Legal Regulation of Foreign Exchange Relations in Uzbekistan

Foreign exchange regulation is one of the most important tools for ensuring the financial stability and economic security of the state. Over the past decades, the Republic of Uzbekistan has pursued a consistent policy of liberalizing foreign exchange relations, creating a legal framework that meets international standards.

In 2019, a new version of the Law “On Currency Regulation” (No. ZRU-573) was adopted, which replaced the previous versions of 1993 and 2003 and established modern mechanisms for foreign exchange regulation, foreign exchange transactions, and foreign exchange control.

The purpose of this article is to conduct a comprehensive legal analysis of the Law, identify its key provisions, and determine trends in the development of Uzbekistan’s foreign exchange legislation in the context of integration into the global economy.

According to Article 1, the purpose of the Law is to regulate relations in the field of foreign exchange transactions and foreign exchange control. The Law establishes the legal foundations for implementing a unified state foreign exchange policy, ensuring a balance between the economic freedoms of participants and the need to control capital flows to prevent financial risks and illegal transactions.

Principles of the Law

The Law enshrines:

• Unity of the system of currency regulation and control;
• Priority of economic measures over administrative ones;
• Prohibition of unlawful interference by state bodies in the foreign exchange transactions of residents and non-residents.

Foreign Exchange Regulation

The Central Bank of the Republic of Uzbekistan is defined as the state body for currency regulation, with broad powers to issue regulatory acts, establish the procedure for carrying out foreign exchange transactions, regulate the activities of currency exchanges, as well as license and supervise banks.

The Law guarantees the free formation of the exchange rate based on market mechanisms of supply and demand, which is a key condition for macroeconomic stability.

Foreign Exchange Transactions

The Law divides foreign exchange transactions into domestic and international, and the latter — into current transactions and capital movement transactions.

• Current international transactions include payments for foreign trade transactions, interest, and non-trade transfers (including alimony, education, medical treatment, tourism).
• Capital movement transactions include investments, loans, leasing, purchase of real estate, acquisition of intellectual property rights.

The liberalization of foreign exchange transactions is reflected in the provision that the attraction of foreign direct investment and its repatriation are carried out without restrictions.

Currency Control

The system of currency control consists of the Central Bank, the Accounts Chamber, the Ministry of Finance, the State Tax Committee, and the State Customs Committee. Currency control bodies have the right to conduct inspections, request documents, establish reporting forms, and issue mandatory orders.

The Law also secures the rights of residents and non-residents to review inspection materials, appeal the actions of control authorities, and receive compensation for damage caused by unlawful actions of officials.

Liability for Violations and Enforcement Measures

An important innovation is Article 11-1, which provides for financial sanctions for failure to ensure the repatriation of foreign currency earnings from foreign trade operations. Penalties are differentiated depending on the delay period and can reach 35% of the amount of non-repatriated assets.

The legislation also provides for exceptions (e.g., in the event of force majeure, long-term equipment supply contracts, or insignificant amounts of overdue debt).

Practical Significance and Development Trends

The adoption of the new version of the Law and subsequent amendments (including changes in 2021–2025) indicate Uzbekistan’s commitment to harmonizing currency regulation with international standards, stimulating investment, and increasing transparency in foreign trade operations.

The Law is aimed at creating favorable conditions for business and foreign investors while ensuring control over financial flows and preventing money laundering.

The Law “On Currency Regulation” is a fundamental normative act that defines the rules for circulation of currency assets, carrying out foreign exchange transactions, and implementing currency control in Uzbekistan. The current version of the Law reflects a liberal approach to regulating the currency market while maintaining effective mechanisms for control and protection of the state’s economic interests.

Future prospects for the development of foreign exchange legislation are linked to the digitalization of currency transactions, integration into international payment systems, and the expansion of currency risk-hedging instruments.

 

Classification of Foreign Exchange Transactions, Controlling Bodies, Obligations, and Sanctions

Category	Elements	Content / Essence
Foreign Exchange Transactions	Domestic Transactions	Carried out within the territory of the Republic of Uzbekistan between residents; include transactions for payments in duty-free shops, settlements for international transport, refund of amounts to consignors, contributions to authorized capital, etc.
	International (Cross-Border) Transactions	Divided into current international transactions and capital movement transactions
	– Current International Transactions	Payments for foreign trade, interest, non-trade transfers (alimony, education, treatment, business trips, royalties)
	– Capital Movement Transactions	Investments, loans and borrowings, leasing, purchase of real estate, placement of funds abroad, acquisition of IP rights
Foreign Exchange Regulation and Control Bodies	Central Bank	Issues regulatory acts, licenses currency exchanges, establishes the procedure for foreign exchange transactions, sets limits on currency positions, publishes statistics, supervises banks
	Accounts Chamber, Ministry of Finance, Tax and Customs Committees	Conduct inspections, request documents, monitor completeness of reporting, issue orders to eliminate violations
Obligations of Residents	During foreign exchange transactions	Ensure repatriation of assets, maintain records and prepare reports, provide documents and explanations to control authorities, ensure access to premises and databases
Obligations of Non-Residents		Comply with the rules of foreign exchange transactions on the territory of Uzbekistan, provide reports and documents upon request of control bodies
Sanctions	For failure to ensure repatriation	Penalties: 5% — up to 360 days; 10% — 360–545 days; 35% — more than 545 days. Refund of penalty is provided in case of voluntary repatriation or payment
	For other violations	Liability is established by law (administrative, tax, criminal)