The exchange rate of
the Central Bank

Other currency

Ratio of precious metal 1 (one) ounce of turkmen manat

  GOLD
  SILVER
  PLATINIUM
  PALLADIUM

LAW OF TURKMENISTAN on foreign exchange regulation and control in foreign economic relations

This Law shall establish the legal foundations and principles for foreign exchange regulation and foreign exchange control in foreign economic relations; it is aimed at implementing a unified government policy on foreign exchange in Turkmenistan and supporting the sustainability of the domestic currency and the stability of the currency exchange market of Turkmenistan. It shall also define the authority of the exchange regulatory bodies and the rights and duties of residents and nonresidents and of the exchange control bodies and agents.

SECTION I.  GENERAL PROVISIONS

Article 1.  Fundamental concepts used in this Law

1. The following fundamental concepts shall be used in this Law:

1) currency:

a) monetary units in the form of banknotes, treasury bills, and coins, including those made of precious metals, that are accepted in a state (or group of states) as legal tender and are in circulation (including those that have been or are being removed from circulation but may be exchanged for monetary units that are in circulation);

b) funds in bank accounts (deposits) in monetary units that are accepted in a state (group of states), as well as funds in international monetary or payment units;

2) domestic currency – the currency of Turkmenistan, issued by the Central Bank of Turkmenistan to be used in settlements and payments;

3) foreign currency – the currency of a foreign state, as well as international monetary or payment units;

4) exchange rate – the price of a monetary unit of one state (group of states) expressed in the monetary units of another state (group of states), including:

a) the official exchange rate established by the Central Bank of Turkmenistan;

b) the market exchange rate established by exchange market participants on the basis of supply and demand;

5) reserve currency – the principal type(s) of freely convertible currency (exchangeable without limit in international transactions) that is applied by Turkmenistan in foreign trade activity;

6) currency assets:

a) domestic currency, securities, and payment documents, the face value of which is expressed in domestic currency, when transactions are performed with them between residents and nonresidents or among nonresidents;

b) foreign currency;

c) securities (stocks, bonds, and others) as well as payment documents (checks, bills, letters of credit, and others) in foreign currency;

7) exchange account – an account (deposit) in an authorized credit institution that is opened for an individual (including an unincorporated sole proprietor) or legal entity (or its branch or representative office) and is designated for recording and storing currency assets and performing foreign exchange transactions;

8) foreign exchange transactions:

a) transactions involving the transfer of property rights and other rights to currency assets, as well as the use of currency assets as a means of payment;

b) the import and export of currency assets into and from the customs territory of Turkmenistan;

c) the transfer of currency assets from an account (deposit) opened outside the borders of Turkmenistan into an account (deposit) of that same entity opened within Turkmenistan, or from an account (deposit) opened within Turkmenistan into an account (deposit) of that same entity opened outside the boundaries of Turkmenistan;

 

9) residents:

a) individuals (including unincorporated sole proprietors) who permanently reside within Turkmenistan or are temporarily located outside Turkmenistan, with the exception of citizens of Turkmenistan who have documents granting them the right to reside in a foreign state, issued under the laws of that state;

b) individual foreign citizens and stateless persons (including unincorporated sole proprietors) who have documents granting them the right to reside in Turkmenistan, issued in accordance with the laws of Turkmenistan;

c) legal entities created pursuant to the laws of Turkmenistan and their branches and representative offices, located within and outside Turkmenistan;

d) diplomatic missions and consular institutions of Turkmenistan and other official missions of Turkmenistan located outside Turkmenistan, as well as permanent missions of Turkmenistan attached to intergovernmental, interstate, and international organizations;

10) nonresidents:

a) individuals who are not residents pursuant to item 9, subitems “a” and “b” of this part;

b) legal entities, created pursuant to the laws of foreign states, that are located outside Turkmenistan;

c) organizations that are not legal entities created pursuant to the laws of foreign states and are located outside Turkmenistan;

d) branches, representative offices, and other autonomous subdivisions of the nonresidents indicated in subitems “b” and “c” of this item that are located within Turkmenistan;

e) diplomatic missions and consular institutions of foreign states that are accredited in Turkmenistan, and permanent missions of such states attached to intergovernmental, interstate, and international organizations;

f) foreign states and their administrative/territorial units;

g) intergovernmental, interstate, and international organizations and their branches and permanent representative offices in Turkmenistan;

h) other entities not indicated in item 9 of this part;

11) authorized nonbanking credit institutions –  nonbanking credit institutions that are entitled under Turkmenistan law to perform specific types of banking transactions involving currency assets on the basis of a license issued by the Central Bank of Turkmenistan;

12) authorized credit institutions:

a) resident banks and nonbanking credit institutions created pursuant to Turkmenistan law, entitled to perform any or specific types of banking transactions with currency assets under licenses issued by the Central Bank of Turkmenistan;

b) nonresident branches of banks and other financial institutions, created pursuant to the laws of foreign states, that are registered and active within Turkmenistan pursuant to licenses issued by the Central Bank of Turkmenistan and are entitled to perform any or specific types of banking transactions with currency assets;

13) foreign credit institutions:

a) banks and other financial institutions that are created outside Turkmenistan and are entitled to perform banking transactions under the laws of the states in which they are registered;

b) branches and representative offices of authorized credit institutions of Turkmenistan, registered and active outside Turkmenistan pursuant to the laws of foreign states, that are entitled to perform any or specific types of banking transactions;

14) authorized credit institutions – banks entitled to perform banking transactions and transactions with currency assets under licenses issued by the Central Bank of Turkmenistan;

15) currency exchange – a legal entity or autonomous subdivision thereof, created according to the laws of Turkmenistan, whose principal activity is the organization of foreign currency auctions under procedures and conditions established by the laws of Turkmenistan;

16) exchange transactions – the exchange of one currency for another –that is, the purchase and sale of foreign currency for domestic currency (conversion) or for other foreign currencies (translation), in which the exchange ratio is established through quotations or an exchange rate;

17) exchange office – a specially equipped location for conducting exchange transactions with foreign currency in cash;

18) authorized broker – a credit institution that performs commercial transactions involving the purchase and sale of currency in its own name on the instructions and at the expense of clients, pursuant to a license issued to it;

19) authorized dealer – a credit institution that engages in commercial transactions involving the purchase and sale of currency in its own name and at its own expense, pursuant to a license issued to it;

20) currency position – the ratio of a dealer’s claims (the amount of currency purchased and/or earned) to liabilities (amount of currency sold and/or spent) in foreign currency, including the dealer’s off-balance sheet transactions, which is considered closed when claims and liabilities on a specific currency are equal and open when they do not match. The latter include:

a) open short currency position – a surplus of liabilities and obligations on a sold and/or earned currency over assets and claims in that currency (the occurrence of a shortage of that currency);

b) open long currency position – a surplus of assets and claims on a purchased and/or earned currency over liabilities and obligations (a surplus of inflow on that currency over outflow, a surplus of purchases and/or earnings of the currency over sales and/or spending of it);

21) currency position limit – a guideline for the maximum open short or long currency position of authorized dealers at the end of the banking day;

22) trading credits – a deferral of export payments or a preliminary (advance) payment on imports, or an overtaking (excess) of exports over imports when mutual deliveries are made under a barter contract, carried out directly between suppliers (sellers) and recipients (buyers) of goods (work, service);

23) direct investments:

a) the ownership or acquisition by an investor of at least ten percent of the stock shares (participatory interest or contribution) in the authorized capital of an already created or newly created legal entity;

b) an investment of capital in the capital stock of a newly created branch of a legal entity;

24) international reserves of Turkmenistan:

a) refined gold ingots, foreign currency in the form of banknotes or coins, or foreign currency balances in bank accounts (deposits) outside Turkmenistan;

b) the right to purchase from the International Monetary Fund a portion of its reserves, and special drawing rights from the International Monetary Fund;

c) bonds issued or guaranteed by foreign states, central banks of foreign states, or international financial organizations, paid for in foreign currencies;

d) other assets defined by the Board of the Central Bank of Turkmenistan in coordination with the Cabinet of Ministers of Turkmenistan;

25) limit on freely available currency – an amount in the reserve currency (or its equivalent in domestic or another foreign currency), set by the Central Bank of Turkmenistan, within which one-time exchange transactions of residents and nonresidents established by this Law shall be carried out by residents and nonresidents without the application of restrictive measures.

