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Approved by decision of the Board of National Bank of the Azerbaijan Republic 27 July, 1997 Minutes No 13 Registration No 98

Regulations on procedures with foreign currency accounts of residents and non-residents of the Azerbaijan Republic in authorised banks of the Azerbaijan Republic





These Regulations have been prepared in accordance with the laws of the Azerbaijan Republic «On exchange control», «On National Bank of the Azerbaijan Republic» and «On banks and bank activity in the Azerbaijan Republic»
.
1. General
1.1 These Regulations manage procedures with foreign currency accounts of legal entities and physical persons - residents and non-residents of the Azerbaijan Republic in credit organisations of the Azerbaijan Republic. These Regulations are related only to business activity of credit organisations of the Azerbaijan Republic and do not cover their bank activity.
1.2 In these Regulations the following terms are used:
1.2.1 Bank - authorised bank as specified in the Law of the Azerbaijan Republic «On exchange control».
1.2.1 Foreign currency - currency notes in the form of banknotes and coins in circulation which are regarded legal payment means in respective foreign country or on the territory of a group of countries.
1.2.3 Residents:
a) physical persons with permanent address in the Azerbaijan Republic, including those temporarily living outside the Azerbaijan Republic;
b) legal entities established in accordance with legislation of the Azerbaijan Republic;
c) enterprises and organisations located in the Azerbaijan Republic and established in accordance with legislation of the Azerbaijan Republic which, however, are not legal entities;
d) diplomatic and other official representations of the Azerbaijan Republic located outside the Azerbaijan Republic;
e) subsidiaries and representations of residents specified in sub-clauses «b» and «c» of this clause located outside the Azerbaijan Republic.
1.2.4 Non-residents:
a) physical persons with permanent address outside the Azerbaijan Republic, including those temporarily living in the Azerbaijan Republic;
b) outside the Azerbaijan Republic - legal entities established in accordance with legislation of foreign countries, enterprises and organisations which are not legal entities;
c) foreign diplomatic and other official representations in the Azerbaijan Republic, and also international organisations, their branches and representations;
d) subsidiaries and representations (bureau and agencies) of non-residents specified in sub-clause «b» of this clause located in the Azerbaijan Republic.

2. Payments into currency accounts of residents and non-residents of the Azerbaijan Republic
2.1 Money may be transferred into currency accounts of residents and non-residents of the Azerbaijan Republic in authorised banks of the Azerbaijan Republic without any restrictions, except:
2.1.1 money received as a result of sale of commodities and provision of services on the territory of the Azerbaijan Republic.
In such cases, in accordance with Instruction of National Bank of the Azerbaijan Republic dated 1 November, 1994, No 05/23 license is required for sale of commodities and provision of services for foreign currency on the territory of the Azerbaijan Republic. Such money transfers are permitted if money to pay for commodities which have been sold in the Republic and services rendered here are transferred from bank accounts outside the Republic.
2.1.2 money paid in cash by non-residents to the residentsí cash departments for commodities and services exported by residents of the Azerbaijan Republic.
In such cases residents may accept in their cash departments only that foreign currency which has been earlier brought to the Republic by non-residents (physical persons or physical persons- authorised representatives of legal entities - non-residents) and has been declared at the customs. This operation is carried out as follows:
a) payment in cash should be envisaged in the contract;
b) money may be received only from non-resident - recipient of commodities or physical person authorised by this non-resident in compliance with regulations;
c) money should be delivered to cash department of the resident-supplier of commodities nor later than 10 days after they were imported to the Republic and declared. If the operation is sound, National Bank may extend this term at its own discretion based on application of the authorised bank;
d) when accepting money, residents should require from their partners - non-residents customs declaration confirming import of money into the Republic;
e) when receiving money in cash department residents must prepare receipt voucher in accordance with established order;
f) residents shall have to accept at their account in the bank money which they received through cash department on the same day or during the next working day.
g) when accepting money bank should require the following documents:
· original of export contract;
· copy of receipt voucher of resident;
· original of customs declaration confirming import of money into the Republic.
After verification of credibility of documents the bank keeps their copies and accepts moneys from the resident. Original of customs declaration confirming import of money into the Republic shall be kept in the bank only after its execution. Before that bank makes a note on the original of customs declaration and keeps its copy. If several authorised banks make notes on this customs declaration, its original should be kept in a bank which executes the latest payment.

