Cashless settlements

Functioning of banks customers accounts

The principal legislative acts to regulate opening, using and closing of banks customers accounts shall be:

The Civil Code of Ukraine. Paragraph 3 of chapter 71 regulates mutual relations between a bank and a depositor when concluding agreement on a bank deposit. Chapter 72 regulates mutual relations between a bank and a customer when opening a bank account.

Economic Code of Ukraine. Part 2 identifies basic activities of economic entities. Paragraph 1 of chapter 35 determines characteristics of legal regulation for financial activities, including banking activities.

The Law of Ukraine "On the National Bank of Ukraine". Article 7 of this Law determines, that the National Bank of Ukraine shall set rules for effecting banking transactions by banks.

The Law of Ukraine # 2346 of 05.04.2001 "On Payment Systems and Funds Transfer in Ukraine".  Article 6 of this Law  ascertains circle of persons, for whom banks are authorized to open accounts, as well as the body (the National Bank of Ukraine),  which shall set procedure for opening bank accounts. Categories of accounts to be opened with banks are identified by Article 7 of this Law.

The Law of Ukraine # 2121 of  07.12.2000 "On banks and banking". Chapter 11 of this Law sets banks responsibility to identify customers, who open accounts, as well as persons authorized to act  on behalf of mentioned customers.

The Law of Ukraine # 249 of 28.1.2002 "On prevention and counteraction to legalization (laundering) of incomings received by criminal way". Article 4 of this Law reads, that banks are subjects of initial financial monitoring, which in accordance with Article 5 commit themselves to identify a person who shall effect a financial transaction under financial monitoring, or  who shall  open an account (including deposit account). Identification of persons who effect financial transactions shall be made according to Article 6 of this Law.

The Regulation on the procedure of exercising by the Ukrainian banks deposit transactions with legal entities and natural persons , which is approved by the Board of the National Bank of Ukraine # 516 of 03.12.2003 and registered with the Ministry of Justice of Ukraine under # 1256/8577 of 29.12.2003 (with amendments). This Regulation shall regulate general procedure of obtaining  funds by the Ukrainian banks (both in foreign exchange and national currency) or banking metals from legal entities and natural persons on their current, deposit accounts and allocation of saving (deposit) certificates.

The Instruction on the procedure of opening and using bank accounts in domestic currency and foreign exchange, which is approved by the National Bank Board decision # 492 of 12.11.2003 (below in the text - Instruction).

The Regulation shall regulate legal relations which arise when opening by banks current and saving  (deposit) accounts in foreign exchange and national currency) with legal entities and natural persons, foreign representations, nonresidents-investors and election blocs of political parties.

New in functioning of banks customers' accounts

Since February, 2008 there came into force the Resolution of the Board of the National Bank of Ukraine # 3 of 08.01.2008 "On approval of amendments to the Regulation on procedure of opening, using and closing accounts in both domestic currency and foreign exchange", registered with the Ministry of Justice of Ukraine under # 42/14733 of 22.01.2008 (published in the Official Herald of Ukraine, No.6 (04.02.2008), p.160.

Implementation of these amendments was required by the following:

- to bring some norms of the Regulation in compliance with requirements of the Law of Ukraine # 3456-1V of 22.02.2006 "On putting amendments to some legislative acts of Ukraine", which amended Article 5 of the the Law of Ukraine "On the system of taxation" as to notification of the bodies of state tax service on opening (closing) of customers' accounts with financial institutions;
- to regulate problem issues, linked with foreign exchange transactions;
- to improve procedure of opening, changing and closing of customers' accounts. 

According to Amendments to the Regulation, in particular:
- amendments were put to procedure of identification of banks' customers;
- improvements were made to the procedure of opening of running and deposit accounts to economic entities, as well as running  accounts for forming of statutory fund (statutory capital) of an economic entity - legal person;
- amendments were put to procedure of functioning of accounts of individuals and foreign representations;
- the procedure of changing and closing of customers' accounts was improved;
- there was specified the procedure of notification by banks bodies of state tax service on closing of accounts of customers' of special category.

