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Argentina Tightens Foreign Currency Controls

The Argentine government has imposed new restrictions on the purchase of foreign currency (mainly US dollars). The Argentine Tax Authorities (the “Tax Authorities”) by means of General Resolution Nº 3210/11 (“GR 3210”) issued on October 31 2011, created the “Consultation Program of Banking Operations”. This program implements a computer system called “Foreign Exchange Consultation (“FEC”) in order to intensify reviews on the sale of foreign currency in Argentina.

This new measure, which came into force on November 9, 2011, provides that financial institutions authorized to trade foreign currency by the Argentine Central Bank (“ACB”) must verify and record, through the FEC system, the aggregate amount in pesos of each exchange transaction at the time that the relevant transaction will be perfected. For this reason, as from the date of entry into force of GR 3210, the sale of dollars through ATMs, internet banking (home banking) and telephone banking has been suspended.

This procedure that allows real time assessments of the fiscal and economic-financial situation of anyone expecting to make a foreign currency transaction, affects sales of foreign exchange (currency or banknotes) in all its forms, whatever the purpose or destination for the acquired money.

The consultation and registration must be made using the Information Sharing System through a web services or the FEC System available on the Tax Authorities’ website. When using the latter, the acquirer must have a Tax Code (with security level 2, 3 or 4) and authorize the officials who will use it by the “Relations Manager” service. In these procedures, the entities must fulfill certain guidelines set out in an external user manual available on the Tax Authorities’ website.

The entity that will make the transaction will require the potential acquirer, in addition to its tax ID, Labor ID, Identification Key or alternatively, the number of the National Identity Document, that informs the currency to be acquired, its destination, the amount in pesos of the operation, and the relevant exchange rate. From there, the agency will examine instantly the source of the funds of the individual or company that requested the approval of the transaction and their ability to pay and automatically will decide whether to authorize the operation.

According to those input data and the information contained on the database of the AFIP, the reply issued by the agency may be:

Validated: data entered passed the control system, assigning the operation a transaction number.
With inconsistencies: control system has not been passed, detailing the reasons for rejecting the transaction.

In the latter case, the purchaser may consult the Tax Authorities, in which he or she is registered or which corresponds to his/her address (if not registered) the reasons for the inconsistencies.

According to GR 3210 the causes for the inconsistency may be rectified by regularizing it in an appropriate way depending on the case. If the reason is “insufficient economic and financial capacity”, the resolution specifies that the acquirer should make a note accompanied by the impression of the reply issued by the system and the documentation certifying the origin and amount of funds to be used for the purchase of foreign currency. After the presentation, the Tax Authorities look through these documents and decide on the application, without any time limit specified by the resolution.

This new regimen also establishes an online consultation system through which the potential purchaser may find himself, before going to the entity, if the amount of money he want to change could be approved or not by the Tax Authorities. For this purpose, the acquirer should enter the agency’s website (www.afip.gob.ar), and with his tax information he will be able to make the consultation.

Tax Authorities will control that the agencies authorized to carry out foreign exchange operations obey RG 3210’s provisions. In this regard, such organization issues daily reports about the transactions recorded in its system and verifies that all operations reported by the ACB have a transaction number assigned. Also, it will audit the queries made by the acquires who have obtained the answer “with inconsistencies” and, in particular, the operations of foreign currency sales reported by the system “with inconsistencies” that finally are realized with its intervention.

On the other hand, complementing the present controls, the ACB through Communication “A” 5245, which came into force on November 11 2011, states that in cases of foreign currency sale for the formation of foreign assets by residents without the requirement of a subsequent application specific, i.e. for what is commonly called “hoarding”, the entities authorized to trade in foreign exchange may only give access to the local exchange market who obtains the FEC system validation.

The following operations are exempt from getting the fiscal validation:

International agencies and institutions performing functions of official agencies of export credit, Diplomatic and consular representations and Diplomatic staff accredited to the country, Representations from courts, authorities or departments, Special missions, Bilateral commissions or bodies established by International Treaties or Agreements, in which Argentina is party, as carried out in exercise of their functions.
Local Governments
Local Governments employees who are not integrated into the Argentine Integrated Social System (AISS) until the measures necessary for such integration are implemented, and for a maximum period of 30 calendar days from and including October 31 2011, to the extent that the transaction is in the financial institution in which the payments of salaries are accredited and for up to a maximum amount equal to the amount of the last salary received from the Local Government.
Operations conducted within 15 calendar days from 10.31.2011 inclusive by individuals with the application of funds of mortgage loans in local currency granted by local financial institutions for home purchase, and to the extent that the amount acquired is assigned simultaneously to the payment of the that specific property.
Operations conducted within 30 calendar days from 10.31.2011 inclusive by individuals who apply to the purchase of foreign currency notes, the funds resulting of the collection of pensions received from abroad, with exchange tickets concluded since 10.31.2011 inclusive.

Exchange transactions to customers by other concepts that do not correspond to the formation of foreign assets by residents without application to a specific destination also are exempt from the requirement of validation under the “Consultation Program of Banking Operations”. Despite this, banks also must verify that the remaining foreign exchange regulations that may apply are fulfilled.

Should you have any question or comment regarding the foregoing, please contact us by calling at (54-11) 5252-2462, via Fax to (54-11) 5252-2463 or by e-mail to info@canosa.com.ar.

Canosa Abogados shall not and will not be responsible or liable for any actions (or lack thereof) taken as a result of relying on or in any way using information contained in this website and in no event shall be liable for any damages resulting from reliance on or use of this information. Readers should take specific advice when for specific situations.

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Changes to the information contained in this website may be made at any time.

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