3. Transfers from bank accounts of residents of the Azerbaijan Republic
Money from bank accounts of residents of the Azerbaijan Republic may be transferred with the following objectives:
3.1 Within the Republic:
· a) transfers to subsidiaries, representations of other residents or non-residents on the territory of the Azerbaijan Republic, or some entity authorised by non-resident, for commodities imported and sold in the Republic, and services rendered in the Republic or imported to the Republic;
· participation in the ownership funds of other residents of the Azerbaijan Republic based on constituent documents;
·  donations, social assistance and sponsorship;
· repayment of credits and interest on them;
· placement of deposits in the authorised banks of the Azerbaijan Republic;
· conversion into manats and other currency;
· transfers to branches and representations of residents of the Azerbaijan Republic located within the Republic, and also subsidiaries and subordinate enterprises (when relevant decision has been taken), and also transfers from these enterprises to head companies;
· payment of dividends to the constitutors;
· currency accounts opened for these residents in other authorised banks;
· sound operations, other than specified above, may be carried out by individual decisions of National Bank.
Outside the Republic:
· money transferred for commodities brought into the Republic under the import counteracts and also services rendered in the Republic or imported thereto.
 In such cases payment may be done in the following ways:
 Advance payments. The residents may accomplish advance payments in a sum of up to 10 000 (ten thousand) US dollars, or equivalent sum in other currency within the limits of import contract (per each contract). With sound operations, based on bank applications National Bank may allow advance payments for a higher sum. Should there be any concern about the soundness of the operation, National Bank may require additional documentation.
 If commodities under sums paid in advance by residents outside the Republic are not imported to the Republic within 180 calendar days, then authorised bank shall have to terminate all debiting operations on accounts of said resident and notify in writing National Bank of the Azerbaijan Republic and Main State Tax Inspection of the Azerbaijan Republic.
 In individual cases, for banks with satisfactory economic performance, National Bank, on its discretion, may increase above indicated limit of 10 000 US dollars.
 After the commodities have been brought into the Republic or services have been rendered. In such cases and also on execution of transfers listed in sub-clause 3.1 (a) of these Regulations, note about payment shall be made on the original (on the front side) of import contract and customs declaration. Said note shall be certified by the signature of official and stamp of the bank, copies of said documents will be kept at the bank. If the contract is on rendering some service, instead of import customs declaration, acceptance certificate on rendered service will be submitted to the bank.
 As per the import contracts concluded between the consignees and the consignors, cost of commodities will be paid only by organisation receiving commodities (consignee). Third parties may make payments under the contracts (including those based on agreements on co-operation) only by individual permits of National Bank. If the contract envisages payment of money due to the consignor, to bank account of any third party, such payments are permitted;
· transfers under re-export and agency operations. When purchasing and re-selling commodities from one foreign country to another, the residents may pay cost of commodities only after receipt of money from the country-buyer;
· return money under non-executed export contracts;
· payment for education and medical treatment abroad, and also financial assistance for these objectives rendered to the citizens of the Republic. For these objectives each resident of the Azerbaijan Republic may transfer once a year up to 10 000 US dollars (or equivalent sum in other currency) intended for physical person;
