Communication A 5223. Update of references in codified texts

"2011 – Year of Decent Work, Health and Worker Safety" COMMUNICATION "A" 5223 07/09/2011 TO FINANCIAL ENTITIES, TO EXCHANGE HOUSES, AGENCIES, OFFICES AND BROKERS, TO REPRESENTATIVES OF FOREIGN FINANCIAL ENTITIES NOT AUTHORIZED TO OPERATE IN THE COUNTRY:
Ref.: Circular
OPASI 2 - 430
OPRAC 1 - 657
CREFI 2 - 74
LISOL 1 - 540
Communication "A" 5218. Update of references in codified texts.

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We address you with reference to Communication "A" 5218, through which Section 1. of the rules on "Prevention of money laundering and other illicit activities" and the rules on "Prevention of terrorism financing" were replaced, unifying them into a new body called "Prevention of asset laundering, terrorism financing and other illicit activities". Based on this, we send you the sheets with the reference adjustments that, in replacement of those previously provided, must be incorporated into the codified texts of the rules on "Correspondent Accounts", "Credit Management", "Representatives of foreign financial entities not authorized to operate in the country" and "Consolidated Supervision". All communications issued by this Institution referring to the prevention of money laundering and terrorism financing, which are not grouped within a codified regulatory text, are also covered by these reference adjustments. Finally, we remind you that on this Institution's website www.bcra.gov.ar, by accessing "regulations" ("codified texts"), the modifications made with texts highlighted in special characters (strikethrough and bold) will be found. We greet you attentively. CENTRAL BANK OF THE ARGENTINE REPUBLIC Matías A. Gutiérrez Girault Alfredo A. Besio Manager of Issuance of Regulations on behalf of General Manager of Regulations

ANNEX

1.1. Involved entities.
Financial entities in the country are authorized to offer the opening of accounts and the provision of related services to other financial entities in the country for the execution of admitted local transactions, in order to process operations carried out by these latter entities on behalf of third parties, relating to: settlement of collections and payments, liquidity management, loans, collection, transfers and clearing, in compliance with the provisions of the rules on "Credit Policy". These rules shall not apply to the opening of custody accounts for financial entities in the country and abroad (accounted for in off-balance sheet accounts) and to those demand accounts opened in financial entities in the country by local exchange houses and/or local and foreign financial entities, provided they are used exclusively for the execution on their own account of local transactions of collections and payments.

1.2. Opening and operation. Minimum information required.
The information required for the opening of accounts will be kept in a file that, for each client, must be maintained as provided in point 1.1. of the rules on "Credit Management", together with the information and other elements of judgment that allow knowing their identification, as established in the applicable regulations as provided in point 1.1. of the rules on "Prevention of asset laundering, terrorism financing and other illicit activities", qualification, credit margins and any other data that the entity opening the account requires for its evaluation. This requirement shall apply regardless of whether the movements of correspondent accounts - regardless of their nature - generate creditor balances (deposits or other obligations of the financial entity opening the account) or debtor balances. In this sense, the requesting financial entity must present the documentation detailed below:
1.2.1. Purpose of the account.
1.2.2. Authorized legal representatives with signature authority to operate with the entity on behalf and representation of the requesting entity, regarding which the identification requirements for natural persons - regular clients - provided in the applicable regulations as set forth in point 1.1. of the rules on "Prevention of asset laundering, terrorism financing and other illicit activities" must be fulfilled.
The information listed in this point must be updated by the requesting entity when modifications occur or, in default, every two years.
The opening of the account must be approved by the Board of Directors or Board of Administration, or the highest local authority in the case of branches of foreign financial entities, as applicable. The total or partial inability to comply with any of the aforementioned information, authorization and/or update requirements shall constitute an impediment for the opening and/or maintenance of the correspondent account.

CORRESPONDENT ACCOUNTS
B.C.R.A.
Section 1. Provision of correspondent services to financial entities - "your account" -.
Version: 3rd COMMUNICATION "A" 5223
Validity:
07/09/2011

2.1. Involved entities.
Financial entities in the country are authorized to request the opening of correspondent accounts, in financial entities in the country and abroad, in order to carry out admitted operations on behalf of third parties, relating to: settlement of collections and payments, liquidity management, loans, collection, transfers and clearing, in compliance with the provisions of the rules on "Credit Policy". The opening of the account must be approved by the Board of Directors or Board of Administration, or the highest local authority in the case of branches of foreign financial entities, as applicable. These rules shall not apply to the opening of custody accounts in financial entities in the country and abroad (accounted for in off-balance sheet accounts). Regarding foreign financial entities, those that, constituted according to applicable foreign law, have as their permitted activity to develop in the foreign markets where they operate, the habitual intermediation between the supply and demand of financial resources - public deposits - in the terms of the Argentine Financial Entities Law and its regulations, regardless of the corporate type adopted and/or their public, private or mixed character, shall be considered as such. Financial entities must request the information that allows knowing the identification of their counterparties as provided in the applicable regulations as set forth in point 1.1. of the rules on "Prevention of asset laundering, terrorism financing and other illicit activities".