26) banking day – a period designated by a bank for receiving and servicing clients and carrying out banking transactions;

27) exchange regulation – activities of exchange regulatory bodies to establish procedures for the circulation of currency assets, including rules governing the ownership, use, and disposition of such assets;

28) exchange control – activities of exchange control bodies and agents, designed to ensure compliance by residents and nonresidents with the requirements of laws of Turkmenistan in the area of exchange regulation and exchange control (hereinafter – ‘foreign exchange laws of Turkmenistan’);

29) exchange agreement – an agreement, arrangement, contract, or constituent agreement, including amendments as well as other documents on the basis of which and/or in fulfillment of which accounts (deposits) are opened and exchange transactions are performed;

30) export – the removal of goods (work, services) or intellectual property, including exclusive rights to them, from a customs territory to abroad without an obligation of return importation upon the sale of the goods (work, services) by a resident to a nonresident. The fact of export shall be recorded at the time goods cross the customs border of Turkmenistan or services or rights to intellectual property are provided;

31) import – the introduction of goods (work, services) or intellectual property, including exclusive rights to them, into a customs territory from abroad without an obligation of return export upon the sale of goods (work, services) by a nonresident to a resident. The fact of import shall be recorded at the time goods cross the customs border of Turkmenistan or services or rights to intellectual property are provided;

Article 2. Foreign exchange law of Turkmenistan

1. The foreign exchange law of Turkmenistan shall be founded on the Constitution of Turkmenistan and shall consist of this Law and other legal regulatory acts of Turkmenistan governing matters of exchange regulation and exchange control.

2. If an international agreement of Turkmenistan establishes rules other than those contained in this Law, the rules of the international agreement shall apply.

Article 3. Scope of this Law

1. This law shall extend to residents and nonresidents who perform exchange transactions within Turkmenistan, as well as to residents who perform exchange transactions outside Turkmenistan.

2. The provisions of this law shall be applied with allowance for particularities concerning the conduct of exchange transactions established by tax laws of Turkmenistan, the Law of Turkmenistan “On Hydrocarbon Resources”, and other legal regulatory acts of Turkmenistan.

3. This Law shall be applied to relationships arising after it enters into force, except where expressly stipulated by this Law.


Article 4.  Principles of government policy in the area of exchange regulation and exchange control

The principles of government policy in the area of exchange regulation and exchange control shall be:

1) the use of market mechanisms when implementing government policy in the area of exchange regulation;

2) protection of the rights and economic interests of residents and nonresidents when performing exchange transactions;

3) a unified system of exchange regulation and exchange control;

4) the inadmissibility of unwarranted interference by the exchange control body in foreign exchange transactions of residents and nonresidents.

SECTION II.  FOREIGN EXCHANGE REGULATION

Chapter 1.  Exchange regulatory bodies. Principal methods and means of exchange regulation

Article 5.  Exchange regulatory bodies

1. The exchange regulatory bodies in Turkmenistan shall be the Cabinet of Ministers of Turkmenistan and the Central Bank of Turkmenistan.

2. The Cabinet of Ministers of Turkmenistan shall:

1)  determine government policy in the area of exchange regulation;

2) issue legal regulatory acts of Turkmenistan in the area of exchange regulation;

3) exercise other functions in the area of exchange regulation.

3. The Central Bank of Turkmenistan shall:

a) license the banking activities of credit institutions that are authorized to carry out banking transactions and dealings with currency assets;

b) define procedures for the circulation of currency assets within Turkmenistan, including the conduct of exchange transactions by residents and nonresidents;

c) with the limits of its competency, adopt legal regulatory acts of Turkmenistan in the area of exchange regulation, binding upon residents and nonresidents;

d) set the official exchange rates of foreign currencies to the national currency;

e) establish forms for recording and reporting exchange transactions and procedures, as well as timeframes for their submission, to be binding upon residents and nonresidents;

f) establish a procedure for residents and nonresidents to submit information on exchange transactions they carry out, for purposes of compiling the Balance of Payments of Turkmenistan;

g) exercise other functions in the area of exchange regulation.

4. Residents and nonresidents shall be entitled to perform exchange transactions, open accounts (deposits), and conduct transactions on accounts (deposits) without restrictions unless the exchange regulatory bodies have established a procedure for performing exchange transactions or a procedure for the use of accounts (deposits) pursuant to exchange law.

5. The Cabinet of Ministers of Turkmenistan and Central Bank of Turkmenistan shall perform all types of exchange transactions regulated by this law without restriction.

Article 6. Principal means and methods of exchange regulation

1. The principal methods of exchange regulation shall be:

1) licensing of banking activities involving currency assets;

2) registration of exchange transactions and accounts (deposits);

3) notification of exchange transactions and accounts (deposits);

In specific cases, the registration of exchange transactions and/or conduct of an exchange transaction with notification may be replaced by a transaction certificate.

2. The application of different methods of exchange regulation to a single type of exchange transaction shall not be allowed.

3. Retail trade and the provision of services for cash within Turkmenistan shall be carried out by residents and nonresidents exclusively in domestic currency, except in cases stipulated by exchange laws of Turkmenistan, the Law of Turkmenistan “On Hydrocarbon Resources”, and acts of the President of Turkmenistan.

4. No permit from the exchange regulatory bodies shall be required for residents and nonresidents to engage in retail trade or provide services for foreign currency in cash under the “duty-free store” customs regime, nor for maritime, inland water, air, rail, or highway conveyances engaged in international transportation.

5. The exchange regulatory bodies shall not be allowed to establish a requirement for residents and nonresidents to obtain individual permits to conduct exchange transactions, unless otherwise stipulated by laws of Turkmenistan.

6. The principal means of exchange regulation shall be:

1) repatriation by residents of domestic and foreign currency;

2) surrender by residents of a portion of their foreign exchange earnings;

3) residents’ contributions to the foreign exchange reserve of Turkmenistan.

Article 7. Licensing of banking activities involving banking transactions and currency asset contracts

The banking activities of credit institutions that are authorized to conduct banking transactions and currency asset contracts shall be licensed by the Central Bank of Turkmenistan, following the procedure established by the laws of Turkmenistan.

Article 8. Registration of exchange transactions and accounts in foreign credit institutions

1. Exchange transactions involving the movement of capital between residents and nonresidents, where the total amount of the exchange agreement exceeds the limit on freely available currency, as well as the opening by residents of accounts in foreign credit institutions, shall be subject to registration following the procedure established by the foreign exchange laws of Turkmenistan.

Registration shall be understood as the registration of an exchange agreement and the subsequent submission of information on exchange transactions performed and amendments to the exchange agreement.

2. The following shall be subject to registration:

1) exchange transactions involving the movement of capital between residents and nonresidents in which trade credits are granted, direct investments made, loans or bank credits are extended, or cash assets are attracted and placed in accounts or deposits for trust management;

2) the opening of accounts and deposits in foreign credit institutions by resident legal entities (branches and representative offices thereof).

3. To register an exchange transaction involving the movement of capital between a resident and nonresident, the resident shall submit the following to the authorized credit institution servicing its foreign exchange account:

1) an application to register an exchange transaction, containing information on the amount of the exchange agreement;

2) a copy of a passport or other identity document (for individuals);

3) a copy of the individual’s certificate of registration and corresponding license (for non-incorporated sole proprietors);

4) a copy of an abstract from the Unified State Register of Legal Entities (for legal entities);

5) a copy of a decision of the Cabinet of Ministers of Turkmenistan approving an exchange transaction involving the movement of capital (for a state-owned legal entity or its branch or representative office);

6) a copy of the record of a decision by the owner(s) of a legal entity to carry out an exchange transaction involving the movement of capital (for a non-state-owned legal entity or its branch or representative office);

7) a copy of the exchange agreement;

8) copies of documents confirming the creation, fulfillment, and termination of obligations under the exchange agreement.

4. To register an account being opened in a foreign credit institution pursuant to part 2, item “2” of this Article, a resident legal entity shall submit the following to the authorized credit institution servicing its foreign currency account:

1) a registration application, containing information with the name of the country and the full name of the credit institution in which the account is being opened;

2) a copy of an abstract from the Unified State Register of Legal Entities;

3) a copy of the legal entity’s certificate of state registration;

4) a copy of a decision of the Cabinet of Ministers of Turkmenistan approving the opening of an account in a foreign credit institution (for a state-owned legal entity or its branch or representative office);

5) a copy of a constituent agreement and the minutes of a general meeting of the founders, including a record of the decision of the owner(s) of that legal entity to open an account in a foreign credit institution (for a non-state-owned legal entity or its branch or representative office);

6) a copy of the charter (regulation) of a resident legal entity (or its branch or representative office).

5. The authorized credit institution shall be entitled to require that a resident submit the originals of the documents indicated in parts three and four of this Article, and of other documents for comparison with copies confirming the resident’s ability to fulfill the terms of the exchange agreement. Copies of these documents shall be certified by the signature and seal (if any) of the resident itself.

6. Applications to register an exchange transaction shall be reviewed by the authorized credit institution within ten banking days from the day they are received.

At the end of the indicated period, the authorized credit institution shall be required to either carry out  the registration (issue a registration document) or present a reasoned denial of registration.