· payment for subscription to foreign periodical publications. For these objectives each resident of the Azerbaijan Republic may transfer once a year up to 1 000 US dollars, intended for physical person, and for legal entity - up to 3 000 US dollars (or equivalent sum in other currency);
· transfers to close relations of residents living abroad For these objectives each resident of the Azerbaijan Republic may transfer once a year up to 10 000 US dollars (or equivalent sum in other currency);
·  pensions paid outside the Azerbaijan Republic, alimonies and other transfers made based on decisions of legal bodies, transfers for payment of legal, arbitration costs, notary fees, other administrative costs;
· taxes, duties and fines paid outside the Republic based on existing legislation;
· transfers addressed to branches and representations of residents of the Azerbaijan Republic in foreign countries, and also subsidiaries and subordinate enterprises (when relevant decision has been taken), and also transfers from these enterprises to head companies;
· transfers made by legal entities established in the Azerbaijan Republic in order to pay dividends to foreign constitutors, on condition that relevant legislation is observed;
· moneys which were previously transferred or brought to the Republic in cash. In such cases residents may freely transfer money outside the Republic, on condition that extract from personal account has been submitted, confirming money transfer to the Republic, or customs declaration confirming that money have been brought to the Republic in cash. 
· transfers aimed to compensation of credits taken from foreign banks and interest thereon. In such cases residents shall submit to the bank original of credit agreement, reference from Main State Tax Inspection confirming payment of relevant taxes, originals of other documents confirming use of said resources within the Republic, or import of commodities or services to the Republic at the expense of these moneys, and then after accomplishment of transfers bank copies of these documents are left at the bank. If credit attracted by resident was used outside the Republic, then individual permit of National Bank will be required for transfer aimed to compensation of said credit or interest thereon;
·  transfers aimed to compensation of financial aid received from foreign enterprises and organisations, other debts and interest thereon. In such cases residents shall submit to the authorised bank documents specified in sub-clause 3.2 (l) of these Regulations, and authorised bank, in turn, shall, on its own behalf, submit to National Bank application with enclosed copies of said documents. If there are no doubts in soundness of this operation, National Bank may give permit on its implementation;
· operations other than those specified above, if they are sound, can be implemented based on individual permits of National Bank.
If transfers listed in sub-clauses 3.2d, 3.2e, 3.2f, 3.2g, 3.2h and 3.2i of these Regulations are made by physical persons, the customer shall fill in and submit to the bank application form which is shown in Supplement 1 to these Regulations. This application will be kept in the bank together with copies of all confirmation documents (agreements, letters, invoices, etc.).
If the operation is sound, sums exceeding limits specified in sub-clauses 3.2d, 3.2e, 3.2f and 3.2g of these Regulations may be transferred on permit of National Bank issued based on application of respective bank. Application for receiving permit shall be submitted complete with all confirming documents.
To keep control over such transfers, special registration book shall be kept in the bank, with the following information:
· name and requisites of the person making transfer (passport No for physical persons);
· aim and destination of transfer;
· transferred sum;
· other relevant information.
3.5 National Bank of the Azerbaijan Republic allows to carry on operation if there is no doubt in its soundness.

