Prevention of money laundering and terrorism financing: sanctions, assessment of background, opening of branches, distribution of results, regulatory adjustments

"2015 - YEAR OF THE BICENTENNIAL OF THE CONGRESS OF THE FREE PEOPLES"

COMMUNICATION "A" 5785
31/07/2015

TO FINANCIAL INSTITUTIONS,
TO EXCHANGE HOUSES, AGENCIES, OFFICES AND BROKERS, TO REPRESENTATIVES OF FOREIGN FINANCIAL INSTITUTIONS NOT AUTHORISED TO OPERATE IN THE COUNTRY, TO COOPERATIVE CREDIT UNIONS (LAW 26.173):

Ref.: Circular
CREFI 2 - 84
RUNOR 1 - 1142
CONAU 1 - 1120

Prevention of money laundering and terrorism financing. Sanctions. Assessment of background. Opening of branches. Distribution of results. Regulatory adjustments.

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We are writing to inform you that this Institution has adopted the following resolution:

"1. Replace items 1.4.1. and 1.4.2. of the rules on "Prevention of money laundering, terrorism financing and other illicit activities" with the following:

"1.4.1. Notification of sanctions by the FIU and by foreign entities or authorities with equivalent powers.

The Central Bank (BCRA) will assess - within the framework of its competence - the final resolutions on sanctions notified to it by the FIU regarding the subjects under its supervision. It will also take into consideration the sanctions communicated by foreign supervisory entities with equivalent powers against money laundering and terrorism financing.

The facts subject to the sanction will be analysed taking into account the type, reason and amount of the sanction applied, the degree of participation in the facts, the possible alteration of the economic order and/or the existence of harm caused to third parties, the benefit generated for the sanctioned party, its operating volume, its asset liability and the position or function exercised by the natural persons involved.

Situations of recidivism in accordance with the FIU's regulations and cases of repeated sanctions (when the subject has been sanctioned for different infringements that are not computable for the purposes of recidivism) will also be considered.

The foregoing analysis may give rise to:

1.4.1.1. To the disciplinary proceedings and sanctions provided for in article 41 and related provisions of the
Financial Institutions Law, both for the obligated subjects covered by the BCRA regulations and for the natural persons who are involved. das.

1.4.1.2. To the BCRA considering such background unfavourable in cases of applications
for:

• the expansion of the activities of financial and exchange institutions (transformation into another financial institution, establishment of operating houses in the country or abroad, increase in their participation in other financial institutions in the country or abroad, or establishment of representative offices abroad - as applicable);

• the distribution of results by financial institutions; and/or

• acting as promoter, founder or partner, or being appointed as a member of the governing bodies (shareholders, partners or equivalents), management bodies (directors, councillors or equivalent authorities), or supervisory bodies (statutory auditors and members of the supervisory board or equivalents), general manager and deputy general manager with delegation from the board of directors - or equivalent management body - to act in its place, highest authority of a branch of a foreign financial institution or representative (principal and alternate) of a foreign financial institution not authorised to operate in the country or exchange broker.

1.4.2. Non-compliance with the rules on prevention of money laundering and terrorism financing.
to del terrorismo.

When the Central Bank, in its control and prevention tasks regarding money laundering and terrorism financing, finds that the detected non-compliances also constitute infringements of Laws 21.526 and 18.924 and their regulatory provisions, it may consider whether these infringements justify the exercise of the powers provided for in article 41 and related provisions of the Financial Institutions Law and initiate, where appropriate, disciplinary proceedings against the obligated subject and the members of its management bodies (directors, councillors or equivalent authorities), governing bodies (shareholders, partners or equivalents), supervisory bodies (statutory auditors and members of the supervisory board or equivalents) and other persons (such as managers) who are involved."

2. Replace the last two paragraphs of item 1.1.2. of Section 1., Chapter I of Circular CREFI - 2 (text as per Communication "A" 5485), with the following:

"1.1.2. Assessment of background.

… …

The level of probity and moral integrity of the person will be weighed, taking into consideration whether they have breached rules, whether they have been linked to dishonest commercial practices, whether they have been convicted of money laundering and/or terrorism financing offences, and whether they have been sanctioned with a fine, disqualification, suspension, prohibition or revocation by the Central Bank of the Argentine Republic (BCRA), the Financial Information Unit (FIU), the National Securities Commission (CNV) and/or the National Insurance Superintendency (SSN).

Information and/or sanctions communicated by foreign entities or authorities with equivalent powers will also be taken into consideration.

For the weighing of sanctions, their age, the type, reason and - where applicable - the amount of the sanction applied, the degree of participation of the person in the facts and their position or function exercised, the possible alteration of the economic order and/or the harm caused to third parties, the benefit generated for the sanctioned party, the operating volume of the institution and its asset liability will be considered."

3. Incorporate into item 1.1.3. of Section 1., Chapter I of Circular CREFI - 2 (text as per Communication "A" 2241) as the second paragraph the following:

"1.1.3. …

Applicants listed on the lists of terrorists and terrorist associations issued by the United Nations Security Council and/or on the resolutions on terrorism financing communicated by the Financial Information Unit (UIF) shall not be authorized, without prejudice to any other measures to be adopted in accordance with the legislation in force in these matters (laws and regulatory decrees) and the related resolutions issued by the UIF.”

