With effect from 21 December 2017, the National Bank of Ukraine (the “NBU”) made monetary escrow accounts fully operational in Ukraine by recognising them as a separate type of bank account and establishing the rules for wire transfers in escrow transactions. The relevant rules are set out in NBU Regulations No. 133 “On Amendments to Certain Legislative Acts of the National Bank of Ukraine” dated 18 December 2017, and No. 147 “On Amendments to Certain Legislative Acts of the National Bank of Ukraine” dated 28 December 2017 (the “Escrow Regulations”).
According to the Escrow Regulations, Ukrainian companies and individuals, and foreign investors, are permitted to open monetary escrow accounts with Ukrainian banks on the basis of a written escrow account agreement (in paper or electronic form), subject to completion of the relevant identification/KYC procedures of the account bank. Generally, wire transfers to and from escrow accounts are permitted through current bank accounts of Ukrainian companies and individuals, and the investment accounts of foreign investors opened with Ukrainian banks.
The use of escrow accounts will provide more structuring flexibility for cross-border transactions involving Ukrainian persons, including M&A, project finance, lending, revenue and profit-sharing arrangements. The recognition and operation of escrow accounts will further contribute to the improvement of the investment climate in Ukraine.
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