Instruction No. 07/91: Exchange Rate Policy – Floating Exchange Rate Market Regulation

INSTRUCTION NO. 07/91 SUBJECT: EXCHANGE RATE POLICY

• Floating Exchange Rate Market Regulation I. GENERAL PROVISIONS

1. This Regulation exclusively governs transactions conducted in the Floating Exchange Rate Market established by Notice No. 1/91 issued by the Governor of the Bank, and the conduct of any other unauthorized transaction in this Market without prior authorization from the Central Bank is strictly prohibited.
2. The aforementioned Market covers the following operations, to be recorded on the forms constituting Annexes No. 1 and 2 of this Regulation: a) PURCHASES (Annex 1): I – of foreign currency in cash: II – of checks, traveler's checks, payment orders, and other instruments normally accepted in the international financial market as representing value, in favor of individuals (private persons) or tourism-related service providers (receptive and/or emissive): III – of checks, payment orders, and other instruments normally accepted in the international financial market as representing value, in favor of legal entities, exclusively in the cases provided for in this Regulation or when referring to the resale of foreign currency previously acquired in the Floating Exchange Rate Market and not fully or partially used: b) SALES (Annex 2): 1 – of foreign currency intended to cover expenses for travel abroad, related expenses, and transfers specifically indicated in this Regulation or authorized, in each case, by the Central Bank.
3. Banks are permitted to use their own purchase and sale forms in place of those constituting Annexes 1 and 2.
4. The transactions covered by this Regulation shall be freely conducted between the parties, respecting the limits and conditions set forth in this Regulation.
5. For the purposes of this Regulation, the following terms are understood as: a) Administered Exchange Rate Market – the market segment in which rate limits are fixed by the Central Bank; b) Floating Exchange Rate Market – the market segment in which rates are freely agreed upon by the parties; c) Authorized Institution – one authorized to operate in the Administered Exchange Rate Market; d) Accredited Institution – a legal entity accredited to operate in the Floating Exchange Rate Market; e) Accredited Banking Institution – a bank authorized to operate in the Administered Exchange Rate Market and accredited to operate in the Floating Exchange Rate Market; f) Accredited Non-Banking Institution – one solely accredited to operate in the Floating Exchange Rate Market, but not authorized to operate in the Administered Exchange Rate Market.
6. Holding a short position in the Floating Exchange Rate Market is prohibited. Accredited Institutions must maintain a specific exchange position for this segment, observing that: a) the position to be considered is that of the entire counter network of the Accredited Institution; b) this prohibition also applies to each foreign currency individually.
7. Accredited Institutions are required to submit daily summaries of their activity in the Floating Exchange Rate Market to the Central Bank, in the format provided in Annex 3.
8. Accredited Non-Banking Institutions must conduct their transfers to and from abroad, as well as all international banking services they require, through an Accredited Banking Institution.
9. Upon request by Accredited Banking Institutions, the Central Bank may, at its discretion, convert manual exchange to book entry, or vice versa, and conduct arbitrage operations.
10. Operating hours for transactions in this market are free, except for those conducted within bank premises and branches subject to officially established working hours.
11. Exchange transactions conducted in the Floating Exchange Rate Market are accounted for as indicated in Title VII of this Regulation.
12. Exclusively regarding aspects related to inspection and control by the Central Bank, documents related to the transactions covered by this Regulation, including the forms referred to in Annexes 1 and 2, must be retained in archives for a period of 1 (one) year, counted from the end of the fiscal year in which the transaction occurred, with archiving permitted in microfilm and/or microfiche format.
