Nuances of the currency e-license
Author: Law Agency “Absolute”
The currency legislation of Ukraine is rather complicated and regulated. For many years, an individual-citizen of Ukraine was limited in his actions regarding the movement of currency values, both from Ukraine and outside the country.
Individual license of the NBU
Until February 2017, in order to conduct foreign exchange transactions, an individual needed to obtain an individual license issued by the National Bank of Ukraine (NBU), which is practically impossible to implement. Therefore, many people used other legal methods of acquiring foreign currency values abroad (for example, gift agreements, physical transfer of funds across the border).
Many did not pay attention to the need to obtain an individual license of the NBU (someone is unknowingly, and someone consciously, acting at their own peril and risk). The risk is high enough, because The law clearly speaks of a fine of 100% of the amount of illegal foreign currency investment.
In my practice, I have not come across precedents for the imposition of such a fine, but the probability still exists.
Liberalization of the NBU
For individuals, liberalization in Ukraine began in February 2017. The National Bank of Ukraine has allowed citizens of Ukraine to place currency values in their own foreign accounts, provided that the source of origin of these currency values abroad is indicated without Ukraine having an NBU individual license.
In July 2017, Ukrainian citizens were given the opportunity to obtain an e-license – the equivalent of an individual license of the NBU, but under the simplified procedure – by contacting the NBU through an authorized Ukrainian bank.
E-license is granted not only to individuals, but also to Individual Entrepreneurs (FLP), if this investment is not related to business activities in Ukraine.
However, a limit has been taken on the amount of investment of one individual who has requested an e-license – the e-license must not exceed the equivalent of 50,000 US dollars in 1 calendar year.
If the amount of the investment is more than the equivalent of 50,000 US dollars, the individual must obtain an individual license from the NBU according to the old scheme.
As the statistics show, the e-license is quite in demand in Ukrainian society. According to the report of the press service of the NBU, from July 2017 to September 2018, the regulator issued about 1,400 e-licenses with a total investment equivalent to $ 33.4 million.
Obtaining an e-license
In order to obtain an individual license, initially it is necessary to determine the possible objects of investment.
So, the e-license can be issued for:
- transfer of funds to a personal account opened abroad;
- acquisition of corporate rights of a foreign company;
- establishment of a non-resident company;
- investment in securities;
- investment brokerage contracts;
- real estate purchase;
- fulfillment of obligations to non-residents under insurance contracts.
If your desire coincides with the operations permitted by the NBU using the e-license, you must contact any Ukrainian bank (preferably the one in which you have a current account). Then, fill in and submit an application for obtaining an e-license in a format approved by the NBU (most banks have ready-made application templates).
Along with the application for an e-license, you must provide the bank with documents confirming the source of the funds that you plan to invest.
For example, declarations (including FLP), a certificate from the tax authorities about the amount of income received by an individual and the amount of taxes paid from them, the contract of sale. If a natural person deposits cash into a current account, a document confirming the execution of a foreign exchange transaction is required.
Documents are also being submitted to the bank on the basis of which the investment will be made – contracts, contracts, invoices. Documents must contain complete information about the purpose of the investment and comprehensive data of the final recipient of funds.
Both original documents and their copies are provided to the bank.
Consideration of the package of documents takes up to 3 working days, after which the client receives either approval or refusal to obtain an e-license.
E-license is issued only in electronic form and its validity is limited to the day of its issuance. Therefore, it is necessary to promptly create and transfer funds to the recipient specified in the application for e-license. Payment is sent through the SWIFT system.
Advantages of e-license
In general, the procedure for obtaining an e-license is simple, transparent, understandable, and it only differs from sending a SWIFT payment through a bank by writing an application for obtaining an e-license to the NBU, in the same bank.
Verification of the submitted documents is carried out directly in the bank, which the client applies to. In the process of studying the documents, the employees of financial monitoring, currency control independently request additional data and documents from the client for successfully obtaining an e-license.
Technologically advanced financial institutions provide an opportunity for their customers to obtain an e-license and send a payment, even without leaving home, i.e. through remote means of communication with the bank. Some enterprising Ukrainian banks have even created staff units engaged in selling e-license support services.
Unfortunately, monetary liberalization came very late. The size of the investment is limited by a rather ridiculous amount by investment standards, and many Ukrainian citizens already own foreign investments, which are forced to be acquired in violation of the currency legislation of Ukraine.
Therefore, the issue of currency liberalization, loyal to the above-mentioned citizens, remains open.
Nevertheless, there is hope that in the future the NBU will offer effective tools that will help legalize honestly earned and not completely legally invested funds abroad in front of regulatory authorities with minimal losses.