4. Replace item 1.2.2.6. of Section 1., Chapter I of Circular CREFI - 2 (text according to Communication “A” 5485) with the following:

“1.2.2.6. Background information on the responsibility, suitability and experience in financial activity of the members of the governing bodies (shareholders, partners or equivalents), management bodies (directors, council members or equivalent authorities) and oversight bodies (statutory auditors and members of the supervisory board or equivalents) of the entity, and a sworn statement in which such persons declare that none of the disqualifications set forth in Article 10° of the Financial Entities Law apply to them, that they are not listed on the lists of terrorists and terrorist associations issued by the United Nations Security Council nor on the resolutions on terrorism financing communicated by the Financial Information Unit (UIF), that they have not been convicted of money laundering and/or terrorism financing offenses, and whether they have been sanctioned with a fine, disqualification, suspension, prohibition or revocation by the Central Bank of the Argentine Republic (BCRA), the UIF, the National Securities Commission (CNV) and/or the National Insurance Superintendency (SSN).

For these purposes, the application “Personal background information of financial institution authorities” available on the website of the Central Bank of the Argentine Republic (www.bcra.gob.ar) shall be used.

Likewise, certificates issued by the CNV and the SSN regarding the existence or non-existence of sanctions shall be submitted. The certificates submitted shall be no more than 6 (six) months old for processing purposes. Once this period has expired, interested parties shall submit their update.

The submission of the “Sworn Statement on Politically Exposed Person status” shall also be completed, which shall comply with the formal guidelines established by the UIF.”

5. Replace item 2.2.1.7. of Section 2., Chapter I of Circular CREFI - 2 (text according to
   Communication “A” 5485) with the following:

“2.2.1.7. List of the future members of the administration bodies (directors, board members or equivalent authorities) and auditing bodies (statutory auditors and members of the supervisory board or equivalents) of the company resulting from the merger or of the acquiring company, as applicable, and for each of them, a sworn statement on personal and criminal background in which they state that none of the disqualifications established by article 10 of the Law on Financial Entities applies to them, that they have not been convicted of crimes of money laundering and/or terrorist financing, that they do not appear on the lists of terrorists and terrorist associations issued by the United Nations Security Council or in the resolutions on terrorist financing communicated by the Financial Information Unit (UIF) and as to whether they have been sanctioned with a fine, disqualification, suspension, prohibition or revocation by the Central Bank of the Argentine Republic (BCRA), the UIF, the National Securities Commission (CNV) and/or the National Insurance Superintendency (SSN).

For such purposes, the application “Personal background of authorities of financial entities” available on the website of the Central Bank of the Argentine Republic (www.bcra.gob.ar) must be used. Persons who have entered all this information in the Superintendency of Financial and Exchange Entities within the 30 (thirty) calendar days prior to the submission of the merger application are exempt from complying with this requirement.

Likewise, they shall attach the certificates and attestations referred to in points 1.2.2.6. and 1.2.2.7. of this Chapter.”

6. Replace Section 5. of Chapter I of Circular CREFI - 2 (text as per Communications “A” 3700, “A” 4490, “A” 5248, “A” 5345 and “A” 5485) with the one attached in the annex that forms part of this resolution.

7. Replace Section 8. of Chapter I of Circular CREFI - 2 (text as per Communication “A” 5485) with the following:

“Section 8. Fundamental changes in the conditions necessary to maintain the authorization.

The sanctions imposed by the Central Bank of the Argentine Republic, the Financial Information Unit, the National Securities Commission and/or the National Insurance Superintendency on financial entities and/or their authorities, weighed separately or jointly, may give rise to the revocation of the authorizations granted when, in the opinion of the BCRA Board, fundamental changes have occurred in the conditions necessary to maintain the authorization, including the suitability, experience, moral probity or integrity of the members of their administration bodies (directors, board members or equivalent authorities), governing bodies (shareholders, partners or equivalents), auditing bodies (statutory auditors and members of the supervisory board or equivalents) and other persons (such as managers) with respect to whom the BCRA requires that such conditions be evidenced through authorization or certification processes, as the case may be.

In the same sense, for the purposes of the preceding paragraph, the information and/or sanctions communicated by foreign entities or authorities with equi-

valid, as well as other negative antecedents of the entity for having been involved in improper commercial practices.

For the weighing of the sanctions, consideration will be given to their age, the type, reason and -where applicable- the amount of the sanction applied, the degree of participation of the persons involved in the facts and their position or function exercised, the possible alteration of the economic order and/or the damages caused to third parties, the benefit generated for the sanctioned party, the operating volume of the entity and its financial responsibility.”

8. Replace point 1.X. of Section 1. of Chapters II, III and IV of Circular CREFI - 2 (text as per Communication “A” 5485), with the following:

“1.X. Not having been sanctioned by the Banco Central de la República Argentina, the Unidad de Información Financiera, the Comisión Nacional de Valores or the Superintendencia de Seguros de la Nación during the 5 (five) years prior to the application.

However, the Banco Central may authorize the opening of branches, other operating offices and/or the expansion of activities when:

i) they are requested by public financial entities of the Nation, of the provinces, of the Ciudad Autónoma de Buenos Aires and municipal ones in their respective jurisdictions, to the extent that they are destined mainly to the granting of financing for activities and/or promotion programs promoted by the National, provincial, Ciudad Autónoma de Buenos Aires or municipal states, or whose purpose is principally the establishment of payment centers for social security benefits or allocations; or

ii) the operating offices to be installed are located in localities included in categories IV to VI (point 3.3., Section 3., Chapter II of Circular CREFI - 2, -text as per Communication “A” 5355-); or

iii) the sanctions applied are warnings or calls for attention.

In those cases in which the notification of the sanction occurs after the opening of branches, other operating offices and/or the expansion of activities has been authorized without the authorization having been made effective, it may not be carried out unless any of the circumstances stipulated in the preceding points is verified.”

