BANCO CENTRAL DE LA REPUBLICA ARGENTINA

___________________________________________________________ COMUNICACION " A " 3201 I 15/12/00 ___________________________________________________________

TO FINANCIAL ENTITIES:
Ref.: Circular
CIRMO 2 - 41.
Cancelation Check - Law 25345
Regulation

We address you regarding Law 25345, which provided for the creation of the Cancelation Check, a new banking instrument, that will enable the cancellation of obligations without the use of cash.

The aforementioned Law establishes, with respect to this matter, that the Central Bank of the Argentine Republic will set the conditions for the regulation, which will enter into force fifteen days after its publication in the Official Bulletin.

The reference communication will be distributed in printed form.
We salute you very respectfully.

BANCO CENTRAL DE LA REPUBLICA ARGENTINA

Ismael A. Salvatore Héctor O. Biondo
Treasury Manager General Deputy Manager of
Operations Area

REGULATION

Issuance and Distribution of Cancelation Checks - Law 25345-.

Participating financial entities in the purchase and sale operations of cancelation checks (hereinafter CHC) will receive from the Central Bank of the Argentine Republic (hereinafter BCRA), CHC on consignment, which will have the characteristics indicated in point 1 of the Annex.
The distribution of CHC to financial entities with CAMEL rating 1 or 2 and entities whose liabilities are guaranteed by the national government, provincial governments, or the government of the Autonomous City of Buenos Aires, will be made according to their requirement. The delivery will be made via receipt signed by persons authorized with a signature registered with this BCRA.
The distribution of CHC to financial entities that do not fall under point 2, will be carried out according to their requirement, affecting as collateral the Minimum Liquidity Requirements (hereinafter RML) for the total amount of CHC in their possession, formalizing the delivery according to what was established previously.

Validity.

CHC will be valid from the day following their sale to the public, except in cases where the purchase and sale operation is carried out in the same banking house on the same day.
After thirty (30) days from the date of sale, no new endorsements may be made. The collection management of CHC issued more than 30 days ago will be carried out under the same conditions as for non-matured CHC.

Sale of CHC by financial entities.

Participating entities will receive purchase requests for CHC. Natural persons must present documentation accrediting their identity according to the regulations on identification documents in force, and legal persons, in addition to the aforementioned elements corresponding to the person representing them, the power of attorney or copy of statutes and resolution from the relevant body showing their capacity to carry out the operation on their behalf.
Sale requests must be resolved within a period not exceeding 48 hours from their presentation.
Once the operation is accepted, entities must integrate the CHC with the data detailed below, enable it with two authorized signatures, clarification, and box stamp (on the back of the document), and deliver it to the buyer against payment. The data to be integrated are:

Identity of the buyer (natural person: full surname and names; legal person: firm name)
Type and No. of document (natural person: DNI, LE or LC, and CUIT, CUIL or CDI; legal person: CUIT)
Date of sale

Purchase of CHC and/or sending for collection

Participating financial entities must receive CHC for payment.
If CHC are sold and purchased by the same banking house on the same date, the entity must effect payment of those on the day.
In other situations, entities may opt to purchase CHC without opening a credit file for the depositor or receive them to manage their collection before the BCRA within 72 hours.
The CHC must be accompanied by its corresponding stub (which will remain in the possession of the presenter duly intervened; alternatively, the financial entity will deliver a receipt) and presentation of identity document. If there are endorsements, which cannot be more than two, the entity will verify that the relevant supporting documentation remains attached.
Entities may verify, in the file that the BCRA will keep available via STAF, that the CHC has no payment impediment and is among the values that can be commercialized. In addition, entities and the public can access the same information on the website of this institution.
To this end, the query will be made indicating the series and number of CHC, the buyer's document number, and the code of the selling entity.
The entity will integrate the name of the holder or beneficiary on the front of the CHC, obtaining their signature on the reverse of the CHC, and intervening it with the signature of an authorized official for this purpose, clarification, and box stamp.

Validation and registration of purchase-sale operations.

Participating financial entities will receive from their branches throughout the country (according to what is regulated in their internal procedures) the detail of CHC sold and purchased and/or sent for collection on the date, according to the procedure indicated in point 4 of the annex.

