AFIP Regulates Foreign Exchange Transactions

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A new regulation goes into effect today requiring banks to perform background checks on all buyers of foreign currency.

This means that until further notice, anyone wishing to buy dollars can only do so through a bank clerk or a foreign exchange agency and not by ATMs or the internet.

The measure, a resolution of the Federal Administration of Public Income (AFIP), Argentina’s national tax agency, will record in a computer system the total amount in pesos of each foreign exchange transaction.

Resolution 3210, the regulation’s official name, is designed to “eliminate the inequality between those who pay taxes and those who do not, deter money laundering, and give greater transparency to the market,” according to Economy Minister Amado Boudou.

Additionally, the government is hoping to ease pressure on Central Bank reserves amid high levels of capital leaving the country.

Reserves are down more than $US2 billion since the end of August from $50 billion to $47.6 billion, as of the close of day Thursday.

Other strict measures have been implemented recently to increase the supply of dollars on the local market. Foreigners who buy Argentine companies and real estate are required to deposit the full amount of the sale into Argentine financial institutions. Additionally, oil and mining companies must repatriate proceeds of export sales and insurance companies are required transfer all monies held in foreign accounts back into the country before the end of the year.

It is estimated that this year that 20 billion dollars have left the country  to be invested in foreign accounts. In that same time period, the peso has weakened 6.1% versus the dollar.

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