9. Replace the fifth paragraph of point 1.1. of Section 1., Chapter V of Circular CREFI - 2, (text as per Communication “A” 5485) with the following:

“In addition, the non-existence of the disqualifications established by article 10 of the Ley de Entidades Financieras will be verified and the level of probity and moral integrity of the person will be weighed, taking into consideration whether they have violated regulations, whether they have been linked to dishonest commercial practices, whether they have been convicted of crimes of money laundering and/or terrorist financing and whether they have been sanctioned with a fine, disqualification, suspension, prohibition or revocation by the Banco Central de la República Argentina, the Unidad de Información Financiera (UIF), the Comisión Nacional de Valores (CNV) and/or the Superintendencia de Seguros de la Nación (SSN). Applicants who appear on the lists of terrorists and terrorist associations issued by the United Nations Security Council and/or in the resolutions on terrorist financing communicated by the UIF will not be authorized.

The information and/or sanctions communicated by foreign entities or authorities with equivalent powers will also be taken into consideration.

For the weighing of the sanctions, consideration will be given to their age, the type, reason and -where applicable- the amount of the sanction applied, the degree of participation of the person in the facts and their position or function exercised, the possible alteration of the economic order and/or the damages caused to third parties, the benefit generated for the sanctioned party, the operating volume of the entity and its financial responsibility.”

10. Replace points 1.1.2.3. and 1.1.2.4. of Section 1., Chapter V of Circular CREFI - 2 (text as per Communication “A” 5485) with the following:

“1.1.2.3. Sworn statement on personal and criminal antecedents, in which the acquirer of the shares states that none of the disqualifications established by article 10 of the Ley de Entidades Financieras applies to them, that they have not been convicted of crimes of money laundering and/or terrorist financing, that they do not appear on the lists of terrorists and terrorist associations issued by the United Nations Security Council nor in the resolutions on terrorist financing communicated by the Unidad de Información Financiera (UIF), and as to whether they have been sanctioned with a fine, disqualification, suspension, prohibition or revocation by the Banco Central de la República Argentina (BCRA), the UIF, the Comisión Nacional de Valores (CNV) and/or the Superintendencia de Seguros de la Nación (SSN).

For such purposes, the application “Antecedentes personales de autoridades de entidades financieras” must be used, which is available on the website of the Banco Central de la República Argentina (www.bcra.gob.ar).

Likewise, certificates issued by the CNV and the SSN regarding the existence or non-existence of sanctions will be submitted. The certificates submitted must be no more than 6 (six) months old for the purposes of the processing. Once said period has expired, the interested parties must submit their update.

The submission of the “Declaración Jurada sobre la condición de Persona Expuesta Políticamente” will also be complied with, which must conform to the formal guidelines established by the UIF.

1.1.2.4. Criminal Record Certificate, issued by the Registro Nacional de Reincidencia, for each of the acquirers or contributors within the 5 (five) business days prior to the date of its submission to the Banco Central de la República Argentina.

When dealing with natural persons who up to that moment have their real domicile abroad, the certificates of equivalent character issued by the competent governmental authority of the country where they reside must also be submitted, with certification of signatures by the Consulate of the Argentine Republic in said country or legalization through the apostille system, in the case of States that have signed and ratified the Hague Convention of 5.10.61, and translation thereof into the Spanish language, where applicable, made by a registered public translator, with their signature legalized by the corresponding professional association.”

11. Repeal point 1.1.2.5. of Section 1., Chapter V of Circular CREFI - 2 (text as per Communication “A” 5485).

12. Replace point 2.2.2.13. of the rules on “Representatives of financial entities from
    abroad not authorized to operate in the country” with the following:

“2.2.2.13. Sworn statement that the person is not covered by any of the disqualifications established in article 10 of the Law on Financial Entities, that they have not been convicted of crimes of money laundering and/or terrorist financing, that they do not appear on the lists of terrorists and terrorist associations issued by the United Nations Security Council or in the resolutions on terrorist financing communicated by the Financial Information Unit (UIF), and as to whether they have been sanctioned with a fine, disqualification, suspension, prohibition or revocation by the Central Bank of the Argentine Republic (BCRA), the UIF, the National Securities Commission (CNV) and/or the National Insurance Superintendency (SSN).

For such purposes, the application “Personal background of authorities of financial entities” available on the website of the Central Bank of the Argentine Republic (www.bcra.gob.ar) must be used.

Likewise, certificates issued by the CNV and the SSN regarding the existence or non-existence of sanctions shall be submitted. The certificates submitted must be no more than 6 (six) months old for the purposes of the procedure. Once said period has expired, interested parties must submit their updated version.

The submission of the “Sworn Statement on the Status of Politically Exposed Person” shall also be complied with, which must conform to the formal guidelines established by the UIF.”

13. Incorporate as points 2.5.5. and 2.5.6. of the rules on “Representatives of financial enti-
    ties from abroad not authorized to operate in the country” the following:

“2.5.5. Applicants who appear on the lists of terrorists and terrorist associations issued by the United Nations Security Council and/or in the resolutions on terrorist financing communicated by the Financial Information Unit shall not be authorized.

2.5.6. For the weighing of sanctions, consideration shall be given to their age, the type, reason and - where applicable - the amount of the sanction applied, the degree of participation of the person in the events and their position or function held, the possible alteration of the economic order and/or the damages caused to third parties, the benefit generated for the sanctioned party, the operating volume of the entity and its financial responsibility.”

14. Replace points 1.3.9. and 1.5.4. of Section 1. of the rules on “Cooperative Credit Banks
    (Law 26.173)” with the following:

“1.3.9. Sworn statement on personal and criminal background, of the persons referred to in points 1.3.6., 1.3.7. and 1.3.8. in which they state that none of the disqualifications established in article 10 of the Law on Financial Entities applies to them, that they have not been convicted of crimes of money laundering and/or terrorist financing, that they do not appear on the lists of terrorists and terrorist associations issued by the United Nations Security Council or in the resolutions on terrorist financing communicated by the Financial Information Unit (UIF), and as to whether they have been sanctioned with a fine, disqualification, suspension, prohibition or revocation by the Central Bank of the Argentine Republic (BCRA), the UIF, the National Securities Commission (CNV) and/or the National Insurance Superintendency (SSN).