7. A denial of registration shall be allowed only in the following cases:

1) failure to submit the complete set of documents required for registration;

2) failure of submitted documents to meet requirements of the laws of Turkmenistan;

3) discovery of inaccurate information in submitted documents;

4) the nonresident with whom an exchange agreement is to be entered has a delinquent debt owed to residents on exchange transactions involving the movement of capital, where the total amount of the exchange agreement exceeds the limit for freely available currency;

5) an account was open in a foreign credit institution as of the day the resident applied for registration;

6) the imposition, pursuant to the laws of Turkmenistan, of a prohibition (restrictions) on exchange transactions involving the movement of capital between residents and nonresidents, or a prohibition (restrictions) on the opening of accounts and deposits by residents in foreign credit institutions.

A denial of registration on other grounds, including on the grounds that the opening of an account in a foreign credit institution or the performance of exchange transactions would be economically unviable, shall not be permitted.

8. A denial of registration may be appealed following judicial procedure.

9. When closing an account in a foreign credit institution, a resident legal entity shall submit a written notice of the account closure to the authorized credit institution servicing its foreign currency account, indicating the full name of the foreign credit institution in which the account is being closed and written confirmation of the account closure from the foreign credit institution.

Article 9. Notification of exchange transactions and accounts in foreign credit institutions

1. Exchange transactions involving the movement of capital between residents and nonresidents, where the total amount of the exchange agreement exceeds the limit for freely available currency, as well as the opening or closure by residents of accounts in foreign credit institutions, shall be carried out with notification following the procedure established by the exchange laws of Turkmenistan.

Notification shall be understood as the registration of an exchange agreement and the subsequent submission of information on completed exchange transactions and amendments to the exchange agreement.

2. The following shall be subject to notification:

1) exchange transactions involving the movement of capital between residents and nonresidents, entailing an authorized capital share of no more than ten percent, as well as the acquisition of title to real property abroad or exclusive rights to items of intellectual property;

2) the opening (closure) of accounts and deposits in foreign credit institutions by resident non-incorporated sole proprietors.

3. Upon entering into an exchange agreement and performing an exchange transaction under that agreement, residents shall notify the authorized credit institution servicing their foreign currency accounts no later than ten banking days from the day the exchange transaction is completed.

Article 10. Transaction certificate

1. For purposes of ensuring the accounting and reporting of exchange transactions, a transaction certificate shall be prepared to record information on foreign economic transactions.

2. The form of the transaction certificate, rules and conditions for completing it, and the types of exchange transactions requiring the completion of a transaction certificate, shall be established by the Central Bank of Turkmenistan.

Article 11. Repatriation by residents of domestic and foreign currency

1. Unless stipulated otherwise by laws of Turkmenistan, domestic and foreign currency owed to residents under foreign trade contracts with nonresidents is to be repatriated – entered into the residents’ accounts in authorized credit institutions.

2. Residents shall be required to ensure the following within the time limits stipulated by the terms of their foreign trade contracts with nonresidents:

1) receipt from the nonresident of the domestic or foreign currency owed to the resident under the terms of an export contract;

2) the return of domestic or foreign currency that was transferred by the resident to the nonresident by way of settlement under an import contract, in the event of nonperformance and/or incomplete performance of obligations by the nonresident.

3. Residents shall be entitled not to deposit domestic or foreign currency into their accounts in authorized credit institutions:

1) when they deposit exchange earnings into their accounts in foreign credit institutions following the procedure established by this Law;

2) when performing a setoff of mutual claims on obligations between residents and nonresidents;

3) in other cases stipulated by laws of Turkmenistan.

4. Pursuant to this Law, when amounts of domestic or foreign currency are not received into residents’ accounts in authorized credit institutions during settlements on export and import contracts, the obligation to deposit funds to the residents’ benefit shall be considered partially or fully discharged if:

1) the nonresident’s obligation is discharged by offsetting it with a similar counterclaim;

2) the nonresident’s obligation is discharged by replacing the original obligation existing between them with another obligation between the same entities that stipulates a different object or means of discharging it;

3) the right of claim against the nonresident is assigned to another entity;

4) an insurance payout is received following the occurrence of an insured incident under an insurance contract covering the risk of nonperformance of obligations by the nonresident.

5. For purposes of ensuring residents’ compliance with the repatriation obligation, a transaction certificate shall be completed for mutual settlements between residents and nonresidents under export and import contracts where the amount of the exchange agreement of each of them exceeds the limit for freely available currency.

At the same time, a transaction certificate shall not be completed for export and import contracts where the amount of the exchange agreement does not exceed the limit for freely available currency as of the date the exporter and importer entered into the exchange agreement.

6. In the export and import contracts they execute, residents shall be required to indicate specific due dates for the discharge of obligations by nonresidents.

7. The provisions of this Article shall not extend to authorized credit institutions and currency exchanges that perform transactions in domestic and foreign currency in accordance with the laws of Turkmenistan.

Article 12.  Contributions to the foreign exchange reserve of Turkmenistan

1. In the interests of supporting Turkmenistan’s international reserves at an adequate level, a Foreign Exchange Reserve of Turkmenistan shall be formed within the Central Bank of Turkmenistan.

2. Resident state-owned legal entities (and their branches and representative offices) shall make contributions to the foreign exchange reserve from the amount of foreign currency they receive. A list of resident state-owned legal entities (and their branches and representative offices) and the amounts of contributions to the foreign exchange reserve of Turkmenistan shall be established by acts of the President of Turkmenistan.

3. The amount of foreign exchange earnings from which contributions are made to the Foreign Exchange Reserve of Turkmenistan shall include foreign exchange earnings that enter accounts in authorized and foreign credit institutions and are due to residents pursuant to contracts, as well as other types of foreign exchange earnings as defined by the Cabinet of Ministers of Turkmenistan.

4. The contribution to the Foreign Exchange Reserve of Turkmenistan shall be an absolute obligation of a resident, to be discharged by the latter independently or by the authorized credit institution servicing the resident under agreement, no later than five banking days after the day documentary identification is made of the incoming funds in foreign currency.

Article 13. Mandatory sale by residents of a portion of their foreign exchange earnings

1. After making contributions to the foreign exchange reserve of Turkmenistan, resident state-owned legal entities shall sell a portion of the foreign exchange earnings remaining at their disposal to the Central Bank of Turkmenistan for the latter to conduct currency interventions.

2. The amounts of the sale of a portion of foreign exchange earnings shall be established by acts of the President of Turkmenistan.

3. The amount of a sale of a portion of foreign exchange earnings shall include foreign exchange earnings received into accounts in authorized and foreign credit institutions that are owed to residents under contracts, with the exception of:

1) amounts in foreign currency received by the Cabinet of Ministers of Turkmenistan, executive bodies authorized by the latter, or the Central Bank of Turkmenistan from transactions and contracts performed by them within the bounds of their authority;

2) amounts in foreign currency received by authorized credit institutions from banking and other transactions they perform in accordance with the laws of Turkmenistan;

3) foreign exchange earnings of residents within the limits of the amount needed to meet the residents’ obligations under loan agreements and banking credit agreements with nonresident organizations that are agents of foreign governments;

4) The overall amount of residents’ foreign exchange earnings, before the sale of a portion of them, is to be reduced by the following expenses and other payments associated with the execution of the corresponding contracts for which settlements are carried out in foreign currency. These shall include:

1) payments for the shipping, dispatching, and insuring of freight;

2) payments of export customs duties and customs fees;

3) payments of commission fees to credit institutions;

4) amounts owed to foreign tourist companies for tourism services;

5) other transaction expenses and payments, a list of which shall be defined by acts of the President of Turkmenistan.

5. The surrender of a portion of foreign exchange proceeds shall be a resident’s absolute obligation, to be discharged by the resident independently or by the authorized credit institution servicing it under agreement, no later than five banking days after the day documentary identification is made of the incoming funds in foreign currency.

6. The sale of a portion of residents’ currency earnings shall be conducted at the official exchange rates of the Central Bank of Turkmenistan established for the day of sale.

Article 14. Nonresidents’ right to export currency assets

1. Pursuant to the laws of Turkmenistan, nonresidents shall be entitled without restriction to:

1) export currency assets previously imported into Turkmenistan;

2) receive and transfer dividends, fee earnings, and other income received on accounts (investments), deposits, loans, bank credits, securities, and other foreign exchange transactions involving the movement of capital with residents;

3) transfer surplus income received on foreign exchange transactions with residents.

2. Transfers of nonresidents’ cash funds shall be carried out pursuant to the provisions of a foreign exchange agreement. In the absence of a foreign exchange agreement or the relevant provisions thereof, transfers shall be carried out in domestic currency or any foreign currency at market exchange rates, pursuant to the rules for exchange transactions in effect on the date such transfer is made.

3. Pursuant to the foreign exchange agreement, a nonresident’s cash funds shall be transferred into bank accounts (deposits) opened in its name.

4. Transfers of cash funds into bank accounts (deposits) of third parties that are not parties to the foreign exchange agreement, be they individuals or legal entities, shall not be allowed. The above shall not apply to foreign exchange agreements stipulating the opening of a transferable letter of credit.

Chapter 2.  Foreign Exchange Transactions

Article 15.  Foreign exchange transactions between residents

1. Settlements and payments under contracts between residents within Turkmenistan shall be performed in domestic currency.