Redemption of CHC

Participating financial entities must remit within 48 hours to the Treasury Management of the BCRA the CHC purchased and/or sent for their collection.

CHC with opposition.

The complaints filed in accordance with points 14.1, 14.2, and 14.3 will be valid from the day following their receipt at the BCRA, after having been verified that the values have not been collected.

14.1 In case of loss, theft, or destruction of an unnamed CHC, existing in a financial entity, the latter must formalize the complaint in writing and will be responsible for any judicial action that the holder(s) in good faith could undertake.

14.2. Upon detecting a CHC with opposition by the financial entity, it will retain the document, delivering a receipt and a copy of the STAF or Internet screen, duly signed and with the entity's stamp, to the presenter, who will retain the corresponding stub. Subsequently, within the next 48 business hours, it will remit the CHC in question to the BCRA (Treasury Management) to verify it with its own files and analyze the physical aspects of the document.
The Treasury Management will send a copy of the result of the expertise performed together with the CHC to the financial entity for the latter to make, if applicable, the relevant complaint.

14.3 In situations of loss, theft, or destruction of CHC by the public, the following procedure will be adopted:
-The holder must give immediate notice to the financial entity that sold the CHC.
-The financial entity will give immediate notice to the BCRA.
-The beneficiary must ratify the complaint in writing accompanied by the relevant judicial or police complaint before the selling entity (if it were a CHC with endorsement, it must accompany a reliable element issued by the certifying authority). -The BCRA will inform through its Internet page the deprived values and will take charge of making, directly, the payment of the values to their holder upon maturity. -Upon maturity of the lost or destroyed CHC, the entity will indicate to the presenter to contact the Treasury Management (BCRA).

Endorsement.

There may be up to two endorsements, which must be made before a public notary, judicial authority, or banking entity.
In all cases, the same data required in point 7 for endorsers and endorsees must appear.
Endorsements made before a public notary must be prepared in accordance with usual notarial practices.
Endorsements made before a judicial authority must meet the pertinent procedural requirements.
Endorsements in which financial entities intervene must be accompanied by certification on paper with the entity's letterhead and signed by a responsible person with authorized signature.
Entities that purchase CHC or receive them for collection must integrate on the front of the document the name of the seller and their identification with the same data required in point 7 and verify the presence of all the vouchers related to the endorsements, if any, remaining under their responsibility for the lack of any of them.

Sanctions

The failure to declare operations by financial entities, or their late declaration, will imply their registration with a value date to the effective date of sale, making them subject to the sanctions provided for in art. 41 of the Financial Entities Law. Likewise, they will be responsible for the damages caused to the holder of the CHC due to the lack of registration in the CHC Registry of the BCRA.

Disqualifications

The Superintendence of Financial Entities may order that a financial entity not participate in the CHC operation.
In such circumstances, the financial entity must deliver to the Treasury Management of the BCRA, within 48 hours, all the CHC it maintains on consignment.

Authority of application.

Exceptional situations that may arise in the application of this regulation and that do not imply substantial changes will be in charge of the General Deputy Management of Operations of the BCRA.

Annex

Characteristics of CHC
1.1. Formal
-Currency type: $ (pesos) or US$ (US dollars) at the choice of the holder.
-Value: 5000, 10000, 50000.

Series and numbering: will consist in the main body and in the stub of the CHC.
Barcode: in the body of the CHC, containing its series, number, and value.
Legends: “The BCRA will pay, at the choice of the legitimate holder the sum of ”
“Valid for thirty (30) calendar days from the day...........”
“This check responds to the norms established by Law 25345.”

