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Foreign Companies Permitted to Open Offshore Accounts in Ukraine

31/ 01/ 2019
  Starting from 7 February 2019, any foreign legal entity will be able to open a current account in Ukraine, both in UAH and in a foreign currency such as USD or EUR. The current account would have an offshore status and would not be subject to most of the onerous rules applicable to local bank accounts in Ukraine. On 2 January 2019, the National Bank of Ukraine (NBU) adopted several regulations on currency control issues aimed at implementing revolutionary provisions of the new Law of Ukraine On Currency and Currency Operations (FX Law), including the rules for offshore current accounts. Before the FX Law, a foreign company could only have an investment account in Ukraine with very restrictive rules for operations, i.e., an account holder could conduct only definitely prescribed transactions relating to its investment activity in Ukraine. A foreign company could also operate current accounts in Ukraine through its representative office, which required official registration with various local authorities. The rules for investment accounts and accounts of representative offices would remain but would be distinct from the rules applicable to the offshore accounts of foreign companies. The new rules provide for a rather extensive list of operations that a foreign company can transact through its current accounts in Ukraine. A Ukrainian bank may require its customer to provide copies of documents to verify that it has appropriate justification to conduct the respective transactions in full compliance with the applicable AML rules. The new offshore current accounts for foreign companies became possible by virtue of amendments to the Law of Ukraine On Payment Systems and Transfer of Funds within Ukraine of 15 May 2018. We will report on other changes introduced by the FX Law in our new legal alerts. Additional notes This LEGAL ALERT is issued to inform Baker McKenzie clients and other interested parties of legal developments that may affect or otherwise be of interest to them. The comments above do not constitute legal or other advice and should not be regarded as a substitute for specific advice in individual cases. Contact us Ihor Olekhov, Partner Baker McKenzie Maksym Hlotov, Associate Baker McKenzie

Starting from 7 February 2019, any foreign legal entity will be able to open a current account in Ukraine, both in UAH and in a foreign currency such as USD or EUR. The current account would have an “offshore” status and would not be subject to most of the onerous rules applicable to local bank accounts in Ukraine.

On 2 January 2019, the National Bank of Ukraine (“NBU“) adopted several regulations on currency control issues aimed at implementing revolutionary provisions of the new Law of Ukraine “On Currency and Currency Operations” (“FX Law“), including the rules for “offshore” current accounts.

Before the FX Law, a foreign company could only have an “investment account” in Ukraine with very restrictive rules for operations, i.e., an account holder could conduct only definitely prescribed transactions relating to its investment activity in Ukraine. A foreign company could also operate current accounts in Ukraine through its representative office, which required official registration with various local authorities. The rules for “investment accounts” and accounts of representative offices would remain but would be distinct from the rules applicable to the “offshore” accounts of foreign companies.

The new rules provide for a rather extensive list of operations that a foreign company can transact through its current accounts in Ukraine. A Ukrainian bank may require its customer to provide copies of documents to verify that it has appropriate justification to conduct the respective transactions in full compliance with the applicable AML rules.

The new “offshore” current accounts for foreign companies became possible by virtue of amendments to the Law of Ukraine “On Payment Systems and Transfer of Funds within Ukraine” of 15 May 2018.

We will report on other changes introduced by the FX Law in our new legal alerts.

Additional notes

This LEGAL ALERT is issued to inform Baker McKenzie clients and other interested parties of legal developments that may affect or otherwise be of interest to them. The comments above do not constitute legal or other advice and should not be regarded as a substitute for specific advice in individual cases.

Contact us

Ihor Olekhov, Partner Baker McKenzie

Maksym Hlotov, Associate Baker McKenzie

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