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Venezuela: The Central Bank of Venezuela suspended banking products and services that facilitate the payment of foreign currencies

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In brief

On October 9, 2020, the Central Bank of Venezuela (“CBV”) ordered the suspension of products and services offered by universal and microfinance banks that facilitate the payment in foreign currencies for goods and services in Venezuelan (“Notice”).1

In further detail

1.    Authorized banking operations.

The Notice reiterated that universal and microfinance banks may solely mobilize and manage deposits of foreign currencies through:

  1. Wire transfers.
  2. Checks of the depositary bank to foreign correspondents.
  3. Debit instructions for consumer expenses.
  4. Withdrawals with debit or credit cards abroad.2

2.    Suspension of payment in foreign currencies.

The Notice ordered the suspension of any banking product or service that facilitates the payment with foreign currencies of goods and services in Venezuelan territory, because there is no foreign correspondent acting in the transaction.

3.    Non-bank Provider of Payment Services in foreign currency.

The CBV informed that it did not authorize any company to operate as a non-bank provider of payment services in foreign currency.  Companies that offer those services without authorization will be subject to a fine of up to 1% of their paid capital and reserves.3

Spanish version

1 The Central Bank of Venezuela published the Notice on October 9, 2020, according to the Exchange Agreement No. 1 (Official Gazette No. 6,405 Ext. of September 7, 2018). Available in: http://www.bcv.org.ve/circular-suspension-de-producto-o-servicio-que-facilite-los-pagos-de-bienes-y-servicios-en-divisas, consulted on15 October 2020.
2 The withdrawal charged to foreign accounts will be done according to article 32 of the Exchange Agreement No. 1. Article 32: “Persons of legal age living in Venezuela, and legal entities may maintain accounts with universal and microfinance banks under the Law of Banking Sector Institutions, funds in foreign currencies coming from licit activities from foreign sources or from the national finance system, even including cash withdrawals, without more limitation than those derived from prevention policies against money laundering and financing or terrorism. To those effects, the banking institutions are authorized to receive the deposits. Deposits in foreign currency may be mobilized through wire transfers, checks of the depositary bank to foreign correspondents, as well as through debit instructions for consumer expenses and cash withdrawals with credit or debit cards abroad. Likewise, the withdrawal of cash through those accounts will be made according to the terms issued by the Central Bank of Venezuela to that effect. The funds in foreign currency on opened accounts in banking institutions, corresponding to persons of legal age and legal entities, may originate from any licit activity.”
3 V. Resolution No. 18-12-01 (Official Gazette No. 41,547 of December 17, 2018). Third Final Disposition: “Noncompliance with the present Resolution’s dispositions will be administratively sanctioned according to article 135 of the Decree with Rank, Value and Force of Law of the Central Bank of Venezuela.”; and Decree No. 2,179, with Rank, Value and Force of the Organic Reform Law of the Central Bank of (Official Gazette No. 6,211 of December 30, 2015), Article 135.

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Author

José P. Barnola Jr. joined Baker McKenzie in 1996 and became partner in 2003. He is a senior member of the Venezuela tax practice group and counsel of the tax practice group in Mexico, and has extensive experience in tax advice, transactional tax and tax litigation. José has authored over 30 legal articles on several legal and tax issues published in Venezuela, United States, Canada and México (see list in https://www.linkedin.com/in/josepbarnolajr/) and has over 18 years' experience as tax law professor. He has written and spoken on investment protection and tax planning, cross-border distribution activities, corporate reorganizations, VAT, tax litigation, employee taxation and other hot topics of the Venezuelan tax system. Since 2018, José has been based in Baker McKenzie's office in Mexico City on a special temporary assignment, where he provides complex planning and transactional investment protection and tax advice, especially for the oil and gas industry, as well as tax litigation. José is the Latin America representative in Baker McKenzie's Tax Dispute Resolution Global Steering Committee, in charge of designing and implementing the global, regional and local strategic plans of the Firm.

Author

Maria Celis joined the Firm in 1997 and became partner in 2008. She has 20 years of experience working in corporate, mergers and acquisitions, joint ventures, telecommunication, real estate and anti-trust matters, and works with important national and international companies on corporate reorganization and M&A matters. She heads the Venezuela office Diversity & Inclusion committee and she was awarded as a highly commended lawyer in the category “Gender Diversity Lawyer of the Year Venezuela” by Chambers and Partners in the Latin America Awards 2019. In addition, she is member of the Sustainability committee of the Venezuela office and represents Venezuela in the Real Estate and M&A Latin America Steering Committees.

Author

Jesús Dávila joined Baker McKenzie in 2002 and became partner in 2009. He is recognized as a leading lawyer in Venezuela by Chambers Latin America and IFLR1000. Jesus advises domestic and multinational companies on the full scope of corporate transactions, including mergers, acquisitions, takeovers, joint ventures and a variety of other corporate work. He has a strong track record providing insightful advice to companies on matters of antitrust, foreign investment and technology transfer, IT/Communications, and trade and commerce. Jesus has been a professor in various renowned universities in Venezuela.

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