13. In view of the provisions contained in Article 25 of the Exchange Law approved by Law No. 9/88 of July 2, Accredited Institutions, given the responsibility attributed to them, must always deem it appropriate and necessary to request adequate proof allowing them to correctly identify their purchasing clients.
14. Expenses and revenues arising from the transactions provided for in this Regulation, including those due to the Central Bank, must also be processed in the Floating Exchange Rate Market.
15. In the cases provided for in the preceding paragraph, the forms constituting Annexes 1 and 2 must be completed, with the Accredited Institutions themselves appearing as the buyer/seller of the foreign currency.
16. The aforementioned transactions may be consolidated into a single form (purchase or sale) for each currency, provided they refer to transactions of the same nature conducted with the same partner.
17. For the purpose of determining value limits for transactions provided for in this Regulation, conducted in foreign currencies other than the US$ (United States Dollar), the last par rate published by the Central Bank through its exchange rate bulletins must be used.
18. Foreign exchange resulting from sales made by duty-free shops and other establishments authorized to operate in foreign currency or its equivalent may not be traded in the Floating Exchange Rate Market.
19. The Central Bank may authorize the conduct in the Floating Exchange Rate Market of transactions not specifically provided for in this Regulation.
20. The provisions of this Regulation do not apply to expenses funded by the General State Budget (OGE), nor to revenues earned by the OGE in foreign currency equivalent.
21. The recording of transactions must comply with the Classification of Current Invisible Operations approved by Dispatch No. 57/91 of 17/07/91, issued by the Governor of the National Bank of Angola.
22. National or foreign currency resources resulting from transactions conducted in this Market may only be used for the specific purposes provided for in this Regulation; transactions that produce contrary effects or distort their objectives are prohibited.
23. The use of exchange sales as provided in this Regulation as an instrument for raising financial resources or savings is expressly prohibited.
24. Additionally, transactions conducted in this Market are subject to other applicable legal and regulatory norms governing exchange operations in general.
25. Violations of the provisions of this Regulation subject the offenders to penalties prescribed by current legal and regulatory provisions, without prejudice to the cancellation of authorization to operate in the system. II. MARKET AGENTS Institutions operating in this segment will be specially accredited by the Central Bank upon specific request in the format of Annex 4, informing: a) name of the responsible person (in the case of institutions authorized to operate in the Administered Exchange Rate Market, accumulation may occur); b) location of the premises that will operate in the segment; c) paid-in capital and net equity positions evidenced in the latest balance sheet.
26. The following institutions may be accredited: a) Financial institutions authorized or not to operate in the Administered Exchange Rate Market; b) Exchange houses.
27. Accreditation is expressed in a specific document issued by the Central Bank, which must be kept in a visible location.
28. It is mandatory to display, in a location easily visible to the public, a sign indicating the name of the accredited institution, followed by the expression "EXCHANGE - ACCREDITATION OF THE CENTRAL BANK No.", in at least three languages, one of which must be Portuguese.
29. The Central Bank may revoke the accreditation of Institutions that remain inactive for a period exceeding 90 days.
30. Accredited Institutions may open permanent or provisional exchange counters in tourist accommodation facilities, international passenger stations, tourist attraction points, and other locations they deem justified.
31. The exchange counter mentioned in the preceding paragraph has no independent position; consequently, its accounting movement must be daily integrated into the position of the counter indicated as responsible for its operations on the same date.
32. The operation of the exchange counter is subject to the following procedures: a) counter located in a locality where the Accredited Institution maintains a counter:

