Foreign Exchange Transactions and Currency Control in Uzbekistan

The development of international economic relations, liberalization of the foreign exchange market, and the growth of cross-border settlements necessitate effective regulation of foreign exchange transactions and currency control. The Republic of Uzbekistan, as an active participant in global trade and investment processes, has built a comprehensive legal system of currency regulation aimed at ensuring the stability of the national currency, adherence to transparency principles, and the prevention of illegal financial flows.

This article presents a scientific analysis of the provisions of the Law “On Currency Regulation” (in its new edition dated October 22, 2019, with subsequent amendments from 2021–2025).

1. Concept and Classification of Foreign Exchange Transactions

1.1. Definition of Foreign Exchange Transactions

Foreign exchange transactions are defined as transactions related to the transfer of ownership and other rights to currency values, their use as a means of payment, as well as the import, export, mailing, and transfer of currency values.

1.2. Classification of Transactions

The law divides foreign exchange transactions into:

• Domestic – carried out within the territory of the Republic of Uzbekistan;
• International (cross-border) – subdivided into:
  • Current international transactions (payments for trade, services, interest, non-trade transfers);
  • Capital movement transactions (investments, loans, purchase of real estate, cross-border deposits, transfer of exclusive rights).

Of particular importance is the freedom of current international transactions, which are carried out without restrictions, in line with the principles of international monetary law and IMF standards.

2. Legal Regulation of Foreign Exchange Transactions

2.1. Role of the Central Bank

The Central Bank of the Republic of Uzbekistan is the state body for currency regulation. It adopts regulatory legal acts, establishes rules for foreign exchange transactions, licenses currency exchanges, and regulates the foreign exchange market.

2.2. Principles of Regulation

The law establishes:

• Unity of the system of currency regulation and control;
• Priority of economic measures over administrative ones;
• Prevention of unlawful interference in the operations of residents and non-residents.

2.3. Features of Settlement Regulation

All settlements on the territory of Uzbekistan are made in the national currency (sum), except for specially established exceptions (projects with foreign investments, PPP projects).

3. Currency Control: Bodies and Functions

3.1. System of Currency Control Bodies

Currency control bodies include:

• Central Bank;
• Accounts Chamber;
• Ministry of Finance;
• State Tax Committee;
• State Customs Committee.

3.2. Powers of Control Bodies

They have the right to:

• Verify compliance with currency regulation legislation;
• Request documents and information;
• Issue mandatory orders;
• Establish reporting procedures.

3.3. Rights and Duties of Residents and Non-Residents

Participants in foreign exchange transactions are obliged to maintain records, provide documents, ensure access to information, and have the right to appeal actions of currency control bodies and claim compensation for damages in case of unlawful actions.

4. Repatriation of Assets and Liability

The law provides for the obligation of residents to repatriate foreign exchange earnings under foreign trade contracts.
If repatriation deadlines are violated by more than 180 days, the operation is classified as a capital movement transaction, and fines are applied, graded by the length of delay (5%, 10%, 35%).

5. Restrictions and Safeguard Measures

The Central Bank and the Cabinet of Ministers may impose temporary restrictions on foreign exchange transactions:

• To combat money laundering and terrorist financing;
• In case of threats to the balance of payments or economic security.

The term of such restrictions cannot exceed one year, which corresponds to the principle of temporariness of currency control measures.

The system of currency regulation and control in the Republic of Uzbekistan is fairly liberal and meets international standards. The legislation ensures freedom of current operations, while establishing clear mechanisms for monitoring capital movement transactions, mandatory repatriation of foreign exchange earnings, and the powers of control bodies.

Future development of legal regulation should focus on:

• Further digitalization of currency control;
• Simplification of procedures for bona fide foreign economic activity participants;
• Strengthening coordination between control bodies and banks to reduce administrative burdens while maintaining transparency of operations.

Types of Foreign Exchange Transactions and Their Features

Type of Foreign Exchange Transaction	Examples of Transactions	Regulatory Features
Current International Transactions	- Payments for export/import of goods and services - Payment of interest on loans and borrowings - Non-trade transfers (alimony, education, medical treatment, business trip expenses)	- Carried out without restrictions - Purchase/sale of currency for these transactions is free
Capital Movement Transactions	- Investment in foreign branches - Receiving/providing loans and leasing - Purchase of real estate abroad - Transfers to deposits abroad - Transfer of exclusive rights to IP objects	- May be subject to additional monitoring and reporting - In case of repatriation delay over 180 days, reclassified as capital movement transactions
Foreign Exchange Transactions Between Residents	- Settlements in duty-free shops - Settlements with passengers in international transportation - Refund of advances for business trips - Settlements between commission agents and principals under contracts with non-residents - Contribution of currency values to charter capital	- Allowed only in cases strictly provided by law - All other foreign exchange transactions between residents are prohibited
Foreign Exchange Transactions Between Non-Residents	- Transfers between accounts in banks of Uzbekistan and abroad - Non-trade transfers between individuals - Transactions with securities between accounts in banks of Uzbekistan	- Permitted within the framework of securities market and currency regulation requirements
Purchase and Sale of Foreign Currency	- Transactions on the interbank foreign exchange market - Currency exchange for contract settlements	- Conducted exclusively through banks of Uzbekistan and the Central Bank
Import/Export of Cash Currency	- Import of cash currency by individuals without restrictions - Export up to 100 million UZS (equivalent) - Import/export of cash currency by legal entities (except banks) is prohibited	- Exceeding the export limit requires authorization in accordance with Cabinet of Ministers procedures

 

Rights and Obligations of Participants in Foreign Exchange Transactions

Subject	Rights	Obligations
Residents (Individuals)	- Possession and disposal of currency values at their discretion - Execution of cross-border non-trade transfers - Import/export of currency values without restrictions (within norms)	- Ensure repatriation of foreign exchange earnings under foreign trade contracts - Maintain accounting records of foreign exchange transactions (if applicable)
Residents (Legal Entities)	- Possession of currency values and their transfer abroad - Opening of accounts in banks of Uzbekistan and, subject to permits, abroad - Freedom of current international transactions	- Notify tax authorities and the Central Bank about opening accounts abroad - Submit reports on balances and turnovers - Repatriate foreign exchange earnings - Comply with control bodies’ requirements
Non-Residents	- Opening and use of accounts in banks of Uzbekistan - Carrying out settlements for current international transactions without restrictions - Execution of non-trade transfers	- Comply with currency regulation rules in Uzbekistan - Provide documents during inspections
Banks of Uzbekistan	- Conduct transactions for purchase and sale of foreign currency and derivatives - Open correspondent accounts in foreign banks	- Request necessary documents from clients - Comply with Central Bank and currency legislation rules - Prepare and submit reports
Central Bank	- Issue regulatory acts on currency regulation - License currency exchanges and set banks’ position limits - Monitor foreign exchange transactions of residents and non-residents	- Establish procedures for accounting and reporting - Publish foreign exchange market statistics
Currency Control Bodies (Accounts Chamber, Ministry of Finance, State Tax Committee, State Customs Committee)	- Conduct inspections and request information - Issue binding orders to eliminate violations	- Maintain commercial and banking secrecy - Control completeness of accounting and reporting on transactions