Changes Introduced by the Central Bank of Argentina to the Rules Applicable to Financial Proceedings

Central Bank of Argentina (the "Central Bank") Communication "A" 5682, dated December 17, 2014 has established several amendments to the rules applicable to the Financial Proceedings provided for in article 41 of Law No. 21,526. One of the most important changes in the resolutions that the conclusion of the proceedings will now be issued by the Superintendence of Financial and Foreign Exchange Institutions, rather than the Board of Directors of the Central Bank.

It is established that any fines imposed must be cancelled by wire transfer from bank accounts owned or co-owned by the fined person  and/or - in the case- of the co-debtor, with a check issued against these accounts, unless the payments are less than AR$1,000, in which case it would be exceptionally admitted that they be cancelled in cash.

The granting of the payment facilities plan is admitted in the following cases:

1. when institutions supervised by the Central Bank prove that the fines imposed undermine the integration of minimum capital requirements, in which case the request must be accompanied by a plan for new capital contributions compatible with the plan granting facilities and overcoming the minimum capital restrictions; and
2. when individuals or legal persons not subject to supervision by the Central Bank are sanctioned with fines per violation to the Criminal Foreign Exchange Regime or in the terms of article 41 of the Law No. 21,526 and prove, with their last annual tax income form, to have income - taxed or not by this tax- not exceeding in total AR$700,000, provided that the sanctions are not imposed by virtue of having negotiated foreign exchange without intervention of an authorized entity or having operated in foreign exchange without authorization (article 1(a) and (b) of the Criminal Foreign Exchange Regime) or having carried out regular intermediation between the supply and demand of financial resources or having acted in the credit market (article 38 of Law No. 21,526). If there is no obligation to file such form, the individuals or legal persons not subject to supervision by the Central Bank must accompany a statement with their income, together with the corresponding documentation, for the last year.

To request the granting of a payment term for the fine imposed, either in financial or foreign exchange proceedings, the person must:

1. deposit 10% of the amount of the fine through wire transfer or check; and
2. pay the charge for administrative costs which will be equivalent to 0.5% of the amount of the fine. Under no circumstance this payment shall exceed the amount of AR$ 6,000. Also, the request must be completed within 5 business days from the notification of the fine.

For facilities to be granted,  one of the conditions that must be fulfilled is to submit an affidavit on the revenue situation, the assumption by a third party of the obligation to cancel the fine when it is less than AR$ 500,000 and granting of real guarantees if it exceeds that amount, and the favorable opinion of the Superintendence of Financial and Foreign Exchange Institutions that the granting of the facilities plan does not affect in any significant way the disciplinary powers within the financial and foreign exchange system.

The 24 installments of the facilities plan shall be monthly, equal and consecutive, and the minimum of each installment is AR$ 5,000. This value may be reduced to AR$ 1,500, to the extent that in the opinion of the Central Bank -the patrimonial situation and income of the person sanctioned- evidences inability to cope with said payment.