• notification to the Central Bank of the commencement of operations no less than ten days in advance. b) counter located in a locality where the Accredited Institution does not maintain a counter:
• request for authorization to the Central Bank, no less than ten business days in advance of the planned start date. III. OPERATIONS BETWEEN ACCREDITED INSTITUTIONS AND WITH INSTITUTIONS ABROAD INTERNAL OPERATIONS

33. Accredited institutions may buy and sell foreign currency from each other, recording such transactions on the forms constituting Annex 1 - PURCHASE - Purchasing Institution and Annex 2 - SALE - Selling Institution.
34. Arbitrage operations between accredited institutions within the country are also admitted, the records of which must be made using the purchase and sale forms for each case, completed by both partners.
35. Similarly, the Accredited Banking Institution is permitted to conduct arbitrage operations against its own exchange position in the administered exchange rate segment, observing the following: a) the operation must be conducted for immediate delivery; b) any currency may be transferred from one segment to the other.
36. In the arbitrage operations referred to in the preceding paragraph, purchase and sale forms must also be used simultaneously, indicating in the "Additional Information" field the currencies arbitraged and the par rate applied, which must be the arithmetic mean of the purchase and sale par rates indicated in the Exchange Rate Bulletin published by the Central Bank for the Administered Exchange Rate Market. EXTERNAL OPERATIONS
37. Accredited institutions may conduct arbitrage operations with institutions abroad, the records of which must be promoted through the purchase and sale forms for each case, completed by the national partner.
38. The Accredited Banking Institution may, in the same manner and independently of consultation with the Central Bank, conduct foreign currency purchase and sale operations with financial institutions abroad, against national currency, with such operations strictly prohibited with external branches of the same Institution and between affiliated institutions. The records of these operations must be made using a purchase or sale form, as applicable, completed only by the national partner.
39. The transactions referred to in the preceding paragraph must be booked to the debit/credit of patrimonial accounts representing rights and obligations in foreign currencies, in counterpart with the appropriate item of "311-Resources of Credit Institutions Abroad" in the name of the partner in the transaction. OTHER PROVISIONS
40. In addition to purchase, sale, and arbitrage operations, the Accredited Institution may convert manual exchange to book entry, or vice versa. Registration of these operations on forms is waived, and the necessary accounting entries are promoted.
41. Purchase and sale of exchange by arbitrage are recorded by assigning to the purchased and sold currencies the same equivalent in national currency.
42. Revenues and expenses with financial institutions abroad, resulting from transactions conducted in the Floating Exchange Rate Market, must be formalized through a purchase or sale form, as applicable, in which the Accredited Institution itself will be recorded as the transaction partner.
43. The transactions referred to in numbers 33 to 42 above are contracted for immediate delivery; their cancellation or extension is prohibited, and their inclusion in the exchange position of the national contracting parties is mandatory on the day they are conducted.
44. In any case, identification of the contracting parties on the forms corresponding to the operations referred to in the preceding paragraph is mandatory, and the following must also be indicated in the "Additional Information" field: a) in the case of operations with institutions abroad: the country (and respective code number) and the partner locality of the transaction. b) in the case of operations between accredited institutions: the code number of the purchasing or selling accredited institution.
45. The exit of foreign currency in cash from national territory, to carry out the aforementioned operations, may be conducted by accredited institutions, directly or through third parties authorized by them, observing the provisions in the following number.
46. For the purposes of the preceding number, the responsible persons must previously submit to the Central Bank a declaration of exit from the country of the respective foreign currency, in the format of Annex No. 5. A copy of the aforementioned declaration must be presented to the competent authority at the point of entry or exit from the country. IV. PURCHASE OF EXCHANGE FROM CLIENTS
47. Exchange purchase transactions from clients are formalized by completing the form constituting Annex No. 1.
48. The purchase of notes, traveler's checks, checks, payment orders, and other instruments normally accepted in the international financial market as representing value, issued in favor of individuals or tourism service providers, is permitted. When purchasing checks from individuals, the institution must verify that the instrument (bearer or nominative) has not previously been issued or endorsed in favor of a legal entity.
49. The transactions referred to in the preceding number may be conducted for any amount, with mandatory identification of the seller waived. In this case, the expression "Not identified" must be noted in the "Seller - Name" field of the respective form. For traveler's checks, signature comparison with the passport and seller identification are mandatory. However, for non-residents to exercise the right to repurchase foreign currency, under the terms and limits provided in Title V of this Regulation, it is indispensable that the client was adequately identified in the exchange purchase form, with passport data noted (number, date, and issuing authority).
50. The purchase of checks, payment orders, and other instruments normally accepted in the international financial market as representing value, in favor of legal entities, is also permitted, subject to mandatory identification of the seller, exclusively in the cases provided for in this Regulation or when referring to the resale of foreign currency previously acquired in this Market and not fully or partially used.
51. In any case, the Purchasing Accredited Institution assumes the commercial risk for the proper settlement of the acquired financial instrument.
52. Non-resident foreigners and Angolans residing abroad are permitted to receive foreign currency in cash or traveler's checks via payment orders in their favor or through the use of international credit cards. Such transactions must be conducted without the formalization of forms. V. EXCHANGE SALE - TRAVELERS
53. Exchange sale transactions to clients, provided for in this Regulation, must be formalized by completing the form referred to in Annex No. 2 and by noting the sale in the passport, when Angolan.
54. Regardless of any requirements not specifically provided for in this Regulation, the Accredited Institution may sell foreign currency to travelers under the following conditions: a) requirement to present passport and, for travel to non-bordering countries, airline ticket; b) instructions, printed on the reverse of the form or in separate text, in accordance with Annex No. 2, recording that the client declares:

• knowledge of the Floating Exchange Rate Market Regulation, whose terms and conditions they commit to faithfully comply with;
• that the purchased foreign currency is exclusively intended to cover personal travel expenses abroad, with the expected travel date indicated;
• awareness that failure to comply with the Regulation may imply sanctions for exchange fraud under the Law, and that the existence of exchange fraud may presuppose a fiscal offense, with detected cases communicated to the Ministry of Finance.

