Fintech Department Bulletin | Fintech Legal News in Argentina | Edition No. 15.
by Daniel Levi
In this bulletin, you will find a selection of the main legal news related to the fintech and digital banking market in Argentina.
Central Bank issues certain rules to foster financial inclusion
Incentivizes the use of electronic means
Last March 31, the Central Bank issued Communication “A” 7254, through which it established 4 different incentives to generate more financial inclusion.
The first incentive consists in a reduction of the legal banking reserves for those banks that can demonstrate achievements in their policies of financial inclusion and in the development of electronic payments (special consideration will be given to the granting of loans to SMEs and to the use of e-checks and electronic invoices).
The second incentive consists of allowing banks to grant credit to companies or persons that do not have banking history but have a credit history out of the banking market.
The third incentive seeks for banks to start growing payments with debit cards, electronic transfers, direct debit, and electronic payment of credit card balances.
The fourth incentive rewards banks that have fewer out-of-service ATMs and banks that install ATMs in local jurisdictions that lack machines or that are sub-covered.
Banking rules for settlement of interests over savings accounts are soften
Banks will now be able to settle daily interest as certain fintechs already do
Through Communication “A” 7246, last March 25 the Central Bank allowed banks to liquidate and pay interest over savings accounts and salaries accounts in accordance with the terms freely agreed with their clients.
It is worth reminding that, traditionally, in Argentina, banks could only settle interest on these types of accounts with a periodicity of at least 30 days.
With this change, the Central Bank wanted to allow banks to start competing with non-banking fintechs that already offer to their customers the possibility to gain and get paid daily interest over their account balances.
Central Bank requests information on crypto-assets operations
A lawyer brought a collective habeas data action that is ongoing
During the last month, certain rumors circulated in the local financial market about an information request that the Central Bank had supposedly sent to all banks asking information about all clients that operated with crypto assets, in the context of a “research” that the regulator would be conducting on the subject matter.
This gossip (not officially confirmed so far) caused such a noise in the local market, that last April 5 a particular lawyer brought a habeas data class action to stop the Central Bank’s information request, arguing that the data that the Central Bank was asking for (which included client names) exceeded what was necessary for the supposed “market research” purposes.
At the moment of preparing this newsletter, the action was still ongoing.
Government Fines Certain Lending Fintechs
They were penalized for irregularities on consumer defense rules
After several investigations conducted during 2020, last March 23 the Secretariat of Internal Commerce finally sanctioned four fintechs and companies dedicated to online personal loans for breaches to certain consumer defense rules.
The penalized companies were Moni, M2A Capital, Cuotitas, and Patagonia Cred, for an aggregate amount of AR$10 million (AR$2.5 million each).
The irregularities for which they were fined included: (i) the granting of unsolicited loans with automatic charges against consumers; (ii) lack of information about the characteristics and conditions of commercialization of the loans and about the lender; (iii) breach of the revocation right of consumers; and (iv) change of the applicable local jurisdiction for solving disputes.
Clarifications on the right of clients to increase limits for wire transfers
In particular for electronic payments
After some recent discussions generated over the limits imposed by banks for wire transfers, last March 25 the Central Bank (“BCRA”) clarified through Communication “B” 12146 that the right of clients to request the temporary increase of their transfer limits should be available for electronic payments that imply a transfer of funds.
Even though the BCRA seems to have issued this clarification for tax purposes, it was made in general terms, so it may apply as a general principle for electronic payments.
Central Bank’s Report on Retail Payments for 2020
It shows an astonishing growth in the use of electronic payments
Recently, the Central Bank published its semestral report on retail payments for 2020.
The report shows that last year (which was marked by the COVID-19 pandemic) the National Payments System grew 11.1%, led by instant transfers (+79.8%), and debit and prepaid cards (+17.2%). However, the highlight was in the use of e-wallets, which jumped 224% in only one year. There is a special remark also for the extended acceptance of e-checks.
Report on Other Non-Banking Providers of Credit
The First report published after amplification of regulations over the sector
This April, the Central Bank published its report on the Other Non-Banking Providers of Credit (OPNFC), which mainly includes lending fintechs and companies that provide credit for the retail.
Certain data that can be extracted from the report include the following: (i) the number of companies grew 37.4% in the last two years; (ii) by October 2020, the OPNFCs had 6.1 million debtors, of which 2.8 million were exclusive of OPNFCs and never had a banking product; (iii) the aggregate balance owed to OPNFCs raised up to AR$88,000 million; (iv) usual OPNFCs’ customers present lower income than banking customers; (v) delinquency is high (39%) and particularly higher in fintechs (50%); (vi) the number of financings decreased in the last two years, due to the economic crisis and the pandemic.
Guidelines for response and recovery against cyberincidents
Apply over banks and PSPs
Through Communication “A” 7266 dated April 16, the Central Bank published the “Guidelines for response and recovery against cyberincidents”, applicable to both financial entities and PSPs that offer payment accounts.
These guidelines are a series of “good practices” suggested by the Central Bank for the response and recovery against cyberincidents, aiming at avoiding risks in financial stability and at promoting cyberresilience of the ecosystem.
Courts reduce banks’ liability for the use of “double factors” for authentication
Provided that they duly informed their clients about risks and security measures.
A recent case resolved by the end of 2020 by the Unit F of the National Chamber of Commerce (“Cipriano c/ Banco Credicoop”) released the bank from responsibility for supposed phishing suffered by one of its clients because the bank adopted a system of “double validation” and informed its clients about the risks and recommended security measures for operating in electronic environments, which the judges found to be the appropriate expected conduct of the bank according to its specialization.
Another case recently resolved by Unit I of the Civil and Commercial Chamber of Gualeguaychú (“Badaracco c/ Nuevo Banco de Entre Ríos”), reduced in 80% the bank’s responsibility, because the bank adopted a “double-factor” system, though the bank should have informed more clearly its clients about the risks and security measures for preventing them.
Controversy continues over the ability of electronic signature to bring executive foreclosures
Despite a favorable recent precedent
After the first favorable sentence was issued by the end of last year, which admitted the preparation of the executive foreclosure with respect to a loan granted through electronic signature, the courts continue issuing divergent resolutions in this respect.
Thus, in the first cases resolved during 2021, the National Commercial Lower Courts issued sentences as “Afluenta c/ Gamboa”, where the judge rejected automatically the preparation of execution proceedings over a loan granted with electronic signature, while in other cases, such as “Afluenta c/ Meszaros” o “Afluenta c/ Perero”, the judges admitted summoning the debtor, or others where, despite the judge denied the force of electronic signature to conform an executive title, it accepted summoning the debtor for recognizing its signature, as in “Afluenta c/ Martin”. Therefore, this matter is still being controversial.
UALÁ entered an agreement to purchase WILOBANK
The transaction is subject to the prior approval of the Central Bank
By the beginning of April, the news published that the wide-known fintech UALÁ agreed to the purchase of WILOBANK, the first 100% digital bank in the country.
According to the law, the transaction is subject to the prior approval of the Central Bank, which could delay some months.
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This bulletin contains summaries of standards that are published and to which we refer. They are in no way complete or imply legal advice. If you require legal advice, please contact us.