Ukrainian banking regulation on cross-border transactions has been\u00a0radically liberalized with the new Law of Ukraine \u201cOn Currency and\u00a0Currency Operations\u201d taking force on February 7, 2019. The National\u00a0Bank of Ukraine issued a suite of updated regulations governing\u00a0specific transactions, including the ones governing cross-border loans.<\/p>\n
New rules for arrangements between Ukrainian\u00a0borrowers and foreign lenders\u00a0The National Bank of Ukraine (NBU) has overhauled the system of\u00a0registration of loan (credit) agreements with foreign companies\u00a0(locally known as \u201cnon-residents\u201d). From now on, the \u201cregistration\u00a0system\u201d of loan agreements has been replaced with a \u201cnotification\u00a0system\u201d.<\/p>\n
Before February 7, the content and terms of loan agreements with\u00a0foreign lenders have been strictly regulated, and the Ukrainian banks\u00a0have been prevented from accepting the money on their Ukrainian\u00a0client\u2019s accounts until the agreements were reviewed and individually\u00a0approved by a regional branch of the NBU.<\/p>\n
The new rules abolish the requirement for prior approval by the NBU\u00a0and introduce instead a much easier procedure of registration of the\u00a0basic data of the loan agreements by the borrower\u2019s bank.\u00a0Registration takes place in the automated information system “Loan\u00a0agreements with non-residents” (AIS) which is administrated by the\u00a0NBU.<\/p>\n
Review of all documents relating to a cross-border financing transaction is now done by the\u00a0borrower\u2019s bank in Ukraine. This bank is responsible for the completeness and reliability of such data.\u00a0Based on the results of the verification of documents, the bank enters information about the\u00a0agreement to the AIS, and this \u201cregistration\u201d allows the bank to accept and transfer the money under\u00a0the loan agreement. The bank must inform its client and provide an excerpt from the AIS confirming\u00a0the registration no later than one business day after entering the information into the AIS.<\/p>\n
The borrower\u2019s bank has now to comply with the new rules for analyzing and verifying the documents\u00a0relating to the loan agreement. The banks, in particular, must check whether the transaction may be\u00a0classified as a “dubious transaction\u201c. The NBU has defined dubious transactions as those whose\u00a0nature or consequences give grounds to believe that it may be related to the avoidance and \/ or\u00a0non-fulfillment of requirements and restrictions established by law.<\/p>\n
The NBU has established specific indicators that determine what constitutes “dubious\u201d in this\u00a0context.<\/p>\n
In particular, such indicators include:<\/p>\n
The list of indicators approved by the NBU is not exhaustive and may include other indicators and\u00a0measures at the discretion of the bank.<\/p>\n
In turn, the presence of at least of one of the indicators is the basis for conducting an additional\u00a0review of documents relating to relevant currency transactions by the bank. During such additional\u00a0review the bank has the right to request additional documents from the parties of the currency\u00a0transactions.<\/p>\n
In particular, the additional review may include the following:<\/p>\n
The maximum interest rate concept has been abolished<\/strong><\/p>\n One of the most important changes in the regulation of cross-border financing is that the maximum\u00a0interest rate under loan agreements has been abolished.<\/p>\n Before amendments entered into force, the maximum interest rate was 11 % per annum. This rate\u00a0took into account commissions, penalties, default interests, indemnity payments and any and all other\u00a0payments under the agreement, regardless of their nature.<\/p>\n Now, the parties are free to agree on the interest rates and the size of other payments under a loan\u00a0agreement, having due regard, however, to the indicators 4 and 5 above.<\/p>\n Other important changes<\/strong><\/p>\n In addition, the new currency regulations provide for:<\/p>\n According to the NBU, such changes are intended to improve the investment attractiveness of Ukraine.<\/p>\n Disclaimer<\/em><\/strong> Ukrainian banking regulation on cross-border transactions has been\u00a0radically liberalized with the new Law of Ukraine \u201cOn Currency and\u00a0Currency Operations\u201d taking force on February 7, 2019.<\/p>\n","protected":false},"author":5,"featured_media":1386,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"inline_featured_image":false},"categories":[29,31],"tags":[],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/hillmont.com\/ua\/wp-json\/wp\/v2\/posts\/726"}],"collection":[{"href":"https:\/\/hillmont.com\/ua\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/hillmont.com\/ua\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/hillmont.com\/ua\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/hillmont.com\/ua\/wp-json\/wp\/v2\/comments?post=726"}],"version-history":[{"count":5,"href":"https:\/\/hillmont.com\/ua\/wp-json\/wp\/v2\/posts\/726\/revisions"}],"predecessor-version":[{"id":1073,"href":"https:\/\/hillmont.com\/ua\/wp-json\/wp\/v2\/posts\/726\/revisions\/1073"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/hillmont.com\/ua\/wp-json\/wp\/v2\/media\/1386"}],"wp:attachment":[{"href":"https:\/\/hillmont.com\/ua\/wp-json\/wp\/v2\/media?parent=726"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/hillmont.com\/ua\/wp-json\/wp\/v2\/categories?post=726"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/hillmont.com\/ua\/wp-json\/wp\/v2\/tags?post=726"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}\n
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