2.2. Opening and operation of accounts opened in foreign financial entities.
The opening of accounts in foreign financial entities referred to in point 2.1. must be carried out in entities regarding which compliance with the following requirements is verified, regardless of whether the movements of correspondent accounts - regardless of their nature - generate creditor or debtor balances, namely:
2.2.1. That it has a manual for the prevention of money laundering and terrorism financing that contemplates the international standards in this regard and that has appointed a responsible person for its implementation,
2.2.2. That it conducts business in the jurisdiction where it is authorized to carry out financial activity, employs full-time executive and administrative staff at its registered office, maintains a record of operations at its domicile and is subject to supervision by the authority that authorizes it to conduct the financial business and/or the competent body for this purpose (i.e., it is not a "shell bank"),
2.2.3. That the supervisory authority of the country where the entity to which the account opening is requested is located adheres to the "Basic Principles for Effective Banking Supervision", published by the Basel Committee on Banking Supervision, and

CORRESPONDENT ACCOUNTS
B.C.R.A.
Section 2. Request for correspondent services in financial entities - "our account" -.
Version: 3rd COMMUNICATION "A" 5223
Validity:
07/09/2011

B.C.R.A.
ORIGIN OF THE PROVISIONS INCLUDED IN THE
CODIFIED TEXT OF THE RULES ON
"CORRESPONDENT ACCOUNTS"
CODIFIED TEXT ORIGINATING REGULATION
Section Point Paragraph Com. Annex Point Paragraph
Observations
1.1. "A" 5093 According to Com. "A" 5133.
1.2. "A" 5093 According to Com. "A" 5223.
1.2.1. "A" 5093
1.2.2. "A" 5093 According to Com. "A" 5223.
1.3. "A" 5093
1.3.1. "A" 5093
1.3.2. "A" 5093
1.
1.4. "A" 5093
2.1. "A" 5093 According to Com. "A" 5133 and 5223.
2.2. "A" 5093 According to Com. "A" 5133 and 5162.
2.2.1. "A" 5093
2.2.2. "A" 5093 According to Com. "A" 5133.
2.2.3. "A" 5093
2.
2.2.4. "A" 5093
3.1. "A" 5093
3.1.1. "A" 5093
3.1.2. "A" 5093
3.1.3. "A" 5093
3.2. "A" 5093
3.2.1. "A" 5093 According to Com. "A" 5133.
3.
3.2.2. "A" 5093

ii) Fine of 1 to 3 times the amount of funds actually disbursed when non-compliance with the obligation regarding control over the interventions that correspond is verified. iii) Disqualification of 5 to 20 years to engage in financial activity. Such sanctions shall be imposed on the natural persons to whom the transgression is attributable and on the financial entity, which shall be jointly liable for the payment of the fines applied to them in the event that they are declared insolvent by a competent authority. The application of sanctions shall be adjusted to the provisions contained in Article 41 of the Financial Entities Law and its regulations regarding the graduation of fines.

1.6. Credit cards.
Financial entities must refrain from issuing and renewing credit cards to holders who are delinquent debtors of an entity in liquidation, whether judicial or extrajudicial. This circumstance must be communicated to the credit card holders.

1.7. Realization of credits in deposit accounts.
Disbursements for financings exceeding $ 50,000 must be realized by crediting them to deposit accounts, as provided in Section 3. of the rules on "Prevention of asset laundering, terrorism financing and other illicit activities".

1.8. Operations on behalf and order of the head office.
The provisions of this Section do not apply to clients who only receive financings and guarantees, sureties and other responsibilities granted by local branches and subsidiaries of foreign financial entities, on behalf and order of their head office or its branches in other countries or of the controlling entity, provided the following requirements are observed:
1.8.1. The rules of the country where the head office or controlling entity is located, the latter defined according to the provisions in force in that jurisdiction, must cover consolidated supervision of local branches or subsidiaries.
1.8.2. The entity must have an international risk rating included in the "investment grade" category, granted by one of the rating agencies admitted by the rules on "Evaluation of financial entities".