For such purposes, the application “Personal background of authorities of financial entities” available on the website of the Central Bank of the Argentine Republic (www.bcra.gob.ar) must be used.

Likewise, certificates issued by the National Securities Commission (CNV) and the National Insurance Superintendency (SSN) regarding the existence or non-existence of sanctions shall be submitted. The certificates submitted must be no more than 6 (six) months old for the purposes of the procedure. Once said period has expired, interested parties must submit their updated version.

Criminal record certificates must have been issued by the National Registry of Recidivism within the 5 (five) business days prior to the date of their submission to the Central Bank of the Argentine Republic. Furthermore, in the case of natural persons who at the time of their appointment have their real domicile abroad, the certificate of equivalent character issued by the competent governmental authority of the country where they reside must be submitted.

The submission of the “Sworn Statement on the Status of Politically Exposed Person” shall also be complied with, which must conform to the formal guidelines established by the UIF.”

…

“1.5.4. Submission to the Superintendency of Financial and Exchange Entities of the list of members of the Board of Directors (regular and alternate), designated by the constitutive assembly, of the Executive Steering Committee, of the member(s) of the Audit Commission or of the Trustee -as applicable- and of the managers, accompanied by the information referred to in point 1.3.9., unless they are persons whose data are already in the possession of said Superintendency because they have been added to the authorization request. Managers and higher-level functional positions must possess adequate experience in financial matters.

Authorization will not be granted to those who appear on the lists of terrorists and terrorist associations issued by the United Nations Security Council and/or in the resolutions on terrorist financing communicated by the Financial Information Unit.

Additionally, the level of probity and moral integrity of the person will be assessed, taking into consideration whether they have violated regulations or have been linked to dishonest business practices, whether they have been convicted of crimes of money laundering and/or terrorist financing, and whether they have been sanctioned with a fine, disqualification, suspension, prohibition, or revocation by the Central Bank of the Argentine Republic (BCRA), the Financial Information Unit (UIF), the National Securities Commission (CNV), and/or the National Insurance Superintendency (SSN).

Information and/or sanctions communicated by foreign entities or authorities with equivalent powers will also be taken into consideration.

For the assessment of sanctions, consideration will be given to their age, the type, reason, and -where applicable- the amount of the sanction applied, the degree of participation of the person in the events and their position or function exercised, the possible alteration of the economic order and/or the damages caused to third parties, the benefit generated for the sanctioned party, the operating volume of the entity, and its patrimonial responsibility.”

15. Replace point 1.1.2.7.1. of Chapter XVI of Circular RUNOR - 1 (text as per Communication “A” 4510), points 1.1.2.7.2., 1.7.1.8., and 1.16.3.2.3. of Chapter XVI of Circular RUNOR - 1 (text as per Communication “A” 5485), point 1.10.2. of Chapter XVI of Circular RUNOR - 1 (text as per Communications “A” 5485 and “C” 64518), and point 1.16.6. of Chapter XVI of Circular RUNOR - 1 (text as per Communication “A” 2138, 5006, and 5133) with the following:

“1.1.2.7.1. They must establish a special domicile before the Central Bank of the Argentine Republic, and must keep it updated while they serve in the exercise of functions as a member of the governing bodies (shareholders, partners, or equivalents), administration (directors, board members, or equivalent authorities), or audit (trustees and members of the supervisory board or equivalents) in the exchange entity and up to 6 years after ceasing in the corresponding function. This domicile will be valid for the purposes of notifications in matters of financial proceedings and in proceedings governed by the Exchange Criminal Regime Law and will remain in effect until the person notifies a new domicile to the BCRA. Additionally, they will present their personal data and a declaration of assets reflecting their patrimonial situation (Form 1113 A). The information arising from the elements of judgment contained in that form will be evaluated. The analysis to be carried out will aim to verify that the declared patrimonial situation demonstrates sufficient solvency and liquidity to comply with the contributions committed for the integration of capital, as well as to meet the other obligations that correspond to them as shareholders in the future and that, essentially, said capacity comes from usual sources such as income from personal work or commercial activity, rents, or realization of assets previously entered into the patrimony. In this framework, it may be considered that adequate own solvency is not possessed when it is feasible to presume that the resources have been provided by third parties or generated by other types of operations with the purpose of simulating such solvency, according to the evaluation carried out. The declaration of assets must be made in an analytical form, accompanied by documentation that proves the origin and ownership of the declared assets. If the analytical declaration of assets does not show the existence of sufficient liquid funds to carry out the capital contributions, a declaration closely related to the patrimony or income must be presented, detailing how the appropriation of the funds will occur. The declaration of assets must have a certification issued by an independent public accountant, with signature legalized by the respective Professional Council, regarding the content and other declared aspects.

1.1.2.7.2. Sworn statement that they are not included in the disqualifications established in article 4 of Law 18.924 (Form 1113 A), that they have not been convicted of crimes of money laundering and/or terrorist financing, that they do not appear on the lists of terrorists and terrorist associations issued by the United Nations Security Council or in the resolutions on terrorist financing communicated by the Financial Information Unit (UIF), and

regarding whether they have been sanctioned with a fine, disqualification, suspension, prohibi- tion, or revocation by the Central Bank of the Argentine Republic (BCRA), the UIF, the National Securities Commission (CNV), and/or the National Insurance Superinten- dency (SSN).

For these purposes, certificates issued by the CNV and the SSN regarding the existence or non-existence of sanctions will be presented. Such certificates must be no older than 6 (six) months for the purposes of processing. After said period, interested parties must present their update.

Compliance must also be given to the submission of the “Sworn Declaration on the status of Politically Exposed Person”, which must conform to the formal guidelines established by the UIF.”