4. Drawing foreign currency in cash from the accounts of residents of the Azerbaijan Republic 
4.1 Drawing foreign currency from the accounts of residents may be done without any restrictions, except the following:
· loans (advance money);
· if so specified in import contract, 50 000 US dollars in cash may be paid under each contract (or equivalent sum in other currency). To pay cash above this sum, individual permit of National Bank is required.
If the resident withdraws cash from accounts of legal entities and physical persons who carry out business activity without establishment of legal entity, documents confirming destination and aims of use of resources should be submitted to authorised banks.
Authorised bank may pay money after submitted documents are checked. 

5. Transfers from bank accounts of non-residents of the Azerbaijan Republic
5.1 Within the Republic:
a) transfers to subsidiaries, representations of residents or other non-residents on the territory of the Azerbaijan Republic, or some entity authorised by other non-resident, for commodities imported and sold in the Republic, and services rendered in the Republic or imported to the Republic;
· participation in the ownership funds of residents of the Azerbaijan Republic based on constituent documents;
·  donations, social assistance and sponsorship;
· placement of deposits in the authorised banks of the Azerbaijan Republic;
· conversion into manats and other currency;
· payment of dividends to constitutors;
· repayment of credits and interest on them;
· currency accounts opened for these residents in other authorised banks;
· sound operations, other than specified above, may be carried out by individual decisions of National Bank.
5.2 Outside the Republic:
a) money transferred for commodities brought into the Republic under the import contracts and also services rendered in the Republic by other non-residents or imported thereto. This operation may be accomplished as follows:
· After the commodities have been brought into the Republic or services have been rendered. In such cases and also on execution of transfers listed in sub-clause 5.1 (a) of these Regulations, note about payment shall be made on the original (its front side) of import contract and customs declaration. Said note shall be certified by the signature of official and stamp of the bank, copies of said documents will be kept at the bank. If the contract is on rendering some service, instead of import customs declaration, acceptance certificate on rendered service will be submitted to the bank.
 As per the import contracts concluded between the consignees and the consignors, cost of commodities will be paid only by organisation receiving commodities (consignee). Third parties may make payments under the contracts (including those based on agreements on co-operation) only by individual permits of National Bank. If the contract envisages payment of money due to the consignor, to bank account of any third party, such payments are permitted;
 b) money transferred earlier or brought into the Republic in cash. In such case non-residents may transfer money from the Republic without any restriction, provided that they submit extract from personal account, confirming transfer of money to the Republic, or customs declaration confirming that cash has been brought into the Republic;
 Repatriation of foreign investments into the Republican economy. By «foreign investments» we shall mean activity envisaged by the laws of the Azerbaijan Republic «On investment activity» and «On protection of foreign investments».
 c) Foreign investments may be repatriated without any restrictions on condition that confirming documents are presented (customs declaration confirming that cash has been brought into the Republic, or extract from personal account confirming that money have been invested into specific projects). Besides, after relevant taxes and duties have been paid, foreign investors are permitted to transfer abroad profits and other sums received legally as a result of investing, including compensations and reimbursement of losses;
· in all other cases individual permit of National Bank is required.

6. Drawing foreign currency in cash from the accounts of non-residents of the Azerbaijan Republic 
 Drawing foreign currency from the accounts of non-residents may be done without any restrictions.

7. Implementation of currency conversion operations by residents and non-residents
 7.1. Residents and non-residents nay convert currency applying to authorised banks, as follows:
· through Baku interbank currency exchange (BMVB);
· at controlled interbank currency market (RMVR);
· in the bank itself, within the limits specified by National Bank.
7.2 Residents and non-residents may convert cash on their accounts through exchange bureau operating under control of authorised banks.
7.3 Residents and non-residents may buy foreign currency at the Baku interbank currency exchange (BMVB) with the objectives specified in clauses 3 and 5 of these Regulations, and also for payment of travel expenses and representation money. 
7.4 To convert currency at BMBV, residents and non-residents shall submit applications to authorised banks in accordance with form enclosed as Supplement 2 to these Regulations.
7.5 When purchasing foreign currency for objectives specified in clauses 3 and 5 of these Regulations, or other objectives, through the authorised bank residents and non-residents shall submit to the bank, besides application, the following documents:
· original and copy of the contract being a basis for payment of the cost of commodities, work and services. Original of the contract will be returned the customer and copy - kept by the bank;
· copy of invitation letter, estimate of expenses or other confirming documents for payment of travel expenses and representation money and other expenses;
· confirming document of crediting bank for compensation of credits in foreign currency;
· for other objectives - document explaining intention of purchase of foreign currency.
7.6.  After application and confirming documents have been checked, banks summarise all applications of the customers for purchase of foreign currency and submit joint application to BMVB; after the arrival of purchased currency to the bank these money are allocated among the currency accounts of all applicants.
7.7. When residents and non-residents apply to authorised banks with the objective to sell foreign currency, no additional documents are required.
7.8. Bank fee for conversion operations are taken based on mutual agreement with the applicant.

8. Functions of the authorised banks as exchange brokers
8.1.Authorised banks of the Azerbaijan Republic being exchange brokers, within the limits of their authority carry out control over the operations with foreign currency, implemented by residents and non-residents of the Azerbaijan Republic, requirements of existing legislation and also normative acts of National Bank.
8.2.Authorised banks are responsible for violations or mistakes made by them when carrying on operations specified in these Regulations, and also in accordance with article 18 of the Law of the Azerbaijan Republic «On exchange control» and article 35 of the Law of the Azerbaijan Republic «On National Bank of the Azerbaijan Republic».