Information of number of banks' customers and number of accounts opened by customers

In compliance with reporting data (form # 410 "Report on number of banks' customers and number of accounts, opened by customers") as of 01.01.2008, 173 banks serve over 120 million customers - both legal entities and individuals (residents and non-residents),  who opened running and deposit accounts, of which:
118.4 million - individuals,
1.9 million - economic entities.

In 2006 - 2007 number of customers, being served by banks increased mostly at the expense of individual customers.

Total number of accounts, opened by customers as of reporting date amounted to 153.7 million, including:

- 106.8 million of running accounts (69.5% of total number of accounts, opened with banks),
- 46.9 million of deposit accounts (30.5%).

Share of accounts of individual persons makes up almost 98% of all accounts opened by customers (103.6 million of running accounts and 46.8 million of deposit accounts).

Normative and legal Acts drawn up by the Department of Payment Systems

Regulation On cashless settlements in domestic currency in Ukraine (approved  by the Resolution of the Board of the National Bank of Ukraine # 22 of 21.01.2004 and registered with the Ministry of Justice of Ukraine under # 377/8976 of 29.03.2004 (with amendments).

General rules, forms and standards of settlements for legal entities and natural persons and banks in monetary unit of Ukraine in the territory of Ukraine, accomplished with participation of banks shall be set by new version of the Regulation on the national currency cashless settlements in Ukraine (below - Regulation), which is approved  by the Resolution of the Board of the National Bank of Ukraine # 22 of 21.01.2004 and registered with the Ministry of Justice of Ukraine under # 377/8976 of 29.03.2004.

Regulation On approval of changes to the Regulation on cashless settlements in domestic currency in Ukraine (approved on December 4, 2006 by Resolution # 236 of the Board of the National Bank of Ukraine of 18.10.2006, registered with the Ministry of Justice of Ukraine under # 1218/13092 of 20.11.2006 (published in the official Herald of Ukraine, 2006 # 47 of 04.12.2006, Article 3137).

Regulation On procedure of exercising by banks transactions with bills of credit in the national currency in the territory of Ukraine (approved  by the Resolution of the Board of the National Bank of Ukraine # 508 of 16.12.2002 and registered with the Ministry of Justice of Ukraine under # 174/7495 of 29.02.2003).

On December 16, 2002 the Board of the National Bank of Ukraine adopted Resolution # 508, which approved  the Regulation on procedure of exercising by banks transactions with bills of credit in the national currency in the territory of Ukraine (below - Regulation). The above-mentioned Resolution of the National Bank of Ukraine is registered with the Ministry of Justice of Ukraine under # 174/7495.

According to this Resolution, there became invalid the Regulation on banks transactions with bills of credit, approved  by the Resolution of the Board of the National Bank of Ukraine under # 258 of 28.05.1999.

The necessity to develop and approve a new Regulation was caused by passing of the Law of Ukraine "On the bill circulation in Ukraine under # 2374-111 of April 5, 2001.

The Regulation shall set new rules and procedure of effecting by banks bill transactions, which are drawn and are due to be paid in national currency within Ukraine.

Regulation on drawing up applications on purchase or sale of foreign exchange or banking metals by customers payment orders in foreign exchange or banking metals and providing them to authorized banks and other financial institutions and the procedure of their execution (approved  by the Resolution of the Board of the National Bank of Ukraine # 82 of 05.03.2003 and registered with the Ministry of Justice of Ukraine under # 224/7545 of 20.03.2003).

This Regulation regulates, in particular, procedure of drawing up by customers payment orders in foreign exchange or banking metals and determines terms for effecting foreign exchange transfers and namely, a customer can chose such terms for foreign exchange transactions as "urgent",  "time" or  "general".

This Regulation also specifies procedure of drawing up by customers payment orders in foreign exchange, when making transfers within an authorized bank.