2. Foreign exchange transactions between residents within Turkmenistan shall be prohibited, with the exception of:

1) transactions involving contracts concluded between resident authorized credit institutions, including for the purchase and sale of foreign currency on currency exchanges, which they undertake either on the instructions and at the expense of their clients or on their own behalf and at their own expense;

2) transactions with currency assets between residents and resident authorized credit institutions, relating to banking transactions and contracts that authorized credit institutions are entitled to perform under licenses issued to them and/or the laws of Turkmenistan;

3) transactions involving the acquisition, sale, and/or redemption of securities, as well as the payment of fees on securities issued by residents in foreign currency and securities issued by nonresidents, on condition that the title to such securities be recorded in depositaries created pursuant to the laws of Turkmenistan and that settlements be made in domestic currency;

4) transactions involving the transfer (endorsement) of bills expressed in foreign currency to discharge monetary obligations, on condition that settlement is made in domestic currency;

5) transactions involving settlements in duty-free stores and when selling goods and providing services to passengers in vehicles en route in international travel;

6) transactions performed between brokers and clients when brokers provide services entailed in entering into and carrying out agreements with nonresidents for the transfer of goods (work, services);

7) transactions performed under agreements for international freight forwarding and carriage and freightage (charter) when a forwarding agent, carrier, and freighter provide services entailed in transporting freight into or from Turkmenistan, transit shipments of freight through the territory of Turkmenistan, or under contracts to insure the indicated freight;

8) transactions involving free transfers of money or free transmissions of currency assets for medical treatment, education, and other charitable goals;

9) transactions involving the safekeeping, donation, bequeathing, or receipt by inheritance of currency assets by individual persons;

10) transactions involving acquisitions and dispositions of single monetary units and coins by individuals for purposes of collection;

11) transactions involving compensation for travel and entertainment expenses for employees located outside Turkmenistan;

12) transactions involving compensation for expenses entailed in supporting the operations of a branch or representative office of a resident legal entity located outside Turkmenistan;

13) transactions involving the payment of wages and other types of monetary remuneration to resident individuals employed in a branch or representative office of a resident legal entity located outside Turkmenistan;

14) transactions involving compensation of expenses entailed in supporting the activities of diplomatic missions and consular institutions of Turkmenistan and other official missions of Turkmenistan located outside Turkmenistan, as well as permanent missions of Turkmenistan attached to intergovernmental, interstate, and international organizations;

15) transactions involving the payment of wages and other types of monetary remuneration to resident individuals employed in the civil service in diplomatic missions and consular institutions of Turkmenistan and other official missions of Turkmenistan located outside Turkmenistan, as well as permanent missions of Turkmenistan attached to intergovernmental, interstate, and international organizations;

16) transactions involving the performance of contracts between residents and entities that are contractors and subcontractors pursuant to the Law of Turkmenistan “On Hydrocarbon Resources”;

17) transactions associated with the payment of taxes and other compulsory payments to the State Budget of Turkmenistan where so established by tax legislation of Turkmenistan;

18) transactions involving the performance of tourism activities and activities in free trade zones and national tourism zones pursuant to the laws of Turkmenistan.

Article 16.  Foreign exchange transactions between residents and nonresidents

1. Foreign exchange transactions between residents and nonresidents, with the exception of transactions involving the transfer of property and performance of work (provision of services) within Turkmenistan, shall be performed upon agreement of the parties under a foreign exchange agreement in domestic and/or foreign currency, in accordance with the laws of Turkmenistan.

2. When a foreign exchange agreement is made between residents and nonresidents, the foreign exchange laws of Turkmenistan may establish a requirement that the reserve currency be used as the payment currency.

3. Foreign exchange transactions between residents and nonresidents involving the transfer of property and performance of work (provision of services) within Turkmenistan shall be carried out only in the domestic currency, except where provided otherwise by laws of Turkmenistan, the Law of Turkmenistan “On Hydrocarbon Resources”, and acts of the President of Turkmenistan.

4. Foreign exchange transactions between residents and nonresidents in which the amount of the exchange agreement does not exceed the limit for freely available currency shall be conducted without restrictions, except in those cases indicated in parts one through three of this Article.

5. Foreign exchange transactions involving the movement of capital between residents and nonresidents, where the amount of the exchange agreement exceeds the limit for freely available currency, shall be subject to registration pursuant to Article 8 of this Law.

Foreign exchange transactions subject to registration shall include:

1) the extension of trade credits by residents to nonresidents;

2) direct investments by nonresidents in Turkmenistan and by residents outside of Turkmenistan;

3) the extension of loans and bank credits by residents to nonresidents and by nonresidents to residents;

4) the attraction and placement of nonresidents’ funds in Turkmenistan and residents’ funds abroad in accounts (deposits) under trust management.

6. Residents shall be required to inform authorized credit institutions of foreign exchange transactions with nonresidents involving the movement of capital, where the amount of the exchange agreement exceeds the limit for freely available currency pursuant to Article 9 of this Law.

Foreign exchange transactions subject to notification shall include transactions involving the acquisition of:

1) securities, investment fund shares, derivative financial instruments, and the placement of deposits for purposes of securing an authorized capital share, on condition that the resident’s share therein does not exceed ten percent;

2) title to real property in foreign states;

3) exclusive rights to items of intellectual property.

7. Foreign exchange transactions involving the movement of capital between state-owned resident legal entities and nonresidents, carried out pursuant to parts five and six of this Article, shall be performed upon a decision by the Cabinet of Ministers of Turkmenistan.

8. The same exchange transactions involving the movement of capital between non-state-owned resident legal entities and nonresidents, carried out pursuant to parts five and six of this Article,  shall be performed upon a decision by the owners of such resident legal entities.

9. The extension of trade credits by residents to nonresidents without the corresponding security stipulated in part twelve of this Article shall be carried out for a period of time determined pursuant to the foreign exchange agreement, including:

1) on terms under which residents grant nonresidents a payment deferral when exporting goods –from the day the exported goods actually cross the customs border; and when exporting work (services) – from the day the work (services) were actually performed to the day the deferred payment actually arrives, or until the day the obligations are otherwise actually fulfilled by the nonresident;

2) in the form of a preliminary (advance) payment by residents to nonresidents when importing goods (work, services) – from the day the resident transfers cash funds to the nonresident up to the day the imported goods actually cross the customs border of Turkmenistan; when importing work (services) – up to the day the work (services) are actually performed or until the day the obligations are otherwise fulfilled  by the nonresident.

The day exported (imported) goods actually cross the customs border of Turkmenistan shall be the date indicated in the customs declaration, while the day work (services) are actually performed shall be the date indicated in the certificate of acceptance and/or certificate of acceptance and transfer of completed work (services).

The deadline for residents to extend trade credits to nonresidents without the corresponding security may be limited by the foreign exchange laws of Turkmenistan or acts of the President of Turkmenistan.

10. Missing the actual deadline for repayment or other performance of a nonresident’s obligations to a resident shall result in a suspension by the exchange control bodies and agents of all foreign trade transactions by residents with that nonresident, until the latter fully repays the resulting overdue debt.

11. A foreign exchange agreement between residents and nonresidents for export and import transactions may stipulate the basis terms of delivery (shipment) of goods, which shall be defined pursuant to international rules for the interpretation of trade terms.

12. For export and import exchange transactions that do not stipulate the granting of trade credits to nonresidents by residents pursuant to part nine of this Article, the following may serve to ensure the fulfillment of a nonresident’s obligations to a resident in mutual settlements, upon agreement of the parties:

1) a bank guarantee of a foreign credit institution, issued on behalf of the resident;

2) an irrevocable letter of credit covered by the payer on the letter of credit, on condition that the nominated bank be an authorized credit institution or a foreign credit institution;

3) a bill issued by a nonresident to a resident and guaranteed by a foreign credit institution;

4) an insurance policy or certificate issued to the benefit of a resident, covering all types of risk to an amount comprising not less than one hundred ten percent of the value of the property owed to the resident, including failure to return cash assets to the resident or the latter’s non-receipt of such assets, or failure to return or deliver goods to the resident. Requirements for insurance organizations (insurers) whose insurance policies could be recognized as a means to ensure the fulfillment of a nonresident’s obligations to a resident shall be established by the Ministry of Finance of Turkmenistan;

5) liquid collateral belonging on an ownership basis to a nonresident mortgagor or nonresident collateral guarantor within Turkmenistan, which is conveyed to the resident mortgagee to secure performance of an obligation;

6) other instruments for securing the performance of a nonresident’s obligation to a resident, provided by the laws of Turkmenistan.

The criteria that a foreign credit institution must meet shall be established by the Central Bank of Turkmenistan.

13. The conditions for mutual settlements when performing export and import foreign exchange transactions shall be defined by an exchange agreement prepared between residents and nonresidents in accordance with the foreign exchange laws of Turkmenistan, business custom, and international law.