CREDIT MANAGEMENT B.C.R.A.
Section 1. Requirements for granting financings.
Version: 3rd COMMUNICATION "A" 5223
Validity:
07/09/2011

CREDIT MANAGEMENT
CODIFIED TEXT ORIGINATING REGULATION
Sec. Point Para. Com. Annex Chap. Sec. Point Para.
OBSERVATIONS
1.4.6. “A” 3051
1.4.7. “A” 3051
1.4.8.1. “A” 2573 I
1.4.8.2. “A” 2573 II
i) “A” 2573 1. 9° ii) “A” 2573 1. 10°
1.4.9.
Ult. “A” 2573 1. 11°
1.4.10. “A” 2573 1. 12°
1.5.1. 1° “A” 2373 3. 1°
2° “B” 5902 9.
1.5.2. “A” 2373
“B” 5902
3.
2.
1ºy 2º
1° “A” 2373 3. 3° According to Com. “A” 3051.
2° “A” 3051
3° “B” 5902 6.
1.5.3.
4° “A” 3051
1° “B” 5902 1. 1°y 2°
2° “B” 5902 1. 2°
1.5.4.
3° “B” 5902 1. 3°
1.5.5. “B” 5902 1. 4°
1.5.6.1. “A” 2989 5. 5.1.
1.5.6.2. “A” 2989 5. 5.2.1.5.
1.5.7. “A” 2373 3. 4°, 5°y
6°
1.6. 1° “A” 2102 1.
2° “A” 2102 2.
1.7. “A” 2814 3. 3.1. According to Com. “A” 3051 and
5223.
1.8. “A” 2412
1.9.1. “A” 2308 According to Com. “A” 3918 and
4559.
1.
1.9.2. “A” 2177 3.
2.1. “A” 49 I 3.2.1. 1°
2.2. 1° “A” 49 I 3.2.1. 2°
2° “A” 2729 7. 7.2.1. 2° According to Com. “B” 9074.
2.
2.3. “A” 476 4.
3.1. "A" 1465 I 2.
3.2.1. "A" 1465 I 2. According to Com. "A" 2275,
point 2.3.
3.2.2. "A" 2275 2.3.
3.2.3. "A" 2275 2.1.
3.
3.3. "A" 1465 I 2.2. According to Com. "A" 2275
4.1. “A” 431 According to Com. "A" 4817,
4876 and 4972 (point 2).
4.
4.2. “A” 2322

2.2.2.3. Years of residence in the country, if applicable.
2.2.2.4. Type and number of valid identification document to prove identity according to the rules on "Valid Identification Documents".
2.2.2.5. Sex and marital status.
2.2.2.6. Full name/s and surname/s of the spouse, if applicable.
2.2.2.7. Address where the office will be established to carry out representative activities.
2.2.2.8. Actual address.
2.2.2.9. Special address in the Autonomous City of Buenos Aires for all notifications of the Superintendence of Financial and Exchange Entities.
2.2.2.10. Profession and background on banking and financial experience, if applicable.
2.2.2.11. Financial entities with which it operates.
2.2.2.12. Labor activities carried out in other companies, with identification of the recipient of its services and its address.
2.2.2.13. Criminal record certificate.
2.2.2.14. Manual for the prevention of asset laundering and terrorism financing to comply insofar as pertinent with what is provided in the applicable regulations as set forth in point 1.1. of the rules on "Prevention of asset laundering, terrorism financing and other illicit activities".

2.3. Other requirements.
The Superintendence of Financial and Exchange Entities may request additional elements of judgment deemed necessary to complete the analysis of the authorization request.

2.4. Unsatisfied requirements.
When the requesting entities and/or the proposed titular and/or alternate representatives do not satisfy the requests of the Superintendence of Financial and Exchange Entities within 30 (thirty) calendar days following the date on which they become aware of the respective request, their authorization requests shall be considered withdrawn and the corresponding proceedings shall be archived, no new request being processed until one year has elapsed from the date of expiration of the granted deadline.

