The National Anti-Corruption Bureau of Ukraine (NABU) is unlikely to be able to establish how large sums of foreign currency cash used by those involved in the Midas case entered Ukraine
“Midas,” so it proposes to introduce a special form of accounting, said the head of the NABU detective unit, Alexander Abakumov, who is leading the case.
“This is the second time we have encountered such a large amount of money that arrived in Ukraine in packages from the US Federal Reserve Bank. And for the second time, we will obviously find ourselves in a situation where we will not get an answer to the question of how they got into Ukraine,” he said at a meeting of the Temporary Investigation Commission (TIC) on Economic Security chaired by People’s Deputy Yaroslav Zheleznyak (Voice) in Kyiv on Monday.
According to him, the US Federal Reserve System records who it sells these funds to, but in Europe, while in Ukraine no one is doing this.
“There is a proposal to the People’s Deputies to introduce a form of accounting for the import of such amounts of cash into Ukraine, to whom they are sold, and this, in fact, will be a great contribution to preventing such situations,” the NABU representative concluded.
Deputy Head of the National Bank of Ukraine Dmytro Oliynyk thanked him for this proposal.
“We will consider it, and I will report back,” he said at the meeting of the Verkhovna Rada Committee.
Zheleznyak also confirmed his readiness to consider this proposal in the Rada.
He recalled that specifically in the case of Operation Midas, we are talking about the so-called “white” (and not new “blue”) dollars found in the case files, in Federal Reserve packaging, totaling about $4 million.
Oliynyk stated that Ukraine currently does not have a unique registry that would allow the barcode and FRB packaging number to be verified and the origin of these banknotes in Ukraine to be determined.
“Regarding how the bills are imported in general. Currently, there are eight banks that import dollars and euros into Ukraine. Some of them use them only for their own purposes, while others sell them to banks and other participants in the financial market,” said the National Bank representative, describing the current state of cash currency imports.
According to him, billions of dollars are imported into Ukraine, and it is impossible to single out a specific million without a registration system.
“Plus, imports are not only taking place during the war, they have been happening constantly: old banknotes are being taken out, new ones are being brought in, and it is impossible to say for sure where this million was, whether it was in a bank, on the gray market, or in some collection company or exchange office,” Oliynyk stated.
He said that the National Bank had begun collecting information on the system in order to summarize how banks trade currency among themselves and who uses it for their own purposes. “But we are talking about transactions worth billions of dollars. It is difficult to single out a small amount,” the deputy chairman emphasized once again.
In January-October 2024, banks imported the equivalent of $12.88 billion in cash currency to Ukraine, which is 81.4% more than in the same period last year, according to statistics from the National Bank of Ukraine (NBU). The import of cash currency in the first ten months of 2024 is a record high since 2013, the only other record high was in the first 10 months of 2012, when the equivalent of $16.81 billion was imported. In particular, in October, banks imported the equivalent of $1.68 billion to Ukraine, compared to $1.30 billion in September and $1.09 billion in September.
According to the statistics, the US dollar and euro accounted for 68.3% and 31.6% of all imported cash in October, respectively, and 73.7% and 26.1% over the past 10 months.
Deliveries of dollars in October increased slightly compared to September, from $1.08 billion to $1.15 billion, while imports of euros almost doubled, from $229.6 million to $531.7 million.
As reported, since the beginning of 2024, the dollar has risen in price by 9.2%, or UAH 3.50, to UAH 41.5035/$1 at the official exchange rate, and by 13.5%, or UAH 4.93, since the National Bank switched to managed flexibility on October 3, 2023. Meanwhile, since the beginning of this year, the cash dollar has risen in price by about UAH 2.93 when buying to UAH 41.68/$, and by about UAH 2.33 when selling to UAH 41.75/$.
The National Bank of Ukraine has allowed banks and non-bank financial institutions to sell additional cash currency in the amount of their balances as of April 13, 2022, starting from September 16, which it believes will help level the difference between the cash and non-cash exchange rates.
“This helps to increase the stability of the foreign exchange market and stabilize exchange rate expectations,” the NBU said in a post on its website on Friday evening, without specifying how much additional supply it was talking about.
The NBU reminded that currently banks and non-bank financial institutions can sell cash currency in the amount of its purchase exceeding the volume of its sales for the period from April 13, 2022, plus 120% of the volume of non-cash currency purchases from individuals from April 13, 2022.
It is noted that the NBU also allowed enterprises with a 100% state share to transfer funds abroad in order to fulfill obligations to a non-resident under a loan or credit that has been restructured on terms agreed by the government. In addition, other payments related to the servicing of such restructured obligations are allowed.
“Such changes will contribute to the proper completion of the restructuring of external debt by state-owned institutions,” the regulator said.
Another easing, according to the release, was the expansion of the list of medical services for which the population can make cross-border transfers.
“Rehabilitation services, as well as services for the purchase of prostheses and their components, installation, maintenance and repair of prostheses, have been added to the relevant list. This is important for restoring the health of people with disabilities, including combatants in need of prosthetics,” the NBU said.
The above-mentioned mitigations were introduced by the Resolution of the Board of the National Bank No. 115 dated September 15, 2023, the release said.
Commercial banks will take into account not 100%, but 120% of the volume of non-cash currency purchases from the population starting April 21 when calculating the amount of cash foreign currency they can sell in the foreign exchange market, starting April 13, 2022.
“The National Bank has consistently taken steps to minimize the multiplicity of exchange rates. This contributes to the stability of the currency market and improves exchange rate expectations. For the same purpose, the NBU is expanding the ability of banks to carry out transactions for the sale of foreign currency in cash to the population,” the National Bank explained its decision on its website on Thursday evening.
He noted that the relevant changes are aimed at preserving favorable conditions in the foreign exchange market.
The NBU specified that the corresponding changes are stated in the decision № 53 as of April 20.
As reported, the volume of non-cash currency purchases by banks declined to $300.4 mln in March from $462.1 mln in February and $523.9 mln in January. Hryvnia appreciation at the cash market by 1.15 UAH in February, and in March by another 1.2 UAH – to 37.75 UAH/$1, with official rate 36.57 UAH/$1, reduced interest in buying non-cash currency by placing it on deposit for at least three months.
The volume of non-cash currency sales by population in March slightly increased – to $153.3 mln from $123.1 mln in February, returning to the level of January.
As for cash currency, its purchase and sale increased compared to February: purchase – from $1.185 billion to $1.512 billion, sale – from $1.082 billion to $1.235 billion.
At the cash market in April, the hryvnia, after strengthening to 37.2 UAH/$1, has weakened to 38 UAH/$1 by now.