14. In their foreign exchange transactions with nonresidents, residents shall be allowed to issue bills of exchange, checks, and other payment documents expressed in both domestic and foreign currencies, following procedures established by the Central Bank of Turkmenistan.

15. Under civil employment agreements that are entered into by residents and nonresidents, wages and equivalent payments may be paid out both in domestic and in foreign currency, including payments made:

1) by resident employers to nonresident employees;

2) by nonresident employers to resident employees.

16. Unless otherwise established by the foreign exchange laws of Turkmenistan, monetary settlements on securities transactions between residents and nonresidents shall be performed:

1) for securities issued within Turkmenistan – in domestic currency;

2) for securities issued outside Turkmenistan – in domestic currency and/or foreign currency;

17. The effect of parts one through sixteen of this Article shall not extend to foreign exchange transactions involving the movement of capital that are performed between resident authorized credit institutions and nonresidents.

The Central Bank of Turkmenistan shall be entitled to establish particular conditions for applying the requirements stipulated in this Article to banking transactions of authorized credit institutions.

18. Exchange transactions under other contracts between residents and nonresidents shall be performed without restrictions.

Article 17.  Foreign exchange transactions between nonresidents within Turkmenistan

1. Foreign exchange transactions performed in domestic currency between nonresidents within Turkmenistan shall be performed through accounts (deposits) opened in authorized credit institutions, under the procedures established by this Law.

2. Nonresidents shall be entitled to perform foreign exchange transactions among one another with securities issued by residents within Turkmenistan, in accordance with the laws of Turkmenistan.

3. Exchange transactions between nonresidents in foreign currency shall be carried out without restrictions, including transfers of foreign currency:

1) from accounts (deposits) of nonresidents in foreign credit institutions to accounts (deposits) of nonresidents in authorized credit institutions;

2) from accounts (deposits) of nonresidents in authorized credit institutions to accounts (deposits) of nonresidents in foreign credit institutions;

3) from accounts (deposits) of nonresidents in authorized credit institutions to accounts (deposits) of nonresidents in authorized credit institutions;

4. Foreign exchange regulatory bodies may introduce restrictions on the conduct of foreign exchange transactions among nonresidents within Turkmenistan only in cases where the latter have displayed unfair competition, or have entered into pricing arrangements or agreements to divide the retail markets for goods (work, services), restricting the rights of other economic entities in Turkmenistan and contravening the antimonopoly laws of Turkmenistan.

Article 18.  Imports and exports of currency assets into and from Turkmenistan

1. Procedures for importing and exporting currency assets into and from Turkmenistan shall be defined by the foreign exchange laws of Turkmenistan.

2. The customs processing of imports and exports of currency assets into and from Turkmenistan shall be carried out under the procedure established by the customs statutes of Turkmenistan.

3. The import and export of domestic and/or foreign cash money into and from Turkmenistan by resident individuals and nonresident individuals shall not be restricted, provided that the requirements established by parts four and five of this Article are observed.

4. One-time imports and exports of domestic and/or foreign cash into and from Turkmenistan by resident and nonresident individuals shall not be subject to compulsory declaration to the customs agency if the total amount of such cash at the official exchange rate does not exceed the limit for freely available currency.

5. One-time imports and exports of domestic and/or foreign cash into and from Turkmenistan by resident and nonresident individuals shall be subject to declaration at the customs office upon entry or departure, by submitting a customs declaration for the entire amount of the imported or exported domestic and/or foreign cash, if the total amount of such cash does exceed the limit for freely available currency.

The requirement of paragraph one of this part shall also extend to amounts of domestic and/or foreign currency discovered during customs inspection. The discovery of amounts of domestic and/or foreign currency during customs inspection shall not incur liability as provided by the laws of Turkmenistan.

6. It shall be prohibited for resident legal entities and nonresident legal entities, with the exception of authorized credit institutions, to perform transactions involving the importing or exporting of domestic and/or foreign cash into and from Turkmenistan.

Authorized credit institutions shall import and export domestic and/or foreign cash into and from Turkmenistan following procedures established by the Central Bank of Turkmenistan.

7. Imports and exports into and from Turkmenistan of securities in the form of payment documents (checks, bills, letters of credit, and others) and stock assets (shares, bonds, etc.), the nominal value of which is expressed in domestic and/or foreign currency, shall not be subject to declaration and shall be carried out without restriction, unless provided otherwise by statutes of Turkmenistan.

Chapter 3.  Exchange Rate and Currency Market

Article 19.  Exchange rate

1. The exchange rate shall be applied when performing exchange transactions with foreign currency and other financial instruments, the nominal value of which is expressed in foreign currency, for Turkmenistan currency and foreign currency. The exchange rate shall be determined in accordance with the foreign exchange laws of Turkmenistan.

2. For purposes of regulating the currency market of Turkmenistan, official and market exchange rates shall be applied unless foreign exchange laws of Turkmenistan establishes otherwise.

3. The official exchange rate shall be established on the basis of the average value of the market exchange rate. All types of foreign exchange transactions shall be carried out at the official exchange rate, including transactions involving the payment of tax, customs, and other mandatory payments established by the laws of Turkmenistan.

Accounting records shall be maintained and financial, statistical and other reports on foreign exchange transactions compiled using the official exchange rate.

4. The market exchange rate shall be determined based on supply and demand on the currency market of Turkmenistan, with allowance for the requirements set forth in Article 20, part six and Article 21, part four of this Law.

Swaps shall be performed at the market exchange rate.

5. Any transaction in foreign currency shall be reflected in the accounting records at nominal value and for accounting purposes shall be converted into the domestic currency at the official exchange rate in effect at the time of its completion. With each change in the official exchange rate, balances of funds that are calculated and recorded in foreign currency accounts (deposits) in domestic currency are to be recalculated without changing the nominal value of the foreign currency balances.

6. The Central Bank of Turkmenistan shall not cover risk associated with the exchange rate and shall not provide any subsidies on exchange transactions or other related actions.

Article 20.  Exchange transactions of residents and nonresidents

1. Residents and nonresidents shall purchase and sell foreign currency in Turkmenistan exclusively through authorized credit institutions and their exchange offices that are authorized brokers and/or authorized dealers for foreign currency purchase and sale transactions in cash and cashless forms.

2. Pursuant to licenses issued them and/or rights granted them by the laws of Turkmenistan and in the interests of residents and nonresidents, authorized credit institutions shall perform the following:

1) purchase and sell noncash foreign currency for Turkmenistan currency and for foreign currency for legal entities and their branches and representative offices, as well as non-incorporated sole proprietors;

2) purchase and sell, exchange (replace) cash and noncash foreign currency for the currency of Turkmenistan and for foreign currency, for individuals for purposes other than for the latter to engage in business activities.

3. When purchasing and selling, exchanging, and/or replacing foreign currency in cash in amounts that do not exceed the limit on freely available currency, the establishment of personal identification requirements shall not be allowed, except where stipulated by Turkmenistan law.

Personal identification information may be included in a document confirming the completion of an exchange transaction at the request of the individual himself or herself.

4. The purchase and sale, exchange, and/or replacement of foreign currency in cash in amounts exceeding the limit on freely available currency shall be performed only following identification of the individual.

5. Rules governing the conduct of exchange transactions shall be defined by the Central Bank of Turkmenistan and acts of the President of Turkmenistan.

6. Exchange transactions shall be carried out by authorized credit institutions on a paid basis, by introducing a difference in the exchange rates between transactions involving the purchase and sale (spread) of foreign currency, or by charging a commission fee based on the transaction amount pursuant to established rules.

The limit on the potential deviation of the foreign currency purchase or sale rate from the official exchange rate, including with allowance for commission fees, must be no greater than one percent unless established otherwise by the foreign exchange laws of Turkmenistan.

7. Authorized credit institutions shall be required to grant preference in the purchase and sale of foreign currency to resident legal entities (their branches and representative offices), as well as resident non-incorporated sole proprietors, that are carrying out projects (regardless of funding sources) in the areas of industrial production of products and commodities, agricultural products, foodstuffs, and consumer goods, including for export, and the construction of industrially and socially important facilities.

Article 21.  Interbank currency market

1. Authorized credit institutions may freely purchase and sell currency on the interbank currency market within and outside Turkmenistan, pursuant to the foreign exchange laws of Turkmenistan.

2. The interbank currency market within Turkmenistan shall consist of the exchange and off-exchange currency market.

3. Pursuant to licenses issued to them and/or rights granted them by legislative acts of Turkmenistan, authorized credit institutions shall sell and purchase foreign currency both directly in currency exchanges (on-exchange market) and through correspondent banks (off-exchange market).

4. When selling and/or buying foreign currency on the currency market of Turkmenistan, the limit on the potential deviation of the market foreign exchange rates established by players on the interbank currency market of Turkmenistan must not exceed five tenths of one percent of the official foreign exchange rates, unless established otherwise by the foreign exchange laws of Turkmenistan.

