News in foreign exchange legal framework

1.   Repatriation of funds by Argentine residents under the Money Laundering Statute

On February 26, 2009, Communication “A” 4917 (the “Communication 4917”) of the Central Bank (“BCRA”) was passed regulating the repatriation of funds by Argentine residents in accordance with the recently enacted Money Laundering Law.

A.   Communication 4917 in the context of the Money Laundering Law

On December 24, 2008, Law No 26,476 - Regime for Tax Regularization, Promotion and Protection of Registered Employment, Exteriorization and Repatriation of Assets, also known as “Money Laundering Law”, was published in the Official Gazette. This statute is aimed at achieving the exteriorization through the official channel of financial assets, whether located in Argentina or abroad, belonging to Argentine residents.

Sub-section b) of section 26 of Law No 26,476 establishes that exteriorization of the possessions of foreign currency and other goods must be carried out through financial institutions within a term of six (6) months beginning on March 2, 2009.

To such end, and by means of Communication 4917, the BCRA established certain conditions for the transfer of funds through the official exchange market (“MULC”).

B.   Conditions

In light of the above, Communication 4917 established the following conditions for the repatriation of funds through the MULC under the Money Laundering regime:

a. The repatriation must consist as of December 31, 2007, of:

i. external assets in banking or financial, or other entities under the supervision of the respective Central Banks and/or Securities Commissions, or equivalent bodies with the assignment of banking or stock-market supervision that allow registered balances in accounts of institutions under their control; and/or

ii. external assets in financial entities that perform investment transactions, insofar as in virtue of their transactions, such financial entities are supervised by any of the bodies or institutions mentioned in item i above; and/or

iii. other assets acquired before December 31, 2007, which, subsequent-to-such-date, sales or disposals have given origin to external assets deposited in any of the entities mentioned in items i and ii above.

In all cases, the assets must have been in the name of the transferee, or on behalf of the transferee’s married partner, or on behalf of the transferee’s relatives by blood or marriage to the first degree.

b. The external funds must come from foreign bank accounts subject to regulations regarding the prevention of money laundering and terrorism financing, based on international recommendations, and under the supervision of the Central Bank or equivalent bodies in the countries of origin.

c. The transferor must coincide with the transferee. Nevertheless, in the case of individuals or undivided inheritances, the transferor’s foreign account may be on behalf of transferee’s married partner, or on behalf of the transferee’s relatives by blood or marriage to the first degree.

d. The foreign assets, after being transferred to the local bank’s account, must be converted into AR Pesos through the MULC. The Argentine Pesos resulting from the transaction must be deposited in a special demand account on behalf of the transaction holder.

e. Simultaneously with the foreign exchange transaction, the transferee may opt to purchase foreign currencies for its deposit in a special account in its name and up to the amount of the funds repatriated.

f. Lastly, the financial entity taking part in the transactions will issue a certificate for the transferee that will be the documentary evidence of the exteriorization of assets performed.

It is important to bear in mind that by means of Resolution No 82/2009 of the Ministry of Economy and Public Finances, the constitution of the mandatory deposit set forth by Decree No 616/2005 was suspended for a lapse of six (6) months (from March 11, 2009 to September 11, 2009), as long as the funds transferred from abroad through the MULC are applied to certain investments. For further information, please refer to article "Mandatory Deposit obligation; suspension and other specific exemptions", published in this edition of Marval News.

2.   New exceptions regarding the mandatory deposit for the financing of micro-entrepreneurships

On February 26, 2009, Communication “A” 4918 (the “Communication 4918”) of the Central Bank (“BCRA”) was issued. This Communication creates an exception to the mandatory deposit for financings related to micro-entrepreneurships.

Decree No 616/2005 (complemented by Communication “A” 4359) establishes, for certain type of foreign exchange transactions, the constitution of a nominative, non-transferable and non-remunerated Dollar deposit, representative of thirty per cent (30%) of the amount involved in the relevant transaction, during a lapse of three hundred and sixty five (365) calendar days (the “Mandatory Deposit”).

A wide range of transactions have been exempted from the Mandatory Deposit over the years. Communication 4918 adds a new exception to the Mandatory Deposit for micro-entrepreneurships financing.

Communication 4918 takes as an exception from the Mandatory Deposit both (i) direct financings to the non-financial sector as long as they are agreed to an average term of at least two years and granted in favor of entities focusing on the development of micro-enterprises; and (ii) financings to the financial sector to fund financing lines for the micro-enterprises sector.