Furthermore, the Regulation makes provision for requirements on procedure of returning unexecuted foreign exchange payment orders by authorized banks servicing customers.

Regulation on procedure of effecting transactions with foreign exchange cheques in the territory of Ukraine (approved  by the Resolution of the Board of the National Bank of Ukraine # 520 of 29.12.2000 and registered with the Ministry of Justice of Ukraine under # 152/5343 of 21.02.2001).

This  Regulation sets uniform rules and procedure on foreign exchange cheque  transactions effected by authorized banks and  financial institutions

According to this regulation, a cheque as a pay document shall comprise a written order of drawer of a cheque to holder of a cheque on paying out within a certain term of foreign exchange amount indicated in it.

World experience testifies to the fact that cheques payable to somebody are mostly widespread among all kind of cheques. They are well protected both in case of reimbursement and of loss. In accordance with the terms of this regulation, all cheques payable to somebody shall comprise the following essential elements:

• name of a document - "cheque" shall be written in a language in which it is drawn (or without a name, when a cheque is drawn in such countries as Great Britain, USA, Canada, Australia, Germany, etc.);

• an order to pay out e certain amount to holder of a cheque;

• name and requisite elements of an issuer and an payer;

• holder of a cheque's company name for a legal person or family name for a natural person for whom a payment is effected;

• indication of currency type and amount of a cheque.

• cheque drawing date and cheque number;

• place of cheque issue;

• signature of a cheque drawer 

For lack of the above-mentioned essential elements, a cheque is considered invalid, shall be returned to holder of a cheque and is not collected by a bank. Period of cheque validity is indicated on a cheque. For lack of such indication, period of cheque validity shall make up 6 months since the day of its issue.

Bank in Ukraine shall accept registered cheques in foreign exchange from holder of a cheque only for collection. Cheques in foreign exchange of the 1st group of foreign exchange Classificator of the National Bank of Ukraine (below - 1 group of Classificator) and 2d group of foreign exchange Classificator of the National Bank of Ukraine shall be accepted by a bank for collection only from their holders after providing documents, which identify their person or against their notary power of attorney.

Bank shall accept cheques for collection from natural persons both residents and nonresidents against application on accepting for collection cheques in foreign exchange. Cheques delivered to a bank by another person can be accepted for collection only in the following cases:

• in case of providing by holder of a cheque a duly authorized power of attorney;

• in case of a death of holder of a cheque, cheques from his heirs shall be accepted only for collection against documents, requested in accordance with the current legislation of Ukraine;

• a cheque, drawn in favour of a teenager before 15 years old or an incapable person can be delivered to a bank only by their legal representatives (parents, trustees);

• after reaching 15 years of age, a teenager can do it personally, but against written consent of his parents or other legal representatives, authorized in accordance with the current legislation of Ukraine (birth certificate, adoption certificate, trustee certificate, etc.)

Bank can accept cheques for collection on the security in accordance with the current legislation of Ukraine in the following cases:

• there is a need to guarantee execution of holder of a cheque his liabilities as to paying out commission to payers, when a bank which accepts a cheque for collection has some doubts as to paying it out;

• cheques have some damages (torn out and put together, original colour is changed, partially burn out, have some ink, paint or oil spots, but all these damages do not interfere with cheque identification);

• cheque period of validity is expired;

• bank which accepts a cheque for collection has no correspondent relations with issuing bank.

After receiving funds against cheque from a payer, a bank in accordance with preliminary agreement with a drawer of a cheque shall inform him per phone or with a letter on accepting cheques for collection, on receiving funds and on the  name and  location of a bank which is to pay funds.

Natural persons (residents and nonresidents), having foreign exchange current account in the bank, can receive funds against cheques in their account, the number of which shall be indicated in application form on accepting a foreign exchange cheque for collection.

Natural persons (residents and nonresidents), who have no foreign exchange current account in the bank, can receive funds against cheques in cash.