5. Currency exchanges shall provide trading space to authorized foreign currency dealers and brokers, ensure the necessary conditions to conduct exchange trading, and regulate exchange trade following the procedures established by the foreign exchange laws of Turkmenistan.

Currency exchanges shall organize and conduct exchange trading; they may not perform exchange transactions on their own behalf or at their own expense, nor engage in intermediary exchange activities not directly connected to the organization of exchange trade.

6. Limits on currency positions shall be established for authorized dealers where so provided by the foreign exchange laws of Turkmenistan.

Article 22.  Currency intervention

1. Currency intervention shall be one of the basic instruments of the monetary policy of Turkmenistan conducted by the Central Bank of Turkmenistan.

Currency intervention shall be performed for purposes of supporting a stable exchange rate and influencing the exchange rate of the domestic currency and its overall supply and demand.

2. Currency intervention shall be performed through the purchase and sale of foreign currency by the Central Bank of Turkmenistan on the currency market of Turkmenistan.

3. Foreign currency sales shall be carried out using funds formed from the surrender by residents of a portion of their foreign exchange proceeds, as well as other foreign currency purchased from individuals and legal entities.

Chapter 4.  Bank Servicing

Article 23.  Foreign currency accounts (deposits) of residents and nonresidents in authorized credit institutions

1. Residents and nonresidents within Turkmenistan shall be entitled to open foreign currency accounts (deposits) in authorized credit institutions following procedures established by the Central Bank of Turkmenistan.

2. Authorized credit institutions shall service foreign currency accounts (deposits) of residents and nonresidents on the basis of an agreement, unless established otherwise by laws of Turkmenistan.

3. Each resident or nonresident legal entity or branch or representative office thereof, and each resident or nonresident non-incorporated sole proprietor, may have a current foreign currency account opened to service its principal activity in only one authorized credit institution.

4. Authorized credit institutions shall open foreign currency accounts (deposits) without restriction for resident and nonresident individuals. Resident and nonresident individual accountholders of foreign currency accounts (deposits) may perform transactions through these accounts both personally and through an authorized party in accordance with the laws of Turkmenistan.

Article 24.  Payments and transfers on foreign ­­exchange transactions of residents and nonresidents within Turkmenistan

1. With the exception of exchange transactions carried out pursuant to Article 25 of this law, payments and money transfers on foreign exchange transactions of residents and nonresidents within Turkmenistan shall be carried out through foreign currency accounts (deposits) in authorized credit institutions, unless provided otherwise by foreign exchange transaction laws of Turkmenistan.

2. Payments and money transfers on foreignexchange transactions of residents and nonresidents within Turkmenistan shall be carried out following procedures established by the Central Bank of Turkmenistan.

3. Payments and money transfers on foreign exchange transactions of residents and nonresidents within Turkmenistan that are carried out through foreign currency accounts (deposits) in authorized credit institutions in accordance with the payment type and designation shall be subject to documentary identification, with the exception of:

1) transactions with currency assets between authorized credit institutions and their clients that are classified as banking transactions and contracts, which authorized credit institutions are entitled to perform pursuant to the licenses issued to them;

2) payments made from one foreign currency account of a legal entity to another account of that entity, as well as payments related to supporting the activities of the legal entity’s branch or representative office within Turkmenistan;

3) payments made from one foreign currency account of an unincorporated sole proprietor to another account of that person;

4) payments related to supporting the activities of diplomatic missions and consular institutions, as well as international organizations, within Turkmenistan;

5) payments and transfers between individuals;

6) transactions related to reimbursement for the business and entertainment expenses of individual employees;

7) transactions involving the payment of wages and other forms of compensation to individual employees;

8) free payments and money transfers or free transfers of currency assets for treatment, education, and other charitable purposes;

9) transactions involving the payment of taxes and other mandatory payments to the State Budget of Turkmenistan where so provided by the tax laws of Turkmenistan;

10) other payments and transfers provided for by the tax laws of Turkmenistan.

4. Reciprocal claims between residents and nonresidents regarding exchange transactions performed by them within Turkmenistan shall be examined without the participation of the servicing authorized credit institutions. Claims against an authorized credit institution concerning the performance of banking transactions shall be Addressed by residents and nonresidents to the authorized credit institution servicing them.

5. Residents and nonresidents may perform settlements through their foreign currency accounts (deposits) in any foreign currency, if necessary performing a conversion transaction at a market rate agreed upon with the authorized credit institution.

6. Incontestable payment demands in domestic currency that are presented to an accountholder through the authorized credit institution in which the resident’s or nonresident’s foreign currency account is serviced shall be executed by the authorized credit institution by selling currency assets located in its account for domestic currency, also on an incontestable basis.

7. The provisions of this Article shall not extend to transactions on contracts made between authorized credit institutions or between authorized credit institutions and foreign credit institutions.

Article 25.  Payments and transfers of cash funds on foreign exchange transactions of residents and nonresidents within Turkmenistan, performed without using foreign currency accounts (deposits)

1. Unless established otherwise by foreign exchange laws of Turkmenistan, the following shall be classified as payments and money transfers on foreign exchange transactions of residents and nonresidents within Turkmenistan that are carried out using foreign currency accounts (deposits) opened in authorized credit institutions:

1) payments and money transfers of individuals, not exceeding the limit on freely available currency, that are carried out without opening foreign currency accounts in authorized credit institutions;

2) payments and money transfers of individuals that involve the purchase and sale, exchange, and/or replacement of foreign currency in cash through exchange offices of authorized credit institutions;

3) payments made by issuing (transmitting) a check or bill;

4) free transmissions of currency assets for treatment, education, and other charitable goals;

5) the safekeeping, donation, bequeathing, or receipt by inheritance of currency assets by individuals;

6) acquisitions and transfers of individual monetary units and coins by individuals for purposes of collection;

7) transactions involving settlements in duty-free stores and when selling goods and providing services to passengers in vehicles en route in international travel;

8) payment of wages and other types of compensation to employees in foreign currency, following the procedure established by Turkmenistan law;

9) compensation to employees for business travel and entertainment expenses;

10) payments and money transfers made through the foreign currency accounts (deposits) of residents in foreign credit institutions, opened under the procedure established by this Law;

11) money transfers from nonresidents’ accounts (deposits) in foreign credit institutions, performed by them in fulfillment of a resident’s obligations, where provided by foreign exchange laws of Turkmenistan;

12) transactions involving the payment of taxes and other mandatory payments to the State Budget of Turkmenistan, where provided by the tax laws of Turkmenistan.

2. Payments and money transfers on foreign exchange transactions within Turkmenistan, for which registration, notification, or the completion of a transaction certificate is required, shall be performed only through accounts (deposits) opened in authorized credit institutions, following the procedure established by this Law.

Article 26.  Domestic currency accounts (deposits) of nonresidents in authorized credit institutions

1. Nonresidents shall be entitled to open accounts (deposits) in domestic currency in authorized credit institutions within Turkmenistan.

Domestic currency accounts (deposits) of nonresidents in authorized credit institutions within Turkmenistan shall be opened and maintained following procedures established by the Central Bank of Turkmenistan.

2. If no procedure for opening and maintaining domestic currency accounts (deposits) of nonresidents in authorized credit institutions is established by the Central Bank of Turkmenistan, the procedure established for opening and maintaining domestic currency accounts (deposits) of residents in authorized credit institutions shall be applied.

Article 27.  Settlements and money transfers of nonresidents in domestic currency within Turkmenistan

1. Nonresidents shall be entitled to perform settlements and money transfers in domestic currency within Turkmenistan without restrictions, unless specified otherwise by the foreign exchange laws of Turkmenistan.

2. Settlements and money transfers through the domestic currency accounts (deposits) of nonresidents in authorized credit institutions within Turkmenistan shall be carried out under procedures established by the Central Bank of Turkmenistan.

3. When foreign exchange transactions involving the movement of capital are performed in domestic currency within Turkmenistan and such transactions are subject to an established requirement of registration, notification, and/or the completion of a transaction certificate, nonresidents shall perform settlements and money transfers only through accounts (deposits) in authorized credit institutions, and also through accounts (deposits) in foreign credit institutions if the foreign credit institution has a domestic currency correspondent account in an authorized credit institution.

4. Nonresidents shall be entitled to transfer domestic currency within Turkmenistan from their accounts (deposits) in foreign credit institutions into their accounts (deposits) in authorized credit institutions, and from their accounts (deposits) in authorized credit institutions to their accounts (deposits) in foreign credit institutions, without restrictions.

Article 28. Accounts (deposits) of residents in foreign credit institutions

1. Residents may perform settlements when conducting foreign exchange transactions through accounts (deposits) in foreign credit institutions, using funds in domestic and foreign currencies that are credited to those accounts (deposits) in accordance with this Law.

2. Accounts (deposits) in foreign credit institutions for diplomatic missions and consular institutions of Turkmenistan and other official missions of Turkmenistan located outside Turkmenistan, as well as permanent missions of Turkmenistan attached to intergovernmental, interstate, and international organizations, shall be opened following procedures established by the Cabinet of Ministers of Turkmenistan.

