New features of exchanging old banknotes

09/ 11/ 2023

Author: Oleksiy Hrachov, attorney at Dynasty Law & Investment As they say in the famous series: Winter is near! and its time to get warm clothes out of the closet. Agree, its nice to find in the pocket of the coat a few banknotes forgotten there last year, especially other foreign ownership. However, a moment of joy can spoil the state of bills. Recently, the NBU clarified the issue of exchanging cash foreign currency, in particular, it paid attention to the issue of exchanging worn and old banknotes. According to the innovations, banks and financial institutions are not allowed to refuse to exchange damaged or old bills. With such actions, the NBU is trying to discipline the foreign exchange market. The Bank paid special attention to the procedure for exchanging US dollars. Thus, banks and financial institutions are prohibited from refusing and imposing restrictions on the denomination and year of issue of a banknote, if these are legal tender on the territory of a foreign state. For example, all US dollars issued since 1914 must be accepted. Also, for a long time, in practice, they often refused to exchange US dollar banknotes issued in 1996. The NBU emphasized once again that no regulations prohibiting such an exchange had been adopted. Therefore, all banknotes whose authenticity is confirmed using counters and detectors of financial institutions must be accepted for exchange. In case of refusal to carry out such an exchange, a person can apply to the NBU. According to the provisions of the clarification, the consequence of such appeals will be the verification of the activity of the violator and the application of sanctions to him, namely: a fine of up to UAH 400,000 for banks and up to 5% of the equity capital for non-bank financial institutions. The clarification of the NBU mostly applies to cash foreign currency that has no signs of wear or wear and tear that is insignificant. If the banknote is significantly worn, then the collection operation (transfer of the bill to the country of origin) is applied to it. In this case, a service fee may be legitimately applied to the exchange. Along with this, the Bank presented signs of minor wear and tear, such as: minor abrasions (loss of paint on images); stains, tears, incisions in the amount of 3 pieces; holes and punctures in the amount of 4 pieces. This is just one of the few aspects of financial and banking law in which the lawyers of Dynasty Law & Investment are well versed. Therefore, if you have any questions in this area, do not hesitate to contact us.

Author: Oleksiy Hrachov, attorney at Dynasty Law & Investment

As they say in the famous series: “Winter is near!” and it’s time to get warm clothes out of the closet. Agree, it’s nice to find in the pocket of the coat a few banknotes forgotten there last year, especially other “foreign ownership”. However, a moment of joy can spoil the state of bills.

Recently, the NBU clarified the issue of exchanging cash foreign currency, in particular, it paid attention to the issue of exchanging worn and old banknotes. According to the innovations, banks and financial institutions are not allowed to refuse to exchange damaged or old bills.

With such actions, the NBU is trying to discipline the foreign exchange market. The Bank paid special attention to the procedure for exchanging US dollars.

Thus, banks and financial institutions are prohibited from refusing and imposing restrictions on the denomination and year of issue of a banknote, if these are legal tender on the territory of a foreign state. For example, all US dollars issued since 1914 must be accepted.

Also, for a long time, in practice, they often refused to exchange US dollar banknotes issued in 1996. The NBU emphasized once again that no regulations prohibiting such an exchange had been adopted.

Therefore, all banknotes whose authenticity is confirmed using counters and detectors of financial institutions must be accepted for exchange.

In case of refusal to carry out such an exchange, a person can apply to the NBU. According to the provisions of the clarification, the consequence of such appeals will be the verification of the activity of the violator and the application of sanctions to him, namely: a fine of up to UAH 400,000 for banks and up to 5% of the equity capital for non-bank financial institutions.

The clarification of the NBU mostly applies to cash foreign currency that has no signs of wear or wear and tear that is insignificant. If the banknote is significantly worn, then the collection operation (transfer of the bill to the country of origin) is applied to it. In this case, a service fee may be legitimately applied to the exchange.

Along with this, the Bank presented signs of minor wear and tear, such as:

minor abrasions (loss of paint on images);
stains, tears, incisions in the amount of 3 pieces;
holes and punctures in the amount of 4 pieces.

This is just one of the few aspects of financial and banking law in which the lawyers of Dynasty Law & Investment are well versed. Therefore, if you have any questions in this area, do not hesitate to contact us.