Fintech Department Bulletin | Fintech Legal News in Argentina | No. 23.
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.
Content
• Expansion of QR Code Interoperability
• Inclusion of New Roles in the Regime of PSPs (Payment Service Providers)
• Extension of Obligations for Payment Initiators (PSI)
• New minimum IT security requirements
• Prohibition of crypto operations for PSPs
• Progress on the project to reform the Anti-Money Laundering Law
• The CNV approves the trading of Bitcoin futures
• Guide for prosecutors on the prosecution of crypto assets
• Bill for tax disclosure of crypto assets
• Strengthening of the SIRASE system
• Prohibition for the cross-border purchase of gift cards with local cards
• Special exchange rate for foreign wallets
• Reduction of the Ahora 12 rate and increase in revolving rate
• Update of thresholds for the reporting of transactions to AFIP
• Bill to regulate the operation of SAS companies
Expansion of QR Code Interoperability
It should also work for credit card payments
Up until now, QR code interoperability (i.e., the ability for QR codes to be read by any digital wallet in the market) was only mandatory for account-to-account transfer payments but not for card payments.
As a result, certain banking associations recently expressed their dissatisfaction with this limitation, demanding the regulator to expand interoperability for cards as well. This led to strong clashes in the media with non-banking actors in the market.
Shortly after these public discussions emerged, the Central Bank of the Argentine Republic (BCRA) decided, through Communication “A” 7769 published on May 18, to expand QR code interoperability so that any digital wallet can now read them for credit card payments.
As usual lately, this Communication was accompanied by a press release where the BCRA stated, among other things, that this measure would make the payment experience more user-friendly.
This new functionality must be implemented before September 1st, 2023, although the affected entities must submit a compliance schedule to the BCRA (within 30 days of the Communication being issued) for monthly monitoring.
Inclusion of New Roles in the Regime of PSPs (Payment Service Providers)
They must register with the BCRA
Along with the expansion of the interoperability of QR codes, the BCRA incorporated four new functions into the registry regime for Payment Service Providers (PSPs) with the intention of “achieving more transparency”, as expressed by the BCRA in the aforementioned press release. These roles are (i) acceptance, (ii) acquiring, (iii) aggregation or sub-acquiring, and (iv) non-bank agencies that collect taxes and/or services.
The “acceptance” function was already provided for in the regulations, but it did not distinguish between payment instruments. Now, the BCRA clarifies that the acceptance role will only apply to the adherence of merchants to instant transfer payment schemes (PCT), differentiating it from the role of “acquirers” and “aggregators or sub-acquirers”, which will apply to the adherence of merchants to card payment schemes.
Until now, these roles of acceptance, acquiring, and sub-acquiring were not required to register with the BCRA, except in the case of offering payment accounts (PSPCP). With this new modification, PSPs intending to perform the mentioned functions must register with the BCRA prior to the commencement of their operations. Existing PSPs must register by October 1st, 2023.
Communication “A” 7769 establishes the requirements that these entities must meet to register as PSPs, including the need to report the fees charged to merchants, payment settlement times, and the provision of POS terminals and their conditions.
Furthermore, registration is also required for non-bank agencies that collect taxes and/or services. These companies had already been subject to some isolated regulations by the BCRA during the pandemic, but until now, they remained practically unregulated.
Beyond the registration obligations and the expansion of QR code interoperability for card payments, the BCRA has not currently established any additional requirements for all these new roles regarding fund administration, reporting, or other matters. This has raised some doubts about whether the BCRA intended to include all acquirers and sub-acquirers in the system performing these functions or only those that allow payments with QR codes. Given this situation, it is possible that new regulations and clarifications may appear in the future.
Extension of Obligations for Payment Initiators (PSI)
They must enable the initiation of transfers to non-bank accounts
Similar to certain banking associations recently expressing their dissatisfaction with the limitations on the interoperability of QR codes offered by certain non-banking actors, several Payment Service Providers have been complaining about the limitations in certain banking wallets to allow transfers to non-bank payment accounts (CVU).