3. Residents’ accounts (deposits) in foreign credit institutions shall be opened in order to perform foreign exchange transactions associated with:

1) maintenance of a resident’s overseas branches or representative offices – for the period they are in operation;

2) a resident’s operating expenses through a branch or representative office for providing international freight forwarding services or carriage and freightage (charter) services involving shipments of passengers or freight or transit shipments of passengers and freight, or under agreements to insure the indicated passengers and freight – for the period of time these services are being performed;

3) payment of local expenses associated with the construction by residents of various types of facilities within foreign states – for the period of construction;

4) the financing of the conduct of athletic, cultural, and other events, including exhibitions held outside Turkmenistan, by residents – for the period of time such events are held;

5) compensation for business travel and entertainment expenses during a resident’s stay outside Turkmenistan – for the period of the resident’s business travel;

6) the depositing of funds by a resident in payment of the authorized capital of a nonresident legal entity in which the resident’s participation is anticipated, if such a requirement is established by the laws of a foreign state – for the period during which the nonresident legal entity is registered;

7) the depositing of funds designated for securing obligations on residents’ loans and bank credits that are attracted from nonresidents  – for the period such debt is outstanding;

8) other transactions provided for by Turkmenistan law.

Residents shall be entitled to perform the foreign exchange transactions indicated in this part using funds that are deposited into those accounts (deposits) in accordance with Article 29, parts three and four of this Law.

4. The opening (closing) of accounts in foreign credit institutions by state-owned resident legal entities (and their branches and representative offices) that are not indicated in part two of this Article shall be carried out upon a decision of the Cabinet of Ministers of Turkmenistan.

The opening (closing) of accounts in foreign credit institutions by non-state-owned resident legal entities (and their branches and representative offices) shall be carried out by decision of the owners of those resident legal entities.

5. The opening of accounts of resident legal entities (and their branches and representative offices) in foreign credit institutions shall be subject to registration pursuant to the requirements stipulated in Article 8 of this Law.

The use by resident legal entities (and their branches and representative offices) of accounts in foreign credit institutions without registration shall not be allowed.

An account opened in violation of requirements regarding its registration shall be closed following the repatriation of the balances of funds in it, either independently by the accountholders or pursuant to an act of the foreign exchange control body. Such an act may stipulate the imposition of the fines provided in Article 36, part 2, item 2, subitem “f” of this law.

6. Unless established otherwise by the foreign exchange laws of Turkmenistan, resident unincorporated sole proprietors shall be permitted to open accounts in foreign credit institutions.

7. Following their return to Turkmenistan, resident unincorporated sole proprietors shall be required to notify the authorized credit institutions servicing them of the opening (closing) of accounts in foreign credit institutions pursuant to Article 9 of this Law.

Account notifications shall be considered submitted if the resident unincorporated sole proprietors make payments and money transfers from their accounts in authorized credit institutions to their accounts in foreign credit institutions, or from their accounts in foreign credit institutions to their accounts in authorized credit institutions.

8. Resident individuals (excepting resident unincorporated sole proprietors) shall be permitted to open accounts (deposits) in foreign credit institutions without restrictions.

9. Resident legal entities and resident unincorporated sole proprietors shall be required to provide written notification to the taxation authorities for their place of tax registration of the opening (closing) of accounts in foreign credit institutions, in the cases and within the time limits established by the tax laws of Turkmenistan.

10. The provisions of this Article shall not extend to authorized credit institutions and currency exchanges that open accounts in foreign credit institutions in accordance with Turkmenistan law.

Article 29.  Payments and money transfers by residents outside Turkmenistan

1. Residents outside Turkmenistan shall be entitled to make payments and money transfers on foreign exchange transactions without restrictions through accounts (deposits) in foreign credit institutions, unless stipulated otherwise by foreign exchange laws of Turkmenistan.

2. Expenditures entailed in supporting the operations of diplomatic missions, consular institutions, and other official missions of Turkmenistan located outside Turkmenistan, as well as permanent missions of Turkmenistan attached to intergovernmental, interstate, and international organizations, shall be funded under procedures established by the Cabinet of Ministers of Turkmenistan.

3. Residents shall be entitled to transfer funds from their accounts (deposits) in authorized credit institutions to their accounts (deposits) opened in foreign credit institutions for purposes of performing the foreign exchange transactions indicated in Article 28, part three of this Law.

Resident legal entities may make payments and funds transfers from their accounts in authorized credit institutions to their accounts opened in foreign credit institutions, after the registration that is required by this Law when opening an account in a foreign credit institution.

4. Income from transactions with nonresidents (including earnings from retail and wholesale sales of goods (work, services)) may be deposited into the accounts of resident legal entities and resident unincorporated sole proprietors in foreign credit institutions, if the total amount of the foreign exchange agreement for those transactions does not exceed the limit on freely available currency and if this Law does not stipulate a requirement to register, notify, or complete a transaction certificate.

5. Resident legal entities and resident unincorporated sole proprietors shall be entitled to perform foreign exchange transactions without restrictions using funds deposited into accounts in foreign credit institutions in accordance with this Law, if such transactions do not entail the transfer of property or provision of services within Turkmenistan, except where provided by this Law.

It shall be prohibited to perform foreign exchange transactions between residents and nonresidents involving the movement of capital through the accounts of resident legal entities and resident unincorporated sole proprietors in foreign credit institutions, if the amount of the foreign exchange agreement exceeds the limit on freely available currency, if this law stipulates for them [such accounts] a requirement to register, notify, or complete a transaction certificate.

6. Cash assets that are deposited, pursuant to parts three and four of this Article, into residents’ accounts (deposits) in foreign credit institutions, must be used to perform the foreign exchange transactions indicated in Article 28, part three of this Law and/or after compensation of the costs on transactions with nonresidents [‘and must be’?] repatriated to Turkmenistan. [sic]

7. Surpluses on balances of funds in the accounts of resident legal entities and resident unincorporated sole proprietors in foreign credit institutions are to be repatriated to Turkmenistan within10 banking days after the conclusion of the completion periods for foreign exchange transactions stipulated in Article 28, part three of this law.


SECTION III. FOREIGN EXCHANGE CONTROL

Chapter 5. Exchange control bodies and agents. Rights and duties of exchange control bodies and agents

Article 30. Exchange control bodies and agents

1. Exchange control in Turkmenistan shall be carried out by the Cabinet of Ministers of Turkmenistan and by the exchange control bodies and agents.

2. The exchange control bodies in Turkmenistan shall be the Central Bank of Turkmenistan and central executive bodies authorized by the Cabinet of Ministers of Turkmenistan, within the bounds of their authority as established by the laws of Turkmenistan.

3. Exchange control agents in Turkmenistan shall be:

1) authorized credit institutions;

2) stock, currency, and commodity exchanges, including participants thereof;

3) keepers of state registers and state registrars;

4) bodies of the customs service of Turkmenistan;

5) bodies of the tax service of Turkmenistan;

6) other bodies authorized to exercise foreign exchange control under Turkmenistan law;

4. The Central Bank of Turkmenistan shall monitor foreign exchange transactions conducted by credit institutions and currency exchanges.

Article 31. Acts of exchange control bodies

1. Exchange control bodies shall be entitled to issue acts on matters of exchange control where provided by foreign exchange laws of Turkmenistan.

2. Acts of exchange control bodies must not contain provisions pertaining to the regulation of foreign exchange transactions.

Article 32. Rights of exchange control bodies and exchange control agents

1. Within the bounds of their authority and pursuant to the laws of Turkmenistan, exchange control bodies and agents shall be entitled to:

1) conduct audits of compliance by residents and nonresidents with the foreign exchange laws of Turkmenistan;

2) conduct audits of the completeness and reliability of accounting records and reports on foreign exchange transactions of residents and nonresidents;

3) request and receive documents and information relating to the conduct of foreign exchange transactions and the opening and maintenance of accounts (deposits).

2. Within the bounds of their authority and pursuant to the laws of Turkmenistan, exchange control bodies shall be entitled to:

1) issue instructions to eliminate discovered violations of foreign exchange laws of Turkmenistan;

2) apply financial sanctions and fines established by Turkmenistan law for violations of foreign exchange laws of Turkmenistan;

3) issue compulsory orders to exchange control agents for purposes of ensuring the proper exercise of exchange control;

4) establish a procedure for submitting reports on foreign exchange transactions and conducting audits of compliance with the foreign exchange laws of Turkmenistan.

