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4 June 2020
Tapestry
Alert: Global
Argentina:
Central Bank tightens the net on FX transactions
Dear Client
The
Argentinian Central Bank continues to tighten access to the foreign
exchange market for Argentine residents. New rules released at the
end of May have added a 90-day delay on individuals accessing the
foreign exchange market. We have reported on the increasingly
stringent foreign exchange regime in Argentina several times since
it was reintroduced in September, most recently in our alert in April.
With limited exceptions, accessing the FX market to purchase or
transfer foreign currency abroad is subject to the prior approval
of the Central Bank. Individuals are permitted to purchase up to
USD200 per month but, under the latest extension of the rules, they
must confirm that, for 90-days prior to the day of the purchase of
the foreign currency, they have not sold securities (or transferred
securities to a foreign depository) in foreign currency. They must
also undertake that they will not carry out such transactions for
an additional 90-days after the purchase of the foreign currency.
Similar rules apply to purchases of foreign currency by companies.
New restrictions also apply to the outflow of funds from Argentina
to pay for imports (including services) and to carry out financial
transactions, such as the payment of profits and dividends. These
restrictions may be permitted subject to the filing of a sworn
affidavit. There are exemptions to the obligation to file the
affidavit and, if applicable, we recommend that these additional
restrictions are discussed with your local finance teams.
Tapestry
comment
The FX
restrictions detailed above are just the latest saga in the
increasingly tough FX environment in Argentina and need to be
considered in the context of the other foreign exchange
restrictions that have been put in place since September. In
particular the USD200 monthly limit on outward transfers and the
30% FX tax. The 90-day “freeze” on access to FX markets
is now another limiting factor to be taken into account when
operating a share plan involving outward remittance for employees
in Argentina. Monthly share purchases and transfers may no longer
be possible and may have to be replaced by accumulation periods and
quarterly purchases, subject to general legal requirements relating
to the enforceability of any post-acceptance plan amendments.
We suggest that
you discuss this new measure along with existing restrictions with
your local finance teams and consider if you can find a way to
navigate the rules in practice. We will continue to alert you to
these developments although most companies will already have taken
action in response to the FX controls, which look likely to remain
in place for some time.
The
situation in Argentina is complex so please let us know if you
require any assistance navigating these foreign exchange
regulations.
Carla and
Sharon
 
Carla Walsham Sharon Thwaites
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