In what seemed like a reciprocal measure in exchange for the expansion of QR code interoperability, in the same Communication “A” 7769, the BCRA established that all Payment Initiators (PSIs) that allow the initiation of instant transfers must comply with all applicable rules for instant transfers.
Although the wording of this requirement does not easily discern which specific rules the BCRA intended to refer to, in the public announcement accompanying the Communication, the BCRA hinted that one of the most important consequences will be that PSIs must enable their clients to make transfers to both CBU (Banking Universal Code) and CVU.
This modification takes effect 90 days from the publication of the Communication.
Along these same lines, on June 13, the BCRA issued Communication “B” 12560, through which it recalled (once again) that the limits established by the regulations for making instant transfers without restrictions apply to both transfers to bank accounts as to non-bank payment accounts. The BCRA even urged that both financial institutions and PSPCPs should allow their clients the possibility of requesting the temporary extension of said limits (TSI) with no more than 24 hours prior to payment.
New minimum IT security requirements
They will apply to both financial institutions and PSPs
Continuing with the explicit intention of the BCRA to “level the playing field” between financial institutions and PSPs, through the application of similar rules and standards under a functional approach, the BCRA decided to establish new minimum technological requirements for information security in the provision of digital financial services.
These new rules were established by Communication “A” 7783 issued on June 2nd, which determined the following effects: (i) there will be new minimum standards for the provision of digital financial services, which will apply to both financial entities and PSPs, (ii) the minimum standards that previously applied to financial institutions will remain in force, except with regard to electronic channels (which will be governed by the standards for digital services), and (iii) the minimum IT security standards applicable to financial entities will also apply to the Financial Market Infrastructures (Interbanking, Coelsa, Link and Prisma).
Beyond the operational issues derived from this new regulation, two issues stand out that anticipate extensive debates and possible future clarifications. On the one hand, the BCRA established that the new rules for digital financial services will apply to both financial entities and Payment Service Providers (PSPs), without specifying as in other cases if it refers only to the PSP roles that require registration or also to any other type of PSP. On the other hand, the BCRA established the obligation to notify the regulator, with at least 60 days in advance, about any projects that involve a new product or any new type of financial service by digital means to clients.
These new provisions will enter into force 180 days after the regulation was published.
Prohibition of crypto operations for PSPs
Applies to PSPs that offer payment accounts
On May 4th, the BCRA published Communication “A” 7759, in which it established that Payment Service Providers (PSPs) that offer payment accounts (PSPCPs) cannot carry out or facilitate operations with digital assets, including cryptocurrencies, that are not authorized by a competent national regulatory authority or the BCRA.
This prohibition was issued exactly one year after the BCRA imposed the same prohibition on financial institutions through Communication “A” 7506.
Although the limitation imposed on PSPCPs has raised strong concerns in the crypto market (as many crypto exchanges operate with PSPCPs to facilitate fiat ramps), the BCRA’s press release accompanying this new rule clarified that the regulations aim to prevent PSPCPs from conducting such operations themselves or offering to initiate them from their applications or web platforms, through the availability of automated purchase buttons for the user.
The day after the publication of this regulation, the Argentine Fintech Chamber released a statement expressing its opposition to the prohibition imposed by the regulator.
Progress on the project to reform the Anti-Money Laundering Law
Would grant broad powers to the CNV to regulate the crypto market
On April 19th, the Chamber of Deputies gave initial approval to the proposed reform (09-PE-22 OD 624) of the Anti-Money Laundering Law, which, if finally approved and enacted without modifications, would include several fintech market players, including Providers of Virtual Asset Services, as new Obliged Entities.
The project contemplates the creation of new registry of Providers of Virtual Asset Services, which would be under the supervision of the National Securities Commission (CNV). The securities regulator would also be granted certain broad powers to regulate the crypto sector, including some impact on cross-border providers. This modification has generated some criticism from the industry, as this regulatory intention could go beyond what is strictly related to the prevention of money laundering.
