In order to simplify the process of conducting of foreign exchange transactions, improve the investment climate and investment attractiveness, it was adopted the Law of Ukraine “On Currency and Foreign Exchange Transactions” of 21.06.2018, No. 2473-VIII (hereinafter - the Currency Law). After the adoption of the Currency Law, all economic entities want to know about the fines for violating currency legislation. Consider this question in the following.
We start with good news. The currency law cancels Art.37 of the Law of Ukraine “On Foreign Economic Activity” of 16.04.1991, No. 959-XII (hereinafter - the Law on FEA). Gone are the sanctions imposed by the National Bank on violation of the Law on FEA or other related laws. Thus, hopefully, it is possible to forget about the following sanctions:
- fines in cases of untimely execution/non-fulfillment by the entities of foreign economic transactions of their duties;
- individual licensing regime;
- temporary suspension of the right to engage in foreign economics transactions.
It does not necessarily mean that all these sanctions of the National Bank will go into oblivion. Thus, the Currency Law provides the National Bank’s power to issue permits and/or limits for conducting separate currency transactions (paras. 4 of part 1 of Art.12 of the Currency Law). Such a norm may lead to the reintroduction of individual licenses in circulation. Therefore, it’s too early to talk about canceling that sanction.
As a body of currency control, the State Fiscal Service of Ukraine, in case of detection of a violation of currency legislation, may apply measures of influence provided for by the Law on Currency. It is a question of penal sanctions for legal entities and administrative fines for individuals, officials of companies (sub-paras. 3, 4, of para. 1 of Art. 14 of the Currency Law).
If the SFSU will punish a legal entity for an offense, it may impose a fine of up to 100% of the amount of the transaction conducted in violation of currency legislation. It is not specified in the Currency Law for what violations the maximum penalty to be applied, and for what violations less penalties. It only states that only the employee of the SFSU is able to determine the amount of fine, adequate to the violation committed by the legal entity. So, a fine for violating currency legislation can often be maximized, and the number of such fines will increase.
We remind that today such fine is applied, if settlements between residents and non-residents were not carried out through authorized bank, as well as for certain currency transactions without individual licenses (para. 2.2, 2.6 of the Regulation on foreign exchange control, approved by the decision of the Board of the NBU from 08.02.2000, No. 49).
As for the administrative penalties imposed on individuals, officials of companies, they also increase. For example, the illegal purchase, sale, exchange, use of currency values as a means of payment or as a pledge will entail a warning or imposition of a fine of 500 to 1 000 non-taxable minimum incomes of citizens (from UAH 8 500 to UAH 17 000) with confiscation of currency values (Art.162 of the Code of Ukraine on Administrative Offenses). Earlier a fine of 30 to 44 non-taxable minimum incomes of citizens (from UAH 510 to 748) was imposed for this violation.
Also, from now on, the punishment will be imposed for violating the procedure for the execution of foreign exchange transactions (Art.1621 of the Code of Ukraine on Administrative Offenses) by imposing a fine on officials of legal entities and citizens - business entities in the amount of 1 000 to 3 000 of non-taxable minimum incomes of citizens (UAH from 17 000 to UAH 51 000). Previously there was no liability for such a violation. Instead, the Code of Ukraine on Administrative Offenses contained responsibility for avoiding the return of proceeds in foreign currency and for the illegal opening or use of foreign currency accounts outside Ukraine. The fine for these violations was insignificant. Now the punishment for these violations will be as for violation of currency transactions.
It should be noted that penalties imposed for violation of currency legislation can be applied within six months from the date of detection of the violation, but not later than three years from the date of its commission. In addition, only one correctional administration can be applied for each violation.