55. National and resident foreign citizens traveling abroad may purchase foreign currency from banks under the following terms: a) Individuals under 16 years of age: I – for bordering countries: up to the equivalent of US$ 500.00 (five hundred United States Dollars), per person and per trip, upon presentation of passport; II – for other countries: up to the equivalent of US$ 1,000.00 (one thousand United States Dollars), per person and per trip, upon presentation of passport and airline ticket; b) Individuals over 16 years of age: I – for bordering countries: up to the equivalent of US$ 1,500.00 (one thousand five hundred United States Dollars), per person and per trip, upon presentation of passport; II – for other countries: up to the equivalent of US$ 3,000.00 (three thousand United States Dollars), per person and per trip, upon presentation of passport and airline ticket.
56. At the time of the respective exchange transaction, the Selling Accredited Institution must: a) require the presence of the traveler or, in cases of proven incapacity, their legal representative; b) verify, through the entry stamp in the visited country, the completion of the trip related to the previous sale; c) attach, in cases of sale to a legal representative, a copy of the instrument granting powers to the representative to conduct the transaction or, in the case of representation of minor children, the birth certificate, identity card, or respective birth certificate;
57. The Accredited Institution is prohibited from delivering or ceding traveler's checks, sale or purchase forms, and other forms of its use to any intermediary between the seller and the buyer.
58. Non-residents, upon exiting national territory, are permitted to acquire up to 50% (fifty percent) of the value of the sale made to the Accredited Institution, upon presentation of the respective form. After its use, the aforementioned form will be returned to the client with the inscription "VOID FOR REPURCHASE PURPOSES", expressed between two parallel diagonal lines. VI. EXCHANGE SALES – BUSINESS, SERVICE, OR TRAINING
59. In addition to acquisitions made based on Title V, and observing the aforementioned provisions, legal entities may acquire from an Accredited Institution foreign currency intended to cover the expenses of their employees abroad on business, service, or training trips.
60. The aforementioned sale is conditioned upon presentation to the Accredited Institution of a formal letter on the employer's letterhead, stating the purpose of the trip, the duration of the stay abroad, and the traveler's position.
61. The national currency equivalent of the exchange transaction must be debited to the current deposit account in the name of the employing entity or paid with a check issued by it.
62. The amount of foreign currency to be delivered to the traveler, based on the provisions of this Title, must comply with the maximum daily allowance limits indicated in Annex No. 6.
63. In the event of a return to the country before the planned end date of the mission, the foreign currency acquired under this Title, corresponding to the days of early return, must be resold to the Accredited Institution. VII. CRITERIA APPLICABLE TO ACCOUNTING RECORDS
64. For the accounting recording of the transactions covered by this Regulation, the Accredited Banking Institution must insert, in the appropriate grouping of its Chart of Accounts, accounting subheadings under the designation "Floating Rates", in order to separate the accounting recording of exchange transactions conducted at floating rates from those conducted at administered rates;
65. Monthly, for the national currency valuation of rights and obligations in foreign currencies, the balances of the aforementioned accounts must be adjusted, based on the rates provided by the Central Bank for the purpose of balance sheets and financial statements, relative to the Floating Exchange Rate Market.
66. Regarding the aforementioned point, it must be observed that: a) the result equals the value necessary to be debited or credited to the patrimonial account so that its balance in national currency corresponds, in nature (debtor or creditor) and value, to the balance in foreign currency recorded therein converted at the rate mentioned in the preceding point; b) the results ascertained must be accounted for in the respective accounts in counterpart with the appropriate revenue or expense items, in specific subheadings under the designation "Floating Rates".
67. The accounting bookkeeping of transactions in the Floating Exchange Rate Market may be conducted in a centralized manner, at the national or regional level at the discretion of the Accredited Institution, in one or more branches.
68. The daily movements of centralized branches must be incorporated into the accounting of the centralizing branch to which they are subordinate, on the same date they occur; valued postings are not admitted due to the impossibility of incorporating the movement on the same day. Luanda, November 6, 1991. THE GOVERNOR FERNANDO ALBERTO DA GRAÇA TEIXEIRA ANNEXES: 1 to 6. ANNEX NO. 1 (PURCHASE FORM) FRONT PURCHASING INSTITUTION FORM NO. DATE CODE FLOATING EXCHANGE RATE MARKET EXCHANGE PURCHASE SELLER Name/Company Name Address Phone OPERATION - BASIC DATA Foreign Currency and Value Exchange Rate Value in Kz Kz Nature (code) Delivery form (code) ADDITIONAL INFORMATION I declare knowledge of the Regulation of the Floating Exchange Rate Market, whose terms and conditions I will faithfully comply with. (Seller's Signature)