The National Bank expressed concern over the mass blocking of payments in the frontline regions by foreign banks

The National Bank of Ukraine (NBU) recommended that Ukrainian banks contribute to solving problems with settlements under foreign economic contracts of clients registered in regions partially occupied by Russia. The regulator sent a letter to banks and banking associations, informs NBU press office.

Problems with operations

Entrepreneurs report cases when foreign banks block transactions involving legal entities registered in Zaporizhzhia, Kherson, Donetsk and Luhansk regions. This happens regardless of whether the relevant settlement is under temporary occupation or under the control of Ukraine. Foreign banks explain such actions by the fact that they do not have a reliable source of data on the status of these territories.

The National Bank recommends that Ukrainian banks conduct additional communications with foreign banks regarding this issue.

The position of the NBU

The NBU notes that foreign banks often do not detail the grounds for blocking or refusing operations, referring to the requirements of internal policy and compliance procedures. Sanction restrictions may be the basis for such actions.

NBU recommendations

The National Bank recommends that Ukrainian banks, before initiating a payment, explain to foreign financial institutions the content of the transaction and provide additional information or documents regarding the Ukrainian company.

Also, banks must detail payment messages, specifying in the appropriate fields information about the control of Ukraine of the locality where the paying client is registered.

In case of blocking of funds, the NBU advises Ukrainian banks to contact the bank that blocked the payment in order to find out the reasons for the refusal and to agree on the amount of additional information needed by the foreign bank to carry out the transaction.