Although there is no certainty about the final approval of the project, the imminent evaluation of the Financial Action Task Force (FATF) in Argentina could exert pressure to accelerate the processing deadlines.
The CNV approves the trading of Bitcoin futures
The underlying asset will be the Bitcoin Matba Rofex Index
Unlike the BCRA, which is increasingly restrictive regarding the crypto market, the CNV approved a regulation on April 10th to trade Bitcoin futures contracts, with the underlying asset being the “Bitcoin Matba Rofex Index”. This index will allow qualified investors to gain exposure securely and transparently to the price of Bitcoin through derivative products traded on regulated market infrastructures.
The index will be based on Bitcoin price information provided by various price providers and entities that facilitate the BTC/ARS pair operation.
The CNV has imposed two conditions on Matba Rofex S.A., which will be the framework enabled for these transactions. These conditions include the need to have a valid contract with a Payment Service Provider (PSP) registered with the BCRA (which seems somewhat contradictory to the recent prohibition established by the BCRA), as well as the incorporation of alerts warning investors about the risks associated with this operation and the possible contingencies in the formation of the instrument.
This initiative is part of the Innovation Hub launched by the CNV a year ago, which promotes public-private collaboration in the development of financial technologies.
Guide for prosecutors on the prosecution of crypto assets
Provides guidelines for the investigation of criminal offenses
On May 12th, the Public Prosecutor’s Office released a “Practical Guide for the Identification, Traceability, and Seizure of Crypto Assets”, with the intention of providing a series of theoretical and practical guidelines for prosecutors investigating crimes involving the use of crypto assets.
This document aims to provide a series of basic definitions that characterize the ecosystem of crypto assets and the blockchain technology on which they are based. It then provides a comprehensive approach to different investigative aspects related to the traceability and identification of transactions, possible forensic evidence, and seizure of these types of virtual assets.
Bill for tax disclosure of crypto assets Undeclared crypto holdings can be declared for tax purposes
On June 6th, a new bill of law (0009-PE-2023) was presented to the Federal Congress by the Executive Branch for the disclosure of undeclared assets, proposing the creation of a “Voluntary Disclosure of Undeclared Argentine Savings”. This bill aims to allow the declaration of movable and immovable property, as well as other assets, including crypto assets, cryptocurrencies, digital currencies, and similar instruments, both within the country and abroad.
The initiative establishes that, in the case of crypto-assets, taxpayers will be required to submit a sworn statement that will be regulated in the future. The disclosure of these assets will entail the obligation to pay a reduced tax rate in order to rectify past irregularities.
As of today, it is still uncertain whether the bill of law will be debated or approved.
Strengthening of the SIRASE system
Affects international facilitators of digital service payments
On April 20th, the BCRA published Communication “A” 7746, which tightened certain conditions for payments of services abroad through the official exchange market.
In this regard, it was established that for certain service concepts, it will be necessary to wait 60 days from the approval of SIRASE to be able to process payments abroad. It should be noted that the SIRASE system presupposes prior approval from both the Federal Tax Authorities (AFIP) and the Secretary of Commerce to process payments of services abroad, including digital services.
Shortly after this modification issued by the BCRA, AFIP also modified the operational regulations of SIRASE on its website, stating that from now on, all service concepts must go through the prior filter of the Secretary of Commerce. Previously, there were certain concepts that did not require this prior authorization, allowing for faster processing of some payments.
These recent amendments have greatly hindered the operations of international payment facilitators, who must now decide with their clients whether to wait for the SIRASE deadlines or move to the “blue chip swap” market. However, even in this latter case, there have been additional restrictions, as the BCRA has also extended the block to access the official exchange market to 180 days for those entities operating with securities through the “blue chip swap” market.