1.2. Security
Under ultraviolet light, the following are observed:
-Security fibers with blue and yellow fluorescence, randomly throughout the CHC -Yellow fluorescent background for protection against scraping (in the integration sectors).
-Red fluorescent printing for data protection (in Arabic number on stub and in barcode on the body of the CHC) -Numbering in fluorescent penetrating ink, also perceptible on the reverse of the CHC (Arabic number on the body of the CHC) -Continuous watermark with the expressions “República Argentina” and “Deuda Pública Nacional ”, separated by the National Coat of Arms in alternating form: This watermark must be controlled under ultraviolet light (at a maximum distance of 2 cm), resulting, if legitimate, invisible on both sides of the CHC (front and back). The watermark is only visible when viewed against the light. Other security measures:
-Latent image: the value in numbers appears at the right extreme of the upper guard when the CHC is observed at eye level with raking light.
-Front-back complementation: at the right extreme, below the guard, the images of “La Libertad” from front and back complement when viewed against the light.
-Optical variability ink: in the rosette located to the left of the body of the CHC, immediately above the Arabic numbering. It changes from green to blue when the angle of observation varies.
-Dry latent image: in the rosette located to the left of the CHC slightly above the optical variability ink rosette, the image of “La Libertad” appears when the CHC is observed at eye level with raking light. -Engraving printing: presents relief perceptible to the touch in the guards, main texts, and image of “La Libertad”. -Security backgrounds throughout the body of the CHC. -Microprinting: The date box and the lines to place the buyer and seller data are formed by microletters with the expression “Banco Central de la República Argentina”.

Registration of operations: Receiving entities of CHC on consignment must keep a specially enabled record for this purpose, which will contain the following data:

Series and number of CHC
Value.
Date of delivery of the CHC by the BCRA.

The selling entity must record in its records, for each CHC, the following buyer data:

Buyer
Type and No. of document
Date of sale

Validation and registration of purchase-sale operations (point 12 of the Communication).
4.1. They will generate a single “.txt” file with all purchase, collection, and sale operations of the day, ordering by type of operation and assigning each CHC an Order No.

Batch No.
Order No.
Series and No. of CHC

For sale of CHC

Identity of the buyer (natural person: full surname and names; legal person: firm name)
Type and No. of document (natural person: DNI, LE or LC and CUIT, CUIL or CDI; legal person: CUIT)
Date of sale

For purchase and collection of CHC

Buyer's Document No. (natural person: DNI, LE or LC and CUIT, CUIL or CDI; legal person: CUIT)
Date of sale
Identity of the seller (natural person: full surname and names; legal person: firm name)
Type and No. of document (natural person: DNI, LE or LC and CUIT, CUIL or CDI; legal person: CUIT)
Code of selling entity

4.2. They will send via STAF to the BCRA, before 18:00 hours, the “.txt” file generated with all purchase, collection, and sale operations of CHC carried out throughout the country, as indicated previously.

4.3. They will receive from the BCRA a STAF message with the following information:

Total records processed
List of records that presented errors (individualized by order number and type of error) that must be re-sent on the day.
Total to debit from the entity's current account for the CHC sold (correct)
Total to credit in the entity's current account for the CHC sent for collection (correct)

4.4. Rectify errors and proceed to send always via STAF, before 20:00 hours, a new file with the operations that did not pass the previous validation process.

4.5. Receive a new STAF message with the following information:

Total records processed
List of CHC that presented errors (individualized by Order No. and type of error) that will not be registered on the date
Total to debit from the entity's current account for the CHC sold (correct)
Total to credit in the entity's current account for the CHC sent for collection (correct)

4.6. Receive via STAFF the information of the CHC purchased and/or sent for collection received in the BCRA.

4.7. At the close of the MEP, the debits and credits previously informed by the BCRA will be registered in the current account of the financial entity, with the corresponding dates. The validation process will stop upon detecting an error, not continuing with the validation of the record. The record will be rejected and the error informed to the entity.

General considerations
5.1. The affectation of the RML in cases where required, will be made by opening a guarantee account in which the amount equivalent to the CHC delivered will be deposited, and it will be modified with the purchases and sales operated daily. Balances in the guarantee account will be computed for the purposes of integrating the RML.

5.2. The 30-day period inserted in the CHC implies that once that period has expired, no more transmissions by way of endorsement can be made, being the only one who can collect it the last endorsee or beneficiary. For this person, there is no maturity period, being able to present it for collection at any time.

5.3 The buyer of a CHC endorses it to the first beneficiary, and this one can endorse it to a second beneficiary, who must collect it.

5.4. If the buyer annotates on the front of the CHC the name of the beneficiary, this one has the character of final beneficiary, so it cannot endorse it to a third party.