9. Control of National Bank of the Azerbaijan Republic over observance of these Regulations
9.1. In accordance with the Laws of the Azerbaijan Republic «On exchange control» and «On National Bank of the Azerbaijan Republic» National Bank of the Azerbaijan Republic, within the limits of its authority, carries out control over observance of these Regulations by the banks, and also by residents and non-residents during operations with foreign currency.
9.2. If, in the course of operations specified in these Regulations and carried out by authorised banks, National Bank reveals some doubtful facts, it will have the right to request additional documents or explanations, and - if required, to carry out audit in the authorised banks. If necessary documents or data are not submitted, National Bank may stop all operations with correspondent accounts of the authorised bank.
9.3. If National Bank reveals violations of these Regulations, it could apply the following sanctions to authorised banks:
· to suspend operations, to request return of resources, etc.;
· to impose penalties on banks;
· to deprive banks of the right to carry on some banking operations, specified in the license of National Bank;
·  to recall licenses on implementation of operations with foreign currency granted to banks, or to recall completely banking licenses.
9.4. If National Bank reveals that operations implemented by residents and non-residents, and by authorised banks are in conflict with these Regulations or legislation of the Republic, in specific important cases materials may be submitted to juridical bodies.

10. Conclusions 
10.1 Authorised banks of the Azerbaijan Republic are responsible for acquaintance of authorised banks and interested residents and non-residents with these Regulations.
10.2. These Regulations come into force from the date of their signing. 
10.3. Temporary Regulations of National bank dated 3 May, 1997 No 87 shall be regarded null and void.
Chairman of the Board of National Bank of the Azerbaijan Republic
E.S. Rustamov
«____» ____________ 1997

Supplement 1
Application for transfer from accounts of residents outside the Republic
Owner of the account ________________________________________________________
(surname, name, middle name)
__________________________________________________________________________
 (address)
Please, transfer _____________________________________________________________
(sum and currency)
from my account No ____________________________________________ in your bank.
(Name and requisites of beneficiary)
Objective of transfer:
( ) Payment for education (invoice and letter from educational institution enclosed)
( ) Payment for medical treatment (invoice and letter from medical organisation enclosed)
( ) Payment for participation in the conference (letter and invitation enclosed)
( ) Payment for subscription to periodical publication (invoice enclosed)
( ) Other objectives (explain) _____________________________________________________________________
_________________________________________________________________________
Herewith I confirm, that all presented documents are true, and I will bear responsibility in accordance with legislation of the Azerbaijan Republic. Besides, I confirm that this is (my first transfer) (I transferred earlier)
__________________________________________________________________________
(sum, objective and aim of transfer)
through __________________________________________________________________________
__________________________________________________________________________
 (name of the bank)
Please, write off all expenses from the account No _______________________________
Signature  Date «____» _________ 199 __
 Supplement 2
Application for purchase and sale of foreign currency
Organization _______________________________________________________________
Address ___________________________________________________________________
Phone __________________ Fax ____________________ Telex _____________________
Name, middle name and surname of employee responsible for deal _________________ 
__________________________________________________________________________
Please buy/sell on our behalf
__________________________________________________________ (sum and currency)
Purchased currency will be used for the following objectives _______________________
__________________________________________________________________________
__________________________________________________________________________
Please, write off from our account ¹ _______ in your bank cost of purchased/sold currency and commission fee in a sum of __________ %.

Name of purchased/sold currency Sum of purchased/sold currency Maximum/minimum exchange rate

Application is valid until __________________________
Director _______________________________________
Chief Accountant ______________ Date ___________________
Seal
 National Bank of the Azerbaijan Republic
Deputy Chairman of the Board
25 July, 1997
No 05/×Á-636
To all banks of the Azerbaijan Republic
Herewith National Bank is forwarding to you «Regulations on procedures with foreign currency accounts of residents and non-residents of the Azerbaijan Republic in authorised banks of the Azerbaijan Republic». These Regulations come into force from 28 July, 1997 and at the same time «Temporary regulations on procedures with foreign currency accounts of residents and non-residents of the Azerbaijan Republic» dated 3 May, 1997 No 87 shall be regarded null and void. Be also advised that joint instruction of National Bank of the Azerbaijan Republic and Main State Tax Inspection on repatriation of investments by non-residents is being prepared.
We would also like to inform you that before relevant normative document of National Bank of the Azerbaijan Republic is issued, authorised banks will be carrying operations on non-resident crediting based on agreement of National Bank.
In your operations you should follow the above instructions.