should act promptly because the transaction must be performed later in the day of the e-licence issue. If he/she fails to do so, the licence will be cancelled and he/she will have to recommence the process. It is fair to say that applicants will not be required to pay any licence fees.