Liability for Violations of Currency Legislation and Enforcement Measures

Currency regulation and currency control are key instruments for ensuring the financial stability and macroeconomic balance of the state. Under the liberalization of the foreign exchange market in the Republic of Uzbekistan, the issues of legal liability for violations of currency legislation and mechanisms for applying enforcement measures acquire special importance.
This article is devoted to a comprehensive study of legal norms regulating the liability of entities engaged in currency transactions and to the analysis of existing mechanisms of state enforcement.

The Law of the Republic of Uzbekistan “On Currency Regulation” (as amended on 22.10.2019 No. ZRU-573 with amendments from 2021–2025) sets forth the objectives and principles of currency regulation, defines the currency control authorities, and establishes general provisions on liability.

The main provisions on liability are contained in:

• Article 11-1 (liability for failure to ensure repatriation of assets);
• Article 28 (general rule on liability for violation of currency legislation).

In addition to the Law, legal regulation of liability is carried out by:

• The Code of the Republic of Uzbekistan on Administrative Liability (Articles 176-3, 176-4, 175-1);
• The Criminal Code (Article 177 – illegal currency transactions, Article 182 – evasion of customs payments, Article 184 – tax evasion);
• By-laws of the Central Bank and the Cabinet of Ministers on the procedure for monitoring the repatriation of foreign currency proceeds, record-keeping, and reporting.

Types of Violations of Currency Legislation

Violations can be classified into three groups:

Group of Violations	Examples	Legal Qualification
Formal	Failure to submit reports, late notification of opening accounts abroad	Administrative liability (fines)
Material	Failure to repatriate foreign exchange proceeds within the established time limits; violation of settlement procedures between residents	Administrative or criminal liability depending on the amount of damage
Threats to the Financial System	Conducting prohibited currency transactions, money-laundering schemes	Criminal liability, confiscation of funds

 

Liability for Violations (Financial Sanctions)

1. Fines for Failure to Ensure Repatriation

According to Article 11-1 of the Law:

• • 5% of the amount of unrepatriated assets – for delay up to 360 days;
  • +10% – for delay of 360–545 days;
  • +35% – for delay of more than 545 days.

Exceptions apply (force majeure, destruction of goods, specifics of import contracts, arrears ≤ 10% of foreign exchange proceeds for the last 36 months, etc.).

2. Administrative Measures
   • Fines for violation of settlement procedures (Article 176-3 of the CAO);
   • Recovery of amounts of illegally conducted operations;
   • Suspension of account operations until violations are eliminated.
3. Criminal Liability

In case of particularly large amounts or systematic violations – criminal liability with possible imprisonment and confiscation of property.

 

Currency Control Authorities and Their Powers

Control is carried out by the Central Bank, the Accounts Chamber, the Ministry of Finance, the State Tax Committee (STC), and the State Customs Committee (SCC).

Their powers include:

• Conducting inspections of completeness and reliability of accounting for currency transactions;
• Requesting documents and explanations;
• Issuing orders to eliminate violations;
• Forwarding materials to law enforcement agencies if signs of a crime are detected.

State Enforcement Measures

Enforcement measures have preventive, safeguarding, and punitive character.

They include:

• Administrative fines and penalties;
• Suspension of currency transactions;
• Recovery of funds in an indisputable manner;
• Blocking accounts until requirements are met;
• Bringing offenders to criminal liability.

A distinctive feature of currency control is the possibility of deferred payment of fines if they exceed 20% of the current assets of a legal entity – up to 6 months.

Problems of Law Enforcement and Recommendations

Key Issues:

• Difficulty in proving intent when qualifying violations as criminal;
• Excessive administrative barriers for bona fide foreign trade participants;
• Risk of duplication of inspections by different authorities.

Recommendations:

• Improvement of the risk-based approach in currency control;
• Digitalization of processes (online monitoring of repatriation);
• Development of tax/currency compliance institutes;
• Application of the “good-faith resident” principle with reduced penalty rates for entities with a high level of transparency.

Liability for violations of currency legislation in Uzbekistan is based on a combination of administrative, financial, and criminal measures. Current trends are aimed at liberalizing currency transactions while maintaining effective control over the repatriation of foreign currency proceeds and preventing threats to economic security. The introduction of risk-based control and digital tools will reduce the burden on businesses and increase the effectiveness of currency regulation.

 

Violations of Currency Legislation, Liability and Enforcement Measures

№	Type of Violation	Legal Provision	Liability / Enforcement Measure	Competent Authority	Application Features
1	Failure to ensure repatriation of foreign currency assets under foreign trade operations	Art. 11-1 of the Law on Currency Regulation	Fine: • 5% — for delay ≤ 360 days • +10% — for delay 360–545 days • +35% — for delay > 545 days	STC, courts, Accounts Chamber	Possibility of extension in case of force majeure; refund of fine in case of voluntary repatriation within 90 days after court decision enters into force
2	Failure to submit or falsification of reports on currency transactions	Art. 26 of the Law, Art. 176-3 of the CAO	Administrative fine (up to 50 BCV for individuals, up to 200 BCV for legal entities)	STC, Central Bank	Possible suspension of currency operations until violations are eliminated
3	Violation of settlement procedures between residents (settlements in foreign currency not provided for by law)	Art. 17 of the Law, Art. 176-4 of the CAO	Fine: 5–20% of the transaction amount, transaction annulment	STC	Does not apply to operations expressly permitted by law
4	Illegal currency transactions (buying/selling currency outside banks)	Art. 19 of the Law, Art. 177 of the CC	Criminal liability: fine, restriction of liberty, imprisonment up to 3 years	Law enforcement bodies (MoIA, SGB), courts	In case of significant amount — confiscation of the object of offense
5	Opening accounts abroad without notifying the CB and STC	Art. 12 of the Law	Administrative fine (up to 100 BCV), suspension of account activity until notification	Central Bank, STC	Obligation to notify within one month after opening the account
6	Improper use of currency assets (money laundering, terrorist financing)	Art. 21 of the Law, Law “On Combating Money Laundering…”	Freezing of funds, blocking accounts, criminal prosecution	Central Bank, Financial Monitoring Agency, SGB	Decisions are made within the framework of FATF international standards
7	Failure to comply with orders of currency control authorities	Arts. 24–25 of the Law	Administrative fine, suspension of operations until violations are eliminated	Currency control authorities (CB, STC, SCC)	Violation is recorded by inspection report
8	Evasion of tax and customs payments in currency transactions	Arts. 182, 184 of the CC	Criminal liability (fine, corrective labor, imprisonment)	SCC, STC, courts	Applied in case of significant or large damage
9	Systematic gross violations of currency legislation	Art. 28 of the Law, Art. 34 of the Law “On Licensing”	Suspension or revocation of license for currency operations	Central Bank	Measure is applied to banks and financial institutions in case of repeated violations