REPRESENTATIVES OF FOREIGN FINANCIAL ENTITIES
B.C.R.A.
NOT AUTHORIZED TO OPERATE IN THE COUNTRY
Section 2. Authorization.
Version: 2nd COMMUNICATION "A" 5223
Validity:
07/09/2011

B.C.R.A.
ORIGIN OF THE PROVISIONS INCLUDED IN THE CODIFIED TEXT OF THE RULES ON "REPRESENTATIVES OF FOREIGN FINANCIAL ENTITIES NOT AUTHORIZED TO OPERATE IN THE COUNTRY" CODIFIED TEXT ORIGINATING REGULATION Sec. Point Para. Com. Annex Chap. Sec. Point Para. OBSERVATIONS
1.1. “A” 2241 VI 1. 1. According to Com. “A” 4775 pt.
1. and “A” 4981.
1.2. “A” 2241 VI 6. and
9.
9.4. 1° According to Com. “A” 4981.
1.3. “A” 2241 VI 5. According to Com. “A” 4981.
1.4. “A” 2241 VI 7. According to Com. “A” 4981 and
5093.
1.5.1. “A” 2241 VI 8. and
9.
9.4. 2°y 2° According to Com. “A” 4981.
1.5.2. “A” 2241 VI 8. 1º According to Com. “A” 4981.
1.5.3. “A” 4981
1.5.4. “A” 2241 VI 8. 1° According to Com. “A” 4981.
1.6.1. “A” 4981
1.
1.6.2. “A” 2241 VI 9. 9.4. 1°y 2° According to Com. “A” 4981.
2.1. “A” 2241 VI 1. According to Com. “A” 4775 pt.
1. and “A” 4981.
1° “A” 2241 VI 2. According to Com. “A” 4775 pt.
1. and “A” 4981.
2.2.
2° “A” 2241 VI 3. 3.1. last According to Com. “A” 4775 pt.
1. and “A” 4981.
2.2.1. “A” 2241 VI 3. 3.1. According to Com. “A” 2362, “A”
4775 pt.1., “A” 4835 pt.
5. and “A” 4981.
2.2.2. “A” 2241 VI 3. 3.2. According to Com. “A” 4775 pt.
1., 4981 and 5223.
2.3. “A” 4981
2.4. “A” 2241 VI 4. 4.1. 2° According to Com. “A” 4775 pt.
1. and “A” 4981.
2.5. “A” 2241 VI 4. 4.1. 1° According to Com. “A” 3700 pt.
3., “A” 4775 pt. 1. and “A”
4981.
2.
2.6. “A” 2241 VI 4. 4.2. According to Com. “A” 4775
pt. 1. and “A” 4981.
3.1. “A” 4981
3. 3.2. “A” 2241 VI 10. According to Com. “A” 4981 and
“A” 5202
4.
“A” 2241 VI 3. 3.3. 1°y 2° According to Com. “A” 3700 pt.
2. and “A” 4981.
5.1. “A” 2241 VI 9. 9.1.1.
and
9.1.2.
According to Com. “A” 4775 pt.
1. and “A” 4981.
5.
5.2. “A” 2241 VI 9. 9.1.3. According to Com. “A” 2822 pt.
1., “A” 4775, pt. 1. and “A”
4981.
6.
6.1. “A” 2241 VI 3. 3.1. and
3.2. last According to Com. “A” 4775 pt.
1. and “A” 4981.

CONSOLIDATED SUPERVISION
B.C.R.A.
Section 5. Compliance with regulations.
5.2.1.5. Maximum limit that applies to financings, except those intended for other financial entities, regarding whose granting the intervention of credit area officials and the general manager and the approval of the lending entity's executives is not required, fixed at 2.5% of the computable net worth of the second month prior to the granting.
5.2.1.6. Global maximum limits, according to the rules on "Credit Management" for:
a) Small amount loans. b) Loans for micro-entrepreneurs.
5.2.1.7. Position and minimum liquidity coefficients.
5.2.1.8. Ratio for immobilized assets and other concepts.
5.2.2. Quarterly consolidated basis.
Without prejudice to individual compliance, and additionally and independently of monthly consolidated basis compliance, controlling financial entities subject to consolidated supervision shall observe the following rules on a quarterly consolidated basis:
5.2.2.1. Minimum capital, except for market risk.
5.2.2.2. Classification of debtors and minimum provisions for uncollectible risk.
5.2.2.3. Fragmentation of credit risk.
5.2.2.4. Maximum limit for holding participations in companies that do not provide complementary services to the financial activity.
5.2.2.5. Ratio for immobilized assets and other concepts.
5.2.3. Compliance with the rules on "Prevention of asset laundering, terrorism financing and other illicit activities".
Financial entities must ensure that the branches and subsidiaries included in this regime consider within the internal control scheme the following:
5.2.3.1. Existence of written policies and procedures for the prevention of asset laundering and terrorism financing framed in international standards, consistent with the specific characteristics of the different activities and consistent with those of the head office and/or controlling entity.
Version: 5th COMMUNICATION "A" 5223
Validity:
07/09/2011