…

“1.7.1.8. Not having been sanctioned with a fine, disqualification, suspension, prohibition or revocation by the Central Bank of the Argentine Republic, the Financial Information Unit (UIF), the National Securities Commission (CNV) or the National Insurance Superintendency (SSN).

When the notification of the sanction occurs after the installation of branches or offices has been authorized without the authorization having been made effective, it may not be carried out.”

…

“1.10.2. The sanctions of fine, disqualification, suspension, prohibition or revocation applied by the Central Bank of the Argentine Republic, the Financial Information Unit (UIF), the National Securities Commission (CNV) and/or the National Insurance Superintendency (SSN), weighted separately or jointly, that fall on exchange houses, agencies and offices and/or their authorities, may give rise to the revocation of the authorizations granted when, in the judgment of the BCRA, fundamental changes have occurred in the conditions necessary to maintain the authorization, including the suitability, experience, moral probity or integrity of the members of their management bodies (directors, board members or equivalent authorities), governance bodies (shareholders, partners or equivalents) or supervisory bodies (statutory auditors and members of the supervisory board or equivalents) and other persons (such as managers) with respect to whom the BCRA requires that such conditions be proven (through authorization or certification processes, as the case may be).

Likewise, for the purposes of the preceding paragraph, the information and/or sanctions communicated by foreign entities or authorities with equivalent powers may be taken into consideration, as well as other negative antecedents of the entity for having been involved in improper commercial practices.

For the weighting of the sanctions, consideration will be given to their age, the type, reason and - where applicable - the amount of the sanction applied, the degree of participation of the persons involved in the facts and their position or function exercised, the possible alteration of the economic order and/or the damages caused to third parties, the benefit generated for the sanctioned party, the operating volume of the entity and its equity responsibility.”

…

“1.16.3.2.3. Sworn declaration in Form 1113 A, in which the acquirer states that none of the disqualifications established by article 4 of Law 18.924 applies to it, that it has not been convicted of crimes of money laundering and/or terrorist financing, that it does not appear on the lists of terrorists and terrorist associations issued by the United Nations Security Council or in the resolutions on terrorist financing communicated by the Financial Information Unit (UIF), and as to whether it has been sanctioned with a fine, disqualification, suspension, prohibition or revocation by the Central Bank of the Argentine Republic, the UIF, the National Securities Commission (CNV) and/or the National Insurance Superintendency (SSN). For such purposes, certificates issued by the CNV and the SSN regarding the existence or non-existence of sanctions shall be submitted. Such certificates must have an age of no more than 6 (six) months for processing purposes. Once said period has expired, interested parties must submit their update.”

…

“1.16.6. Those who appear on the lists of terrorists and terrorist associations issued by the United Nations Security Council and/or in the resolutions on terrorist financing communicated by the Financial Information Unit (UIF) shall not be authorized as acquirers or contributors.

Likewise, legal persons that, at the date of signing the contract or pre-contract or delivery of the deposit or payment on account, are not regularly constituted may not be acquirers in the negotiation of blocks of shares (equity interests or corporate quotas) of exchange houses or agencies. Furthermore, in the event that such legal persons are directly or indirectly controlling them, the shares with voting rights representing their capital must be registered shares.

In the event that the acquirer is a foreign financial or exchange entity, in order to verify that it is not a “shell bank”, a certification from the supervisory authority of the country of origin must be submitted stating that said entity conducts business in the jurisdiction in which it is authorized to carry out the activity, maintains a record of operations at its domicile, is subject to inspection by the competent authority in the matter and, furthermore, that it employs full-time management and administrative personnel at its registered office.

For the weighting of the sanctions, consideration will be given to their age, the type, reason and - where applicable - the amount of the sanction applied, the degree of participation of the persons involved in the facts and their position or function exercised, the possible alteration of the economic order and/or the damages caused to third parties, the benefit generated for the sanctioned party, the operating volume of the entity and its equity responsibility.

For the purposes of the preceding paragraph, the information and/or sanctions communicated by foreign entities or authorities with powers equivalent to those of the Central Bank of the Argentine Republic (BCRA), the UIF, the National Securities Commission (CNV) and/or the National Insurance Superintendency (SSN) may be taken into consideration”.

16. Incorporate as points 1.1.5. and 1.1.6. of Chapter XVI of Circular RUNOR - 1 the following:

“1.1.5. In no case shall authorization be granted to those who appear on the lists of terrorists and terrorist associations issued by the United Nations Security Council and/or in the resolutions on terrorist financing communicated by the Financial Information Unit (FIU).

1.1.6. When prior sanctions must be weighed, consideration shall be given to their age, the type, reason and -where applicable- the amount of the sanction applied, the degree of participation of the persons involved in the events and their position or function held, the possible alteration of the economic order and/or the damages caused to third parties, the benefit generated for the sanctioned party, the operating volume of the entity and its equity responsibility.

For the purposes of the preceding paragraph, consideration may be given to the information and/or sanctions communicated by foreign entities or authorities with powers equivalent to those of the Central Bank of the Argentine Republic (BCRA), the FIU, the National Securities Commission (CNV) and/or the National Insurance Superintendency (SSN).”

17. Replace points 2.3. and 2.9. of Chapter XVI of Circular RUNOR - 1 (text as per Communications “A” 776 and “A” 5485, respectively), with the following:

“2.3. Address. Indicate where its office will be installed, indicating the existing or to-be-installed communications system.

In addition, it must establish a special address before the Central Bank of the Argentine Republic, and must keep it updated while carrying out the activity.

This address shall be valid for the purposes of notifications in matters of financial summary proceedings and in proceedings governed by the Foreign Exchange Criminal Regime Law and shall remain in effect until a new address is notified to the BCRA.”

