Anti-Money Laundering and Counter-Terrorist Financing: Simplification of Requirements for Foreign Investors

The Argentine Securities Commission (Comisión Nacional de Valores or the “CNV”) enacted General Resolution 692/2017 (the “Resolution”), published in the Official Gazette on May 5, 2017,  adapting the CNV Rules to: (i) the Resolution of the Argentine Financial Information Unit (Unidad de Información Financiera or the “UIF”) 4/2017, and (ii) Communiqué “A” 6220 of the Argentine Central Bank (Banco Central de la República Argentina or the “BCRA”).

UIF Resolution 4/2017, in line with the Financial Action Task Force (FATF) recommendations, established that in order to determine a client’s profile and to comply with the duty of due diligence, the reporting entities (sujetos obligados) may apply a simplified regime for foreign investors  requesting the opening of special long-distance investments accounts (cuentas especiales de inversión a distancia).

In view of the above, the main changes introduced by the Resolution are as follows:
 

I) Anti-Money Laundering and Counter-Terrorist Financing.

• Reporting entities which act within the Argentine capital market: According to paragraphs 4 and 5 of Section 20 of Law No 25,246 as amended, the reporting entities which act within the Argentine capital market are as follows: agents and stock broker companies; companies managing mutual funds; agents trading over-the-counter; all those intermediaries in the purchase, lease, or loan of securities in the stock exchange market with or without listed markets; and intermediary agents listed in futures and option markets.
  
  Under Law No 26,831, the CNV clarifies the reporting entities that act within the capital market’s scope: the Trading Agent (Agente de Negociación or the “AN”), the Clearing and Settlement Agent (Agente de Liquidación y Compensación or the “ALyC”), and the companies managing mutual funds (Sociedades Gerentes de Fondos Comunes de Inversión). The individuals or legal entities acting as trustees or holding or related, directly or indirectly, to trusts’, trustors’ and trustees’ accounts under trust agreements, provided that they intervene in financial trusts registered with the CNV are also considered reporting entities under the same category (according to the new Section 1, of the Chapter 1, of Title XI of the CNV Rules and paragraph 22, Section 20 Of Law No 25,246 as amended).
   
• In line with the UIF Resolution 4/2017, the reporting entities mentioned under paragraphs 4 and 5 of Section 20 of Law No 25,246, may apply special due diligence regime measures for foreign investors in Argentina upon opening special investments accounts.
   
• Issuing companies. The obligation of the issuing companies to verify the legal origin of the funds involved in capital contributions, irrevocable contributions on account of future issuance of shares, or significant loans that they receive, as well as the identity of the persons involved in such transactions remains.
   
• Compliance Officer. Any replacement of the appointed Compliance Officer must be reported to the CNV within 15 days of its registration with the UIF. The new Resolution does not provide for the need to identify the causes that led to his/her replacement.
   

II) Simplification of requirements for investors:

• Opening of account: forms do not require CNV authorization. Account opening forms, general client authorization to the AN or ALyC, and general client authorization to a third party (the “Forms”) need not be filed with the CNV for approval, as  that is the sole  responsibility of the AN or the ALyC
  
  Agents must report the forms used with their clients through the online information system of the CNV (Autopista de Información Financiera).
   
• Opening of bank account for foreign clients: the agents may adjust the contents. When clients are foreign investors subject to a special due diligence, the Resolution allows the agents to adjust, as appropriate, the contents of the account-opening agreements required by the CNV Rules.
   
• Registration of orders and opening of sub-accounts: client’s codes. For the registration of orders carried out by the Markets, as well as for the opening of sub-accounts, the Resolution adds the requirement to request a Tax ID (CDI), a Foreign Investors Code (CIE) and/or a Legal Entity Identifier (LEI), if applicable. The clients’ or depositors’ Tax ID (CUIT or CUIL) are also admissible.

Finally, among other measures, the Resolution removes restrictions by allowing the reinvestment of funds received by clients in sub-accounts of local escrow agents on account of revenues and receivables from tradable securities (in line with BCRA Communiqué “A” 6220).