Prohibition for the cross-border purchase of gift cards with local cards
In a new restrictive measure for the foreign exchange market, the BCRA decided to prohibit access to the official exchange market for payments abroad using credit, purchase, debit, or prepaid cards issued in the country when intended for the acquisition of gift cards or equivalents from stores or establishments located abroad. The measure was established by Communication “A” 7766 on May 11th.
This prohibition adds to the existing one for the use of local cards in cross-border purchases of crypto assets, gambling, loading of wallets or investment accounts, purchase of jewelry, stones or precious metals, and foreign exchange transactions.
Special exchange rate for foreign wallets
They will be able to operate with the “financial” exchange rate
In a measure that seeks to take advantage of the interoperability of QR codes to capture foreign tourism consumption, on May 4th the BCRA issued Communication “A” 7762, through which it exempted from the requirement of settlement in the foreign exchange market non-resident payments made through the use of electronic wallets or other modalities involving immediate debits from an offshore bank account or offshore virtual account opened in an authorized foreign entity.
In this way, consumption by tourists under this modality can take advantage of the “financial” exchange rate (more beneficial than the official exchange rate), which until now could only be obtained through foreign card payments.
In a press release published by the BCRA along with this regulation, it explained that foreign wallet operators seeking to take advantage of this benefit must reach agreements with local administrators of payment schemes for this purpose.
Reduction of the Ahora 12 rate and increase in revolving rate
Government measures aimed at promoting consumption
On May 16th, the Secretary of Commerce published Resolution 904/2023, which reduced by 9 percentage points the interest rate for financing card purchases with installments under the government-subsidized “Ahora 12” program.
This measure was issued in parallel with Communication “A” 7767, which raised the nominal annual rate of fixed-term deposits for individuals to 97% and the maximum rate for the revolving of credit cards financed amounts below ARS 200,000 to 86% (starting from the billing cycle of June 2023).
Update of thresholds for the reporting of transactions to AFIP
The measure applies to banks and PSPs
On April 17th, the AFIP, through General Resolution 5348/2023, updated the amounts by which financial institutions must inform the following transactions to AFIP: (i) monthly credits in account, (ii) monthly cash withdrawals, (iii) account balances, and (iv) debit card transactions by the account holder and/or additional cardholders.
This reporting obligation, originally imposed by General Resolution 4298/2018, raised the reporting threshold to AR$200,000 for all cases, except for debit card transactions, which remained at AR$120,000.
On the other hand, the reporting thresholds for electronic or digital management platforms, established by General Resolution 4614/2019, were also updated. In this case, the minimum threshold per transaction was set at ARS 120,000, monthly balances at AR$200,000, and movements that must be reported in more detail at AR$400,000.
Bill to regulate the operation of SAS companies
It would establish a registry for entrepreneurs
At the end of last March, a group of the governing party deputies presented to the Federal Congress the bill “Transparency Regime for Simplified Anonymous Companies” (0940-D-2023), with the intention of regularizing and establishing a more restrictive regime for the operation of Simplified Corporations (SAS) created by Law 27,349.
This new bill was submitted shortly after the expiration of a previous bill that intended to suspend the operation of these types of companies.
Among other provisions, this new project proposes the creation of an “Entrepreneurs Registry”, under the supervision of the Ministry of Economy, in which individuals who wish to become partners of an SAS must register. It also establishes the obligation for SAS and Limited Liability Companies (SRLs) to submit annual financial statements, imposing unlimited liability on the partners in case of non-compliance with such filing for two consecutive periods.
Shortly after the project became known, the Association of Entrepreneurs of Argentina (ASEA) publicly expressed its opposition and concerns regarding this proposal, as there are still several ventures operating under this legal vehicle.
Please, do not hesitate to contact us should you require any additional information on these matters.
Sincerely,
Daniel Levi
María Shakespear
Pablo J. Torretta
Luciana Liefeldt
Franco Montiel
Jorge Pico
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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.