…

“2.9. Disqualifications, suitability, probity and experience. Natural or legal persons affected by the disqualifications established in article 4 of Law 18.924, nor those who appear on the lists of terrorists and terrorist associations issued by the United Nations Security Council or in the resolutions on terrorist financing communicated by the Financial Information Unit, may not serve as foreign exchange brokers.

In addition, the level of probity and moral integrity of the person shall be weighed, taking into consideration whether they have violated rules, whether they have been linked to dishonest commercial practices, whether they have been convicted of crimes of money laundering and/or terrorist financing and whether they have been sanctioned with a fine, disqualification, suspension, prohibition or revocation by the Central Bank of the Argentine Republic (BCRA), the Financial Information Unit (FIU), the National Securities Commission (CNV) and/or the National Insurance Superintendency (SSN).

For such purposes, certificates issued by the CNV and the SSN regarding the existence or non-existence of sanctions shall be submitted. Such certificates must be no more than 6 (six) months old for the purposes of the procedure. After said period, interested parties must submit their update.

The information and/or sanctions communicated by foreign entities or authorities with equivalent powers shall also be taken into consideration.

For the weighing of sanctions, consideration shall be given to their age, the type, reason and -where applicable- the amount of the sanction applied, the degree of participation of the persons involved in the events and their position or function held, the possible alteration of the economic order and/or the damages caused to third parties, the benefit generated for the sanctioned party, the operating volume of the entity and its equity responsibility”.

18. Replace point 1.1.5. of the rules on “Distribution of results” with the following:

“1.1.5. record fine, disqualification, suspension, prohibition or revocation sanctions imposed in the last five (5) years by the Central Bank of the Argentine Republic, the Financial Information Unit (FIU), the National Securities Commission (CNV) and/or the National Insurance Superintendency (SSN) that are weighed as significant, except when corrective measures have been implemented to the satisfaction of the Superintendency of Financial and Exchange Entities, after consultation, where applicable, with the body that imposed the sanction being weighed.

The information and/or sanctions communicated by foreign entities or authorities with equivalent powers shall also be taken into consideration.

For the weighing of the significance of the sanctions, consideration shall be given to the type, reason and amount of the sanction applied, the degree of participation in the events, the possible alteration of the economic order and/or the existence of damages caused to third parties, the benefit generated for the sanctioned party, its operating volume, its equity responsibility and the position or function held by the natural persons involved.”

Lastly, we inform you that in due course we will send you the sheets that, in replacement of those previously provided, should be incorporated into the ordered texts of the rules on “Prevention of money laundering, terrorist financing and other illicit activities”, “Representatives of foreign financial entities not authorized to operate in the country”, “Cooperative Credit Banks (Law 26.173)” and “Distribution of results”.

We greet you attentively.

CENTRAL BANK OF THE ARGENTINE REPUBLIC

Matías A. Gutiérrez Girault
Issuance Manager of Rules
Juan C. Isi
Deputy General Manager of Rules

ANNEX

B.C.R.A.
Annex to
Comm. “A”
5785
CREATION, OPERATION AND EXPANSION OF FINANCIAL ENTITIES

Chapter I

INSTALLATION, MERGER AND TRANSFORMATION OF FINANCIAL ENTITIES

SECTION 5. Background of promoters, founders, members of the governing bodies (shareholders, partners or equivalents), of administration (directors, board members or equivalent authorities), of oversight (statutory auditors and members of the supervisory board or equivalents), general manager and deputy general manager authorized to replace him, highest authority of branch of foreign financial institution and managers.

The Central Bank of the Argentine Republic shall evaluate the conditions of legal ability, suitability, competence, probity, experience in financial activity and possibility of functional dedication of promoters, founders, members of the governing bodies (shareholders, partners or equivalents), of administration (directors, board members or equivalent authorities) or of oversight (statutory auditors and members of the supervisory board or equivalents) of financial institutions, of the highest authority of branch of foreign financial institution and of the general manager and deputy general manager with delegation from the board of directors -or equivalent administrative body- to act in their replacement.

Likewise, the administrative bodies of financial institutions must certify that the managers and other officers with equivalent responsibilities are not included in the disqualifications provided in the Financial Institutions Law and that they have a background that proves their competence, probity, experience in financial activity and possibility of functional dedication. The performance of these functions shall be subject to said certification and shall not require prior authorization.

The entities must keep all certifications issued and provide in their procedures and internal manuals the conditions for their issuance, conservation and periodic updating, all these elements being available to the Superintendency of Financial and Exchange Institutions.

The natural persons mentioned in this Section who perform functions as members of the administrative body (directors, board members or equivalent authorities) in the financial institution or who are part of its Senior Management -in accordance with the provisions of point 1.5. of the rules on “Guidelines for corporate governance in financial institutions”- must respect the principles of action and performance contained in said rules as well as those established in point 5.4. of this Chapter and Section.

These conditions must be maintained throughout the entire period of performance in the position both by persons subject to authorization by the Central Bank of the Argentine Republic and to certification by the entity in which they perform these functions. Fundamental changes in them may lead to the revocation of the authorization and/or the order to cease functions.

CENTRAL BANK
OF THE ARGENTINE REPUBLIC

5.1. The background of promoters, founders, members of the administrative bodies
(directors, board members or equivalent authorities) and of oversight (statutory auditors and mem- bers of the supervisory board or equivalents), of the highest authority of branch of for- eign financial institution and of the general manager and deputy general manager with delegation from the board of directors (or equivalent administrative body) to act in their replacement must be submitted through the use of the application “Personal background of authori- ties of financial institutions” that is available on the website of the Central Bank of the Argentine Republic (www.bcra.gob.ar).