On request of a natural person (resident or nonresident), foreign exchange amount against cheque can be sold to the bank by foreign exchange purchase rate on the day of transaction; at this a natural person - nonresident, is provided with the form 377 together with cash foreign exchange warrants.

Funds against cheques intended for legal persons (residents)  are prior transferred to foreign exchange clearing account, opened by bank for a legal entity in accordance with the Transaction Rules on foreign exchange interbank market of Ukraine, approved by the Resolution # 127 of 18.03.99 of the Board of the National Bank of Ukraine and registered with the Ministry of Justice of Ukraine on 18.03.99 under the # 171/3464.

Funds against cheques intended for representations of legal persons-nonresidents are transferred in accordance with normative and legal acts of the National Bank of Ukraine The Regulation sets requested essential elements for travelers cheques as well. A travelers cheque is a pay foreign exchange document used in non-trade international settlements which is drawer of a cheque's money liabilities to pay out an amounts indicated in a cheque to a holder of a cheque, whose signature shall be put in a duly site by sale. Travelers cheque is to have the following requisite elements:

• name of a document - "travelers cheque";

• name of issuing companies:  American Express, Visa, Thomas Cook, City Corp., Bank of America, Swiss Bakers Travelers Cheques, etc;

• name of payer and his requisite elements;

• signatures of issuing companies' authorized persons;

• foreign currency face value and its name;

• its series and number;

• place for signature of a person, intending to buy a cheque;

• place for signature of holder of a cheque by paying a cheque off.

The validity period of travelers cheques is not limited.

Date and place for cheque's filling up are indicated in information message on travelers cheques sale. Travelers cheques are issued of a certain denomination.

Travelers cheques are drawn for a single holder, seldom - for two holders (signature of a holder (two holders) is put in a certain place at the sale day. Travelers cheques drawn for two holders can be used by both. Any of two signatures is valid when  receiving cash funds against a cheque.

Banks which have according to the current legislation of Ukraine a special permission of the National bank of Ukraine for importing travelers cheques forms to Ukraine, shall have the right to conclude agreements with other resident banks for  their further sell  in Ukraine.

Transactions on travelers cheques' purchase (pay off) and sale (change of foreign exchange in cash against foreign exchange cheques, below - sale) is executed by a bank against foreign exchange of the 1st group of Classificator or against Hryvnias.

Recovery to holder of a cheque for the lost travelers cheques is effected by the bank against agreements concluded with travelers cheques' issuer.

Regulation on procedure of effecting bank transactions on guarantee in national currency and foreign exchange (approved  by the Resolution of the Board of the National Bank of Ukraine # 639 of 15.12.2004 and registered with the Ministry of Justice of Ukraine under # 41/10321 of 13.01.2005).

This Regulation sets general rules of  the National Bank of Ukraine on procedure for effecting bank transactions on granting and receiving banking guarantee in national currency and foreign exchange.

Regulation on discharge of transactions, arrest and forced writing off funds in foreign exchange and banking metals (approved  by the Resolution of the Board of the National Bank of Ukraine # 515 of 03.12.2003 and registered with the Ministry of Justice of Ukraine under # 167/8766 of 06.02.2004).

This Regulation shall specify general rules of  the National Bank of Ukraine and the procedure of execution by authorized banks and other financial institutions of discharge of transactions, arrest and forced writing  funds in foreign exchange and banking metals off customers' accounts and corresponding accounts of authorized banks residents, opened in other authorized banks residents.

Regulation on procedure of effecting  transactions on documentary credits in settlements on foreign-economic transactions, which are carried out by authorized banks (approved  by the Resolution of the Board of the National Bank of Ukraine # 514 of 03.12.2003 and registered with the Ministry of Justice of Ukraine under # 1213/8534 of 24.12.2003).

This Regulation shall specify general rules on opening, notifying, conducting and closing of  documentary credits, which are effected by authorized banks for their customers, when settling accounts on foreign-economic contracts in foreign exchange and national currency.