Martial Law in Ukraine: Banking and Payment Implications

On February 24, 2022 (as amended on March 21, 2022), the National Bank of Ukraine (the “NBU“?Resolution”). This resolution put in place a number of relatively strict temporary restrictions with the aim of ensuring the infallible and regular functioning of the country’s financial system during the period of martial law.

At the same time, from the beginning of March, the NBU gradually liberalized these temporary restrictions to stabilize and rebuild the economy of Ukraine, which suffered heavy losses as a result of unjustified military actions of the Russian Federation . However, as of today, most of the main restrictions are still in effect (although amended and/or clarified), including:

1. Cash withdrawals from individual client accounts are limited to UAH 100,000 or equivalent amount in foreign currency per day, except where (i) such withdrawal is for the payment of salary or benefits (applicable only to UAH) and (ii) the withdrawal is made at bank branches located in areas under threat of Russian occupation (applicable to both UAH and foreign currency). This limit also applies to withdrawals abroad from foreign currency accounts opened with Ukrainian banks. However, it does not apply to the use of payment cards both in Ukraine and abroad for payments made for goods, works and services. These payments can continue to be made without any restrictions.

2. Quasi-cash and P2P transfer transactions are limited to UAH 100,000 (or foreign currency equivalent) per month to prevent capital outflows abroad. This limit applies to:

  • transfer of funds to individuals’ accounts abroad using the details of the payer’s and beneficiary’s payment cards (P2P transfers);
  • conduct transactions with payment cards for the purchase of assets directly converted (exchanged) into cash and belonging to cash-like transactions. These transactions include replenishing e-wallets, brokerage or forex accounts, paying travelers checks, purchasing virtual assets and other similar purposes.

It is possible to pay with Ukrainian payment cards for goods and services in retail chains and via the Internet without any limitations, both in Ukraine and abroad.

3. Banks are prohibited from exchanging foreign currencies, except, in particular, in cases where foreign exchange transactions carried out by banks with other banks on a swap basis or a bank branch are located in the zone at risk of occupation by Russia.

4. Banks are also prohibited from making cross-border foreign currency payments on behalf of their customers. The exception to this rule is that such payments may be made, in particular, for the purpose of paying for critical import goods (more detailed information on this can be found under the following link – Cross-border trade with Ukraine continues in the midst of war, martial law – Lexology).

5. Debit operations on the accounts of residents of the Russian Federation / the Republic of Belarus by its service banks are terminated. Banks are also prohibited from carrying out operations in Russian and Belarusian rubles.

6. The ban on transferring to Ukrainian individuals funds initiated with the use of electronic payment instruments that operate in the Russian Federation and/or the Republic of Belarus.

The Resolution further provides for the following measures:

  1. banks must ensure uninterrupted operation, taking into account the restrictions set out in this resolution, and provide access to safe deposit boxes on an uninterrupted basis;
  2. there are no limits on non-cash payments;
  3. the issuance of bank metals from bank accounts can be done without any restrictions (subject to their availability in a particular bank branch);
  4. ATMs are backed by unrestricted cash;
  5. the NBU makes unlimited cash back;
  6. the NBU carries out unsecured refinancing for banks in order to maintain liquidity without limitation of amounts for up to one year, with the possibility of extension for another year;
  7. payments by the Ukrainian government will be made without limitation for the duration of the special legislation;
  8. the NBU allowed the forward purchase of foreign currencies under forward contracts concluded before February 23, 2022 (inclusive) under certain conditions.

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