5.2. The new directors or board members (or equivalent authorities) and the statutory auditors and mem-
bers of the supervisory board (or equivalents) must observe the general conditions of legal ability, suitability, competence, probity, experience in financial activi- ty and possibility of functional dedication, detailed in points 1.1.2. and 1.1.3. of Sec- tion 1. of this Chapter.

5.2.1. To prove compliance with said requirements, financial institutions may
choose one of the following procedures:

5.2.1.1. Submit to the Central Bank of the Argentine Republic at least 60 (sixty) days prior to the date of the ordinary shareholders' or associates' meeting at which the election of directors or board members is considered, the information contained in points 1.2.2.6. and 1.2.2.7. of said Section. The proposal note must be signed by the president or by competent authority of the parent company as applicable, in accordance with the provisions of Communication “A” 2910.

5.2.1.2. Appoint the director or board member and submit the aforementioned documentation within 20 (twenty) calendar days of the holding of the relevant ordinary shareholders' or associates' meeting, of the board meeting in the case of vacancy or of the date on which the appointment decree is signed.

5.2.2. At the time of the submissions made according to the preceding op-
tions, the entities must also send:

5.2.2.1. Current bylaws or charter of the entity.

5.2.2.2. Minutes of the respective shareholders' or associates' meeting, of the board meeting or corporate oversight body that make the appointment of authorities, or decree, as applicable according to the procedure adopted.

5.2.2.3. Information on the existence or not of commissions or committees with indication, if applicable, of the names and positions of the members of each of them.

5.2.2.4. Table containing the names of the members of the last two boards of directors or administrative councils of the entity and the composition of the projected one with the authorities under analysis, ordered in its first column by positions in decreasing order.

5.2.2.5. Sworn statement on personal and criminal background of the new
directors or board members, in which they state that none of the disqualifications established by article 10 of the Financial Institutions Law applies to them Financial entities, who have not been convicted of crimes of asset laundering and/or terrorist financing, who do not appear on the lists of terrorists and terrorist associations issued by the United Nations Security Council nor in the resolutions on terrorist financing communicated by the Financial Information Unit (UIF) and regarding whether they have been sanctioned with a fine, disqualification, suspension, prohibition or revocation by the Central Bank of the Argentine Republic (BCRA), the UIF, the National Securities Commission (CNV) and/or the Superintendency of Insurance of the Nation (SSN).

For such purposes, the application "Personal background of authorities of financial entities" must be used, which is available on the website of the Central Bank of the Argentine Republic (www.bcra.gob.ar).

The submission of the "Sworn Statement on the status of Politically Exposed Person" shall also be complied with, which must conform to the formal guidelines established by the UIF.

Likewise, certificates issued by the CNV and the SSN regarding the existence or non-existence of sanctions shall be submitted. Such certificates must be no more than 6 (six) months old for the purposes of the proceedings. Once said period has expired, interested parties must submit their updated version.

Criminal record certificates must have been issued by the National Registry of Recidivism within the 5 (five) business days prior to the date of their submission to the Central Bank of the Argentine Republic. In addition, in the case of natural persons who at the time of their appointment have their actual domicile abroad, the equivalent certificate issued by the competent governmental authority of the country where they reside must be submitted, with certification of signatures by the Consulate of the Argentine Republic in said country or legalization through the apostille system, in the case of States that have signed and ratified the Hague Convention of 5.10.61, and translation thereof into the Spanish language, where applicable, made by a registered public translator, with their signature legalized by the corresponding professional association.

5.2.2.6. Establish a special domicile before the Central Bank of the Argentine Republic, and keep it updated while serving in the exercise of administration functions (director, board member or equivalent authority), oversight functions (statutory auditor and members of the supervisory board or equivalent), or as a member of Senior Management in the entity (in accordance with the provisions of point 1.5. of the rules on "Guidelines for corporate governance in financial entities") and until 6 years after ceasing in the corresponding function.

This domicile shall be valid for the purposes of notifications in matters of financial proceedings and in proceedings governed by the Law on Criminal Exchange

Regime and shall remain in effect until the person notifies a new domicile to the Central Bank of the Argentine Republic.

5.2.3. The documentation referred to in points 5.2.2.1., 5.2.2.2., 5.2.2.5. and 5.2.2.6. must be certified by a Public Notary.

Within 30 (thirty) days of receipt of the required background information, the Board of Directors of the Central Bank of the Argentine Republic shall expressly rule on the matter. For such purpose, it shall take into account the opinion of the respective Board Committee, which may make the consultations it deems appropriate. However, said period may be extended if circumstances arise that prevent the decision from being adopted.

Until the financial entity is notified of the favorable resolution and the applicable legal requirements are met, the new director or board member may not assume the position for which they were appointed.

Notwithstanding this, the members of the board of directors of public banks, whether owned by the National, provincial, Autonomous City of Buenos Aires or municipal states, whatever their legal nature, whose appointments depend on an act of the Executive Branch and, where applicable, of the Legislative Branch of the jurisdiction, may assume their positions while their authorization is being processed at this Institution, their appointment being considered provisional, "ad referendum" of the pertinent authorization resolution and without prejudice to the validity of the acts in which they participate during that period. In the case of financial entities in which the National, provincial, Autonomous City of Buenos Aires or municipal states have shareholding, including in cases involving financial agents of said jurisdictions and even when said States do not hold such shareholdings, the procedure described above applies only to the members of the board of directors appointed by them. Likewise, said procedure shall apply in the case of directors appointed to represent the staff of said financial entities.

5.2.4. A period of 5 calendar days is established for public financial entities and those with state participation to report the list of new directors appointed to represent the State, detailing their first and last names, identity document and CUIT or CUIL. Likewise, within 30 calendar days they must submit the minimum information required on a general basis.

In all cases, failure to submit such information within the established terms shall give rise to the application of the provisions of article 41 of the Law on Financial Entities.

