Reforms to foreign exchange control regulations related to repatriation of Argentine residents’ investments

1.    Redefinition of the transactions deemed repatriation

The Communication enlarges the existing list of transactions that qualify as “Argentine residents’ investments repatriation” and, are thus, granted free access to the foreign exchange market.

Thus, as from March 17, 2008, BCRA’s regulation deems as Argentine residents’ investments repatriation any remittance to Argentine bank accounts from Argentine residents’ bank accounts opened with:

a)     a foreign bank incorporated in a member country of the Organization for Economic Co-Operation and Development (“OECD”) whose sovereign debt has been rated “BBB” or more; or in a bank which consolidates its financial statements in Argentina with an Argentine Bank; or

b)     financial entities which usually perform investment activities and are incorporated in a member country of the OECD, whose sovereign debt has been rated “BBB” or more.

In addition, the Communication includes remittances from temporary residents’ bank accounts opened in the country where they reside permanently, which are considered as Argentine residents’ remittances. Temporary residents are those individuals who -according to section 23 of Law No 25,871- have a pertinent authorization by the Argentine Directorate for Migrations (i.e. migrating workers, scientists, highly qualified personnel, sports players, artists, professors, students, etc.).

2.    General requirements for a transaction to be considered a repatriation of an Argentine resident’s investment

The transactions described above require, pursuant to the Communication

(i)            identity between the person who orders the remittance and the person who is the beneficiary of the remittance;

(ii)           evidence that the funds transferred have been kept in the foreign bank account for at least 10 business days before the foreign exchange transaction is executed; and

(iii)           that the foreign exchange form includes information on the account holder and the bank where the account is opened.

The exceptions to the 10 business days minimum period established by Communication “A” 4717 of the BCRA, have not been abrogated. As a consequence, the following transactions do not require the production of evidence on such minimum waiting period:

a)     funds originated in transfers from accounts held in Argentina by the Argentine resident and channeled through the Argentine foreign exchange market;

b)     the collection of debts, sale of direct investments, sale of other foreign assets of the Argentine resident and collections of profits on such foreign assets;

c)     the cross-border collection of salaries, wages, etc. paid by Argentine residents; and

d)     the sale of the clients’ foreign assets which do not exceed US$ 40,000 per calendar month.