On July 9, 2021, substantial amendments to Belarusian currency legislation entered into force. We will briefly review the key amendments.
Registration and Conditions of Currency Agreements
One of the key changes to the Belarusian legislation is the introduction of the term “currency agreement,” which is defined quite broadly and covers any agreement on the basis of which currency transactions are conducted. Previously there was a requirement for Belarusian residents – Belarusian citizens (except for those permanently residing in a foreign state); foreign citizens and persons without citizenship permanently residing in Belarus; individual entrepreneurs and legal entities registered in Belarus – to obtain permits from the National Bank of Belarus (NBRB) for conducting certain currency transactions, among which the acquisition of securities from Belarusian non-residents and the provision or receipt of loans to/from Belarusian non-residents. After the introduction of the amendments, such a requirement was canceled, while a registration procedure was introduced.
Currently, Belarusian residents are required to register with the NBRB, on a special website, those currency agreements that cumulatively meet the following criteria: (1) they are concluded between a resident and non-resident of Belarus; (2) they envisage currency transactions of a certain nature specified in the relevant list of agreements subject to registration (for instance, providing for settlements in the export/import of goods, works, services); and (3) the amount of monetary obligations is equal or exceeds 2,000 basic units (approximately USD 23,000) for individuals and 4,000 basic units (approximately USD 46,000) for legal entities.
Belarusian residents need to provide documents and information on amendments to, and the performance of, the registered currency agreement. Failure to fulfill the registration obligation, when such registration is required, entails the imposition of fines on Belarusian residents. However, there are certain risks for Belarusian non-residents – Belarusian banks may deny conducting the relevant currency transactions. Additionally, Belarusian legislation currently requires the inclusion of special provisions into currency agreements, namely: (1) the amount of monetary obligations; (2) conditions of settlements; (3) deadlines for the fulfillment of payment obligations by non-residents and for the return of prepayments made by Belarusian residents (in case of non-fulfillment by Belarusian non-residents of their obligations); and (4) timeframes for repatriation of monetary funds.
Repatriation of Monetary Funds
Previously existing foreign trade formalities, such as deadlines for the completion of foreign trade transactions, are not effective anymore. Instead, a repatriation requirement was introduced to ensure crediting of funds received from export (or import, in case of a refund due to non-fulfillment of obligations by Belarusian non-residents) transactions to accounts in Belarusian banks. Belarusian legislation does not provide for strict repatriation deadlines – they are determined by Belarusian residents themselves as payment (performance of obligations) terms plus the time needed for bank settlements (not exceeding 30 days). In case such funds are credited to Belarusian residents’ foreign accounts, they need to be transferred to accounts in Belarusian banks within five business days from the date of crediting.
According to the new rules, currency restrictions may be imposed by the NBRB jointly with the Council of Ministers of Belarus, for a period not exceeding one year, in case there is a threat to the economic security of Belarus and the situation cannot be resolved by other economic measures. Although not introduced at the moment, such currency restrictions may include a prohibition to conduct currency or foreign exchange transactions, a requirement to obtain special NBRB permits to conduct currency transactions, restrictions on opening and maintaining accounts with foreign banks, and other measures.
Opening Accounts with Foreign Banks
Generally, unless currency restrictions are introduced, Belarusian residents are allowed to open accounts in Belarusian rubles and foreign currency with foreign banks without restrictions and have the right to transfer funds in Belarusian rubles and foreign currency from their accounts: (a) in Belarusian or foreign banks to their accounts in foreign banks and (b) in foreign banks to their accounts in Belarusian or other foreign banks. Nevertheless, Belarusian residents may receive monetary funds to accounts opened in foreign banks only in cases directly specified in Belarusian legislation.
To sum up, the changes were aimed at the liberalization of the Belarusian currency legislation and may be positively assessed, however, it is too early to draw any conclusions.
By Dennis Turovets, Partner, and Anastasia Yarokhovich, Senior Associate, Egorov Puginsky Afanasiev & Partners