3. In the exercise of exchange control and within the bounds of their authority, exchange control agents shall be entitled to request and receive from residents and nonresidents the following documents or copies of documents related to the performance of foreign exchange transactions and the opening and maintenance of accounts (deposits):

1) a passport or other identity document;

2) registration certificates of individuals acting as non-incorporated sole proprietors;

3) certificates of the state registration of legal entities, extracts from the Unified State Register of Legal Entities, charters, constituent agreements, records of general meetings of the founders, and other documents of legal entities;

4) certificates of registration with the a body of the tax service;

5) documents confirming a nonresident’s right to perform exchange transactions and open accounts (deposits), prepared and issued by a body of the nonresident’s state of residency (place of registration), if the laws of that foreign state stipulate that the nonresident obtain such a document;

6) licenses and registration documents or copies of notices, where stipulated by this Law;

7) foreign exchange agreements;

8) receipts and statements for accounts (deposits), issued by credit organizations, that confirm the completion of foreign exchange transactions;

9) transaction certificates, including documents confirming the discharge of obligations under transaction contracts;

10) customs freight declarations, as well as customs declarations confirming the import or export of currency assets into or from Turkmenistan;

11) documents verifying property and non-property rights;

12) other documents related to the conduct of foreign exchange transactions and the opening and maintenance of accounts (deposits).

4. A document submitted by a body of state of a foreign state must be validated following established procedure, unless stipulated otherwise by international agreements of Turkmenistan.

When necessary, a document in a foreign language shall be submitted along with a translation in the official language of Turkmenistan.

5. Exchange control agents shall not be liable for the reliability of documents submitted to them by residents and nonresidents.

When necessary, exchange control agents shall be entitled to require the originals of these documents for comparison with the submitted copies.

In specific cases, residents and nonresidents, with the consent of exchange control agents, may submit excerpts of documents, certified following the procedure established by Turkmenistan law.

6. Exchange control agents shall be entitled to deny residents and nonresidents a foreign exchange transaction that is performed with their participation in cases of:

1) submission of an incomplete set of the documents necessary to perform the foreign exchange transaction;

2) noncompliance of submitted documents with requirements of the foreign exchange laws of Turkmenistan;

3) discovery of unreliable information in submitted documents.

            Article 33.  Duties of exchange control bodies and agents

1. Within the bounds of their authority, exchange control bodies and agents shall be required to monitor exchange transactions performed within Turkmenistan by residents and nonresidents.

2. Exchange control bodies and agents shall be required to review residents’ applications for the registration and completion of the transaction certificates required pursuant to this Law, within the time limits established by laws of Turkmenistan.

3. Exchange control agents shall be required to:

1) monitor residents’ and nonresidents’ compliance with foreign exchange laws of Turkmenistan;

2) monitor adherence to completeness and accuracy in recording and reporting foreign exchange transactions;

3) notify the exchange control bodies of violations of laws of Turkmenistan they discover to have been committed by residents and nonresidents;

4) submit information to the exchange control bodies on foreign exchange transactions following established procedure.

5) monitor residents’ compliance with requirements regarding the repatriation of domestic and foreign currency.

4. Exchange control bodies and agents shall be required not to disclose information comprising commercial or banking secrets or other confidential information that becomes known to them while exercising their authority in accordance with Turkmenistan law.

CHAPTER 6.  RIGHTS AND DUTIES OF RESIDENTS AND NONRESIDENTS

Article 34.  Rights of residents and nonresidents

Residents and nonresidents who perform foreign exchange transactions within Turkmenistan shall be entitled to:

1) be familiarized with reports of audits conducted by exchange control bodies and agents;

2) submit written objections regarding facts set forth in reports of audits conducted by exchange control bodies and/or agents;

3) appeal the actions or inaction of exchange control bodies and agents under procedures established by the laws of Turkmenistan;

4) exercise other rights provided by the laws of Turkmenistan.

Article 35.  Duties of residents and nonresidents

Residents and nonresidents who perform foreign exchange transactions within Turkmenistan shall be required to:

1) submit documents and information stipulated by this Law to exchange control bodies and agents;

2) maintain records and reports on the foreign exchange transactions they perform, following established procedure;

3) ensure the safeguarding of documents and information for at least five years from the day the corresponding foreign exchange transactions were completed;

4) carry out orders of the exchange control bodies to eliminate violations of law discovered during audits.

SECTION IV.  CONCLUDING PROVISIONS

Article 36.  Liability for violation of this Law

1. Violation of this Law shall entail liability established by the laws of Turkmenistan.

2. Violation of the provisions of this Law by residents shall be punishable by the imposition of financial sanctions and fines on residents by the exchange control bodies in the form of:

1) a one-time financial sanction of one hundred percent of the amount of:

a) an exchange transaction performed in foreign currency between residents, for which the financial sanction shall be applied against the resident/recipient of foreign currency, with the exception of exchange transactions in foreign currency between residents that are performed pursuant to Article 15 of this Law;

b) an exchange transaction performed in foreign currency between residents and nonresidents within Turkmenistan, with the exception of exchange transactions performed in foreign currency between residents and nonresidents within Turkmenistan provided for in Article 16 of this law;

2) fines assessed for each calendar day at the rate of one tenth of one percent of the amount of:

a) domestic and foreign currency, owed to a resident and not received by the time limit stipulated by the terms of a foreign trade contract with nonresidents, for exports of goods (work, services);

b) domestic and foreign currency that was provisionally transferred by a resident as payment for imports and not refunded by the time limit stipulated by the terms of a foreign trade contract with a nonresident, due to the nonresident’s failure to perform its obligation;

c) balances of cash assets in residents’ accounts (deposits) in foreign banks that were not repatriated to Turkmenistan within ten calendar days following the conclusion of the performance periods of the exchange transactions;

d) delinquent debt owed by a nonresident to a resident on exchange transactions involving the movement of capital, where the amount of the exchange agreement exceeds the limit on freely available currency. This includes debt of a nonresident on a trade credit obtained from a resident in the context of foreign trade activities without the security provided for in Article 16, part twelve of this Law, the time period on which has exceeded the deadline established by foreign exchange laws of Turkmenistan;

e) debt owed by a nonresident to a resident on exchange transactions involving the movement of capital, where the amount of the exchange agreement exceeds the limit on freely available currency, that are subject to registration but in fact were performed without the appropriate registration;

f) funds that entered the accounts of resident legal entities (or their branches and representative offices) in foreign credit institutions, which are to be opened following registration but were in fact opened without the appropriate registration;

g) debt owed by a nonresident to a resident on exchange transactions involving the movement of capital, where the amount of the exchange agreement exceeds the limit on freely available currency, that are to be carried out with notification and on which ten banking days have elapsed since the starting date of the exchange transaction and notification has not in fact been sent;

h) funds that entered the accounts of resident unincorporated sole proprietors in foreign credit institutions that were opened with notification, on which ten banking days have elapsed since the starting date of the exchange transaction and notification has not in fact been sent;

i) contributions made by a resident untimely manner from its currency earnings pursuant to Article 12 of this Law, on which five banking days have elapsed since the earnings entered its current foreign currency account.

j) the portion of currency earnings subject to mandatory sale pursuant to Article 13 of this Law, that are sold by a resident in an untimely manner, on which five banking days have elapsed since the earnings entered the resident’s current foreign currency account;

3. A resident’s obligation to pay fines shall begin from the day a violation arises, and shall continue until the resident has completely eliminated the violation or until the assessed fines have reached one hundred percent of the amount of the violation.

4. The imposition of financial sanctions and fines on the residents indicated in part two of this Article shall not be allowed if:

1) the circumstances giving rise to them entailed unlawful actions (inaction) on the part of the exchange control bodies or agents;

2) the indicated circumstances were the result of force majeure;

3) the statute of limitations is tolled by the filing of a court claim or is suspended due to factual circumstances pursuant to the laws of Turkmenistan;

4) there exist other grounds established by the laws of Turkmenistan.

The imposition and/or non- imposition of financial sanctions and fines pursuant to this Law shall not release residents from the duty to eliminate discovered violations.

5. Financial sanctions and fines and penalties imposed by exchange control bodies shall be collected by exchange control agents without right of appeal, pursuant to the laws of Turkmenistan.

Financial sanctions and fines may be imposed for violations of the exchange laws of Turkmenistan that were committed within a period of time comprising no more than the five years preceding the year in which they were discovered.

6. The amounts of assessed financial sanctions and fines are to be transferred to the State Budget of Turkmenistan in domestic currency at the official exchange rate.

7. This Article shall become effective as of January 1, 2012.

Article 37.  Dispute resolution

Disputes arising on issues of foreign exchange regulation and foreign exchange control in foreign economic relations shall be resolved in a court of law.

Article 38.  Effective date of this Law

1. This Law shall become effective as of the day of its official publication, with the exception of Article 36 of this Law, which is to become effective as of January 1, 2012.

2. legal regulatory acts of Turkmenistan are to be harmonized with this Law within three months of the day it becomes effective.

3. The Law of Turkmenistan “On Foreign Exchange Regulation”, dated October 8, 1993 (Bulletin of the Medzhlis of Turkmenistan, 1993, No.9-10, p. 88), and all subsequent laws or relevant parts thereof which amended it, are to be declared inoperative.

Gurbanguly Berdimhamedov
President of Turkmenistan

Ashgabat,
October 1, 2011

Translation from the official language of Turkmenistan