The National Bank of Belarus changed approaches to the control of currency transaction of private individuals and legal entities.
The changes are in force from March 1, 2019. Let us explain the main innovations of the resolution of the Board of the National Bank of the Republic of Belarus dated 19.12.2018 No.612 “On Certain Aspects of Holding Currency Operations” in lay terms.
REGISTRATION INSTEAD OF PERMIT
BEFORE
Several currency transactions were carried out by resident legal entities and individual entrepreneurs on the basis of permits from the National Bank of Belarus.
NOW
These operations are carried out without permits from the National Bank but are subject to registration in the servicing bank.
These operations include:
• acquisition of shares within their distribution among the founders, a share in the share capital or a share in the property of a non-resident, as well as making additional contribution to the share capital of a non-resident in case of its increase;
• acquisition of securities issued by non-residents from a non-resident;
• acquisition of ownership over immovable property located outside Belarus (please note: although transactions with movable property considered as immovable according to Belarusian legislation (e.g., air and sea vessels) are excluded from this list, transactions with them will be subject to registration as foreign trade contracts if their amount is over €3000);
• placement of funds in non-resident banks or transfer of funds to non-residents (except for banks) on terms of trust management;
• settlements for obligations incurred by a resident legal entity or individual entrepreneur (except for a bank), that is a surety, a guarantor, to a non-resident on the basis of a suretyship agreement or a guarantee agreement concluded between them;
• granting loans;
• raising credit facilities or loans (please note: any such transaction is subject to registration now, regardless of the terms of the contract of such a credit facility or loan; the permit must have been obtained only in certain cases, such as a high interest rate, the transfer of loan bypassing the borrower’s accounts, etc.).
Resident legal entities or individual entrepreneurs are obliged to register a transaction resulting from a foreign economic agreement: 1) stipulating their payments – before they are made; 2) stipulating receipt of payments from a non-resident – no later than 7 business days from the first payment’s date (can be also registered before any payments are received).
To register a transaction (a foreign economic agreement), a resident submits to one of the banks, in which an account for settlements with non-residents is opened, an application in the form prescribed by law (the bank has the right to supplement the application with other necessary information) in duplicate, as well as the original or copy of the foreign economic agreement. Submission of these documents through electronic document workflow is allowed.
The resident is obliged to notify the bank which registered the transaction about the completion of all operations under a foreign economic agreement (including made within its extended time terms) in any form within 30 calendar days from the day the resident establishes the fact of full completion of all these operations. At the same time, it is allowed that such information is inserted in the information on the received funds submitted to the bank as the entry “All operations under a foreign economic agreement (including made within its extended time terms) are completed”.
For currency transactions related to the capital flow, which were carried out on the basis of permits of the National Bank earlier and are transferred now to the registration procedure, resident legal entities and individual entrepreneurs are obliged to register until August 31, 2019 the transactions which terms have not expired and obligations under which have not been fulfilled. The same rule has been established for foreign exchange operations involving the receipt of credit facilities or loans, which were previously carried out under a notification procedure, for which obligations have not been fulfilled.
Let us remind that almost all other currency operations related to the capital flow are carried out by resident legal entities and individual entrepreneurs under a notification procedure: it is necessary to send a notification about a currency transaction to a servicing bank in the form prescribed by law. This notification is submitted by a resident either before they make settlements on such a currency transaction or within 7 business days from the date funds are credited to the resident’s account.
However, for some currency transactions it is not necessary to observe any order – some examples are:
• making payments to non-residents for obligations involving the transfer to the resident of real estate (or rights to it) located in the territory of the Republic of Belarus;
• sale to a non-resident of a share in the share capital or share in the property of a resident;
• operations with securities issued by residents;
• formation of the share capital of a resident legal entity at the expense of contributions of non-residents in foreign currency, Belarusian rubles or in securities in the order established by the legislation of Belarus, as well as some other operations.
OPENING ACCOUNT ABROAD WITHOUT THE PERMIT
BEFORE
- Resident private individuals (excluding those residing outside Belarus) open accounts in foreign currency and in Belarusian rubles in non-resident banks on the basis of a permit from the National Bank.
- Resident legal entities and individual entrepreneurs (except for banks and state-financed organizations) were able to open accounts of their representative offices in the banks of the EAEU member states in the national currency of the corresponding EAEU member state.
NOW
- Resident private individuals open accounts in foreign currency and in Belarusian rubles in non-resident banks without a permit from the National Bank. Please note: the placement of funds on such an account by a resident still requires obtaining a permit from the National Bank, the same applies to other transactions, such as buying shares of a non-resident, etc.
- Resident legal entities and individual entrepreneurs open accounts of their representative offices in non-resident banks of any country under a notification procedure.
Banks open any accounts in non-resident banks without the permission of the National Bank).
DEDOLLARIZATION CONTINUES
BEFORE
- Resident legal entities and individual entrepreneurs are entitled to use foreign currency when a bank conducts currency banking operations (for example, issuing a bank guarantee, factoring).
NOW
Resident legal entities and individual entrepreneurs are not entitled to use foreign currency when a bank conducts currency operations related to:
- purchase and sale of precious metals or precious stones;
- use of foreign currency under a bank guarantee in case the principal monetary obligation between the principal and the beneficiary is expressed in Belarusian rubles;
- use of foreign currency under a factoring agreement in case the main monetary obligation between the creditor and the debtor is expressed in Belarusian rubles.