The Central Bank of the Argentine Republic may request additional information, which must be provided within the periods established in each case, and the verification of non-compliance in its submission shall give rise to the consequences mentioned in the preceding paragraph.

5.3. For financial entities incorporated as cooperatives whose bylaws provide for the establishment of an executive committee or board, such body shall only resolve on its members. With respect to the remaining directors, the corresponding technical area of the Banco Central de la República Argentina shall verify the absence of disqualifications

BANCO CENTRAL
DE LA REPÚBLICA ARGENTINA

established by article 10 of the Law on Financial Entities. In addition, the level of probity and moral integrity of the persons shall be assessed, taking into consideration whether they have trans- gressed regulations, whether they have been linked to dishonest commercial practices, whether they have been convicted of crimes of money laundering and/or terrorist financing and whether the person has been sanctioned with a fine, disqualification, suspension, prohibition or revoca- tion by the Banco Central de la República Argentina (BCRA), the Unidad de Información Financiera (UIF), the Comisión Nacional de Valores (CNV) and/or the Superintendencia de Se- guros de la Nación (SSN).

For such purposes, certificates issued by the CNV and the SSN regarding the existence or non-existence of sanctions shall be required. The certificates submitted must be no more than 6 (six) months old for processing purposes. Once said period has expired, interested parties must submit their updated version.

Information and/or sanctions communicated by foreign entities or authorities with equivalent powers shall also be taken into consideration.

5.4. For the purposes of the evaluation provided for in this Section and the subsequent performance of members of the administrative body (directors, board members or equivalent authorities) in the entity or who make up its Senior Management -in accordance with the provisions of point 1.5. of the rules on "Guidelines for corporate governance in financial entities"-, the principles and/or standards of conduct established in said rules and those listed below shall be taken into consideration:

5.4.1. Honesty and integrity in the exercise of their duties.

5.4.2. Acting in accordance with their competencies, with the due care and diligence proper to professional activity.

5.4.3. Observance of the standards of conduct of the financial system, of the financial entity itself and/or of the regulated and related activities in which they perform or have performed.

5.4.4. Compliance with Argentine legislation, the provisions, instructions and recommendations of this Central Bank and of other regulators to which it is subject. This standard presupposes abstention from acting in cases of conflict of interest between the entity and its clients and the entity and the control bodies.

5.4.5. Cooperation and timely provision of relevant information to regulatory bodies, avoiding its concealment or misrepresentation.

5.4.6. Safeguarding -within their responsibilities- the reliability of the entity's accounting and non-accounting information and the proper functioning of internal and external controls.

5.4.7. Safeguarding that the accounting criteria used are adequate, in accordance with the principle of due care and diligence proper to professional activity.

5.4.8. Defending the best interest of clients and the protection of users of the financial system, acting with loyalty and warning of the risks of operations.

CENTRAL BANK OF THE ARGENTINE REPUBLIC

5.4.9. Transparency of relevant information towards users of financial services.

5.4.10. Not assuming disproportionate risks that could affect the entity's assets and, consequently, those of its clients.

5.5. The provisions of point 5.2. shall apply to the members of the administrative bodies (directors, board members or equivalent authorities) and supervisory bodies (statutory auditors and members of the supervisory board or equivalent) of financial entities and to the highest authority of a branch of a foreign financial entity whose mandate is renewed when so ordered by the Superintendente de Entidades Financieras y Cambiarias.

When a new evaluation is not ordered, financial entities must annually certify that the natural person maintains the conditions of legal ability, suitability, competence, probity, experience in financial activity and possibility of functional dedication.

5.6. The appointment of the new general manager in the financial entity, of the deputy general manager with delegation from the administrative body to act in their replacement and of the highest authority of a branch of a foreign financial entity, shall also be subject to the prior evaluation of their background, as provided in point 5.2., where relevant.

In the case of general managers who are appointed -or those who perform those functions- in public financial entities, the provisions of points 5.2.3. and 5.2.4. shall apply.

The proposal note must be signed by the president or by the competent authority of the parent company as applicable, in accordance with the provisions of Communication "A" 2910.

5.7. Applicants who appear on the lists of terrorists and terrorist associations issued by the United Nations Security Council and/or in the resolutions on terrorist financing communicated by the Unidad de Información Financiera (UIF) shall not be authorized.

5.8. In cases where sanctions must be assessed, consideration shall be given to their age, the type, reason and -where applicable- the amount of the sanction applied, the degree of participation of the persons involved in the events and their position or function exercised, the possible alteration of the economic order and/or the damages caused to third parties, the benefit generated for the sanctioned party, the operating volume of the entity and its financial responsibility.

For the purposes of the preceding paragraph, the information and/or sanctions communicated by foreign entities or authorities with powers equivalent to those of the Banco Central de la República Argentina (BCRA), the UIF, the Comisión Nacional de Valores (CNV) and/or the Superintendencia de Seguros de la Nación (SSN) may be taken into consideration.

CENTRAL BANK OF THE ARGENTINE REPUBLIC

5.9. When a financial institution verifies non-compliance with the conduct standards
contained in point 5.4. of this Section by an authorized or certi- fied person, it must report it to the Banco Central de la República Argentina within a period of 5 (five) business days from the detection of the fact.

In the case of persons under the certification regime, the institution must initiate the corresponding internal actions in accordance with the seriousness of the offense committed to restore full compliance with the standards.

Failure to communicate timely to the Banco Central as provided in this point shall give rise to the application of sanctions under the terms of article 41 of the Ley de Entidades Financieras and may be considered as falling within the figure of concealment of relevant information under the terms of point 5.4.5.

The governing bodies of financial institutions must arrange the necessary measures so that these control functions are developed in the procedure manuals, as well as the assignment of responsibilities for their execution, with the participation of the Internal Audit. Likewise, the External Audit must be requested to also apply periodic review procedures.