CONSOLIDATED SUPERVISION
B.C.R.A.
Section 5. Compliance with regulations.
5.2.3.2. Appointment of a compliance officer responsible for the implementation of the policies and procedures mentioned in the previous point and for keeping the highest level of the head office and/or controlling entity informed on the matter.
5.2.3.3. Existence of an organizational structure with clear definition of roles and responsibilities consistent with that of the head office and/or controlling entity.
5.2.3.4. Existence of a written procedure for reporting unusual or suspicious operations according to respective legal requirements, and consistent with that of the head office and/or controlling entity.
5.2.3.5. If it has internal audit to evaluate prevention programs and controls consistent with those of the head office and/or controlling entity and if its conclusions are analyzed on a consolidated basis.
5.2.3.6. If there are staff training programs in the matter, consistent with those of the head office and/or controlling entity and if they are fulfilled.
Financial entities must make arrangements to obtain information regarding compliance with the previously detailed points by each of their included branches and subsidiaries, for example, through reports issued by the external and internal auditors of the aforementioned branches and subsidiaries.
5.2.4. The branches abroad of financial entities and their significant subsidiaries, according to what is provided in point 2.1.2. of these rules, must observe the rules on "Correspondent Accounts".

5.3. Applicable criteria.
For the purposes indicated above, the following shall be taken into account:
5.3.1. Monthly consolidation.
The data of the local financial entity, including its branches in the country and abroad, and its significant subsidiaries, will be taken.
The maximum limits in matters of credit risk fragmentation must be observed at all times on a consolidated basis, that is, considering the operations included of the respective clients in the entities and companies subject to monthly consolidation. Version: 4th COMMUNICATION "A" 5223 Validity:
07/09/2011

CONSOLIDATED SUPERVISION
B.C.R.A.
Section 5. Compliance with regulations.
The determination of computable net worth will be carried out by applying the rules established in the matter, both regarding the requirement and the integration, on a consolidated basis.

5.3.2. Quarterly consolidation.
The data of the local financial entity, including its branches in the country and abroad, and all its subsidiaries included in the obligation to consolidate quarterly, will be taken. The maximum limits in matters of credit risk fragmentation must be observed at all times on a consolidated basis, that is, considering the operations included of the respective clients in the entities and companies subject to quarterly consolidation. The determination of computable net worth will be carried out considering, both for the requirement and for the integration, the balances at the end of the quarter, and applying in other aspects the rules established in the matter. This net worth will be the basis for comparison during the following quarter to determine compliance with the rules to be observed on a quarterly consolidated basis.

5.4. Other aspects.
5.4.1. Fund collections with a term of less than 30 days.
Stock exchange companies subject to consolidated supervision may not carry out stock exchange operations with a term of less than 30 days, or cancel them in advance before 30 days have elapsed, that directly or indirectly imply a collection of funds.

5.4.2. Restrictions regarding common investment funds.
The limitations on the holding of fund units and on the transactions that grant liquidity to such funds must be observed on individual and consolidated bases. Version: 6th COMMUNICATION "A" 5223 Validity:
07/09/2011

CONSOLIDATED SUPERVISION
ORDERED TEXT SOURCE NORM
Section Point Paragraph Com. Annex Point Paragraph Observations
5.2.1.6. “A” 4891 8.
5.2.1.7. “A” 2690 single 6.
5.2.1.8. “A” 2227 single 5.1.8. According to Com. “A” 2736.
5.2.1.9. “A” 5180 8.
5.2.2. “A” 2227 single 5.1. According to Com. “A” 2649. Complemented by Com. “A” 2461,
2736, 2839, 5180 and “B” 5902.
5.2.3. “A” 4835 4. According to Com. “A” 5223.
5.2.4. “A” 5093
5.3.1. “A” 2227 single 5.2.1. According to Com. “A” 2649.
5.3.2. “A” 2227 single 5.2.2.
5.4.1. “B” 6115 3rd
5.4.2. “B” 6566 1.
5.
5.5. “A” 2227 single 5.3. According to Com. “A” 2649.