Uzbekistan To Introduce New Currency Control Rules

The President has signed the Law On Currency Regulation No. ZRU-573 of October 22, 2019 (the "New Law"), which is effective since its date of publication - 23 October 2019. As the result, the Law On Currency Regulation No. ZRU 556 - II of December 11, 2003 (the "Old Law") shall cease to have effect. An unofficial translation of the New Law is available in English at the following link: https://kostalegal.com/publications/law-of-the-republic-of-uzbekistan-on-currency-regulation. The discussion below provides for the New Law review by focusing on, in our view, the most significant alterations made to the Old Law.

REGULATORS

The state body responsible for the state currency regulation remains the same - the Central Bank of the Republic of Uzbekistan ("CBU"). However, the CBU is no longer responsible for the issuance of permits to open bank accounts abroad as it was envisaged by the Old Law. It is now laid down that the CBU will only receive notifications of corresponding activities.

Separately, the New Law defines the CBU, the Audit Chamber, the Ministry of Finance, the State Tax Committee and the State Customs Committee as authorized bodies in the area of foreign currency control. In particular, these state bodies are authorized to conduct currency control inspections and require relevant information in this respect.

RESIDENTS AND NON-RESIDENTS

The group of persons and legal entities that fall within the definition of resident has been extended. As per the New Law, those who fall within one of the following categories are regarded as a resident for currency control purposes: (i) citizens of the Republic of Uzbekistan, including while residing abroad, (ii) individuals holding a residence permit in the Republic of Uzbekistan, including stateless persons, (iii) legal entities registered within the territory of Uzbekistan in accordance with Uzbek law or their representative offices/branches, (iv) international organizations with the headquarter registered in Uzbekistan.

As the New Law stipulates, non-residents are those who fall outside the definition of the resident.

CURRENCY OPERATIONS

Like in the Old Law, the New Law defines two types of foreign operations: current cross-border transactions and capital movement transactions. Such a separation is required to clearly define what kind of activities are intended to be regulated by the state. In this way, current cross-border transactions can be conducted with no limitations, while capital movement...