The Argentine Central Bank Removed All Existing Restrictions to Access the FX Market for Foreign Portfolio Investments of Argentine Residents (“atesoramiento”)

Communiqué “A” 6037 (the “Communiqué”) established a new set of foreign exchange regulations (abrogating several previously enacted regulations) referring to “General rules of the Foreign Exchange Market”, “Payment of Argentine import of goods and other purchase of goods abroad,” “Services, revenue, ordinary transfers, and non-financial non-produced assets,” “Financial Indebtedness,” “Foreign portfolio investments of Argentine Residents,” “Financial derivatives” and “Foreign exchange trades with Non-Argentine Residents.” 

Argentine Residents are allowed to access the FX Market to (i) transfer funds to Argentina and make payments made abroad in transactions with non-Argentine residents, (ii) transfer funds to Argentina to repay obligations with local financial institutions and/or for the issuance of foreign currency denominated notes; and/or (iii) purchase and sale foreign assets. All the regulations related to the following items remain unaltered (i) General Exchange Positions and specific operations of entities authorized to operate in the FX Market and (ii) obligation to transfer to Argentina and settle for pesos all payments collected for the export of goods and related services.

Non-Argentine residents may access the FX Market to transfer funds collected in Argentina for various concepts to their accounts abroad. All other foreign exchange transactions regarding the sale of currency, cash, checks and travelers checks denominated in foreign currency to non-Argentine residents will be subject to the prior approval of the Central Bank of Argentina (the “Central Bank”) when the amounts transacted exceed the equivalent of US$ 10,000 (previously this cap was set at US$ 2,500) per calendar month in the aggregate traded with entities authorized to operate in the FX Market. For transactions below this amount, the sole requirement is the accreditation of identity.

The Communiqué also introduces important changes to the following areas, among others:

1. Simplification of foreign exchange transactions through sworn affidavits and concept codes

The Communiqué removes the obligation to justify, through the presentation of documentation, each foreign exchange transaction. As of now, all foreign exchange transactions carried out through authorized entities are processed automatically. In lieu of providing supporting documentation, the client must file a sworn affidavit within each foreign exchange ticket, indicating the concept code which corresponds to the foreign exchange transaction.

Moreover, to access the FX Market to pay abroad for Argentine imports of goods and other purchase of goods, or to transfer funds abroad for the purchase of services, interest, profits and dividends and the acquisition of non-financial non-produced assets, a sworn affidavit stating that the cross-border debt regime established by Communiqué “A” 3602, as amended, has been complied with must be filed in connection with the cross-border debt being cancelled, as well as stating compliance with the direct investment reporting regime established by Communiqué “A” 4237, as amended (if applicable).

The prior settlement in the FX Market of the corresponding proceeds borrowed has been removed as a requirement to access the FX Market to repay principal of cross-border financial debt, including the payment of financial stand by granted by local financial institutions. The debtor must file an affidavit stating compliance with the cross-border debt regime and with the minimum holding term of 120 days, as applicable as per the regulations established by Decree No. 616/2005, as amended.

Furthermore, the concept codes set forth by the Central Bank for foreign exchange operations have been significantly reduced from 315 to 72 codes, starting on September 1, 2016 pursuant to Communiqué “A” 6039.

2.  Export of services and sale of non-financial non-produced assets

Any payments collected in foreign currency by Argentine residents for the export of services and for the collection of insurance premiums due to insurances policies hired from non-Argentine residents (which do not correspond to the international trade of goods as regulated by regulations applicable to collection of exports and payment of imports) must be transferred to Argentina (either to settle such proceeds in the FX Market or to have them deposited in a local bank account denominated in foreign currency) within a term of no more than 365 calendar days as of the date of their collection abroad or in Argentina, or its deposit in foreign bank accounts.

3-  Foreign Portfolio Investments

The concepts corresponding to the so-called “atesoramiento” or portfolio investments have been simplified and the monthly cap of US$ 5,000,000 per person in the aggregate has been removed.

4.  Extended Operating Hours

Entities authorized to operate in the FX Market may operate at any time in the sale, purchase and swap of foreign currency with clients. Thus, internet banking and exchange institutions may freely choose their operating hours outside the hours during which the FX Market operates (10:00am to 3pm).

In the event of wholesale transactions being conducted during the extended operating hours, exchange rates must range within the price range agreed upon with all the clients during standard operating hours in the FX Market. In the event of transactions in currency other than United States dollars, the range may be determined in relation to the exchange rate between United States dollars and the involved currency by the Central Bank at the closing of the day and the range of the exchange rates agreed upon by the entity with clients for the sale and purchase of United States dollars.

Entities authorized to operate in the FX Market must, in all cases, leave record of the time in which the foreign exchange transactions were carried out.

5.  Forwards and derivatives

For further information on this matter, please refer to “The Central Bank Relaxes Foreign Exchange Restrictions on Derivatives” in the present edition of Marval News.