Argentine Justice admitted the legality of the "blue chip swap"

The Chamber of Appeals on Criminal Economic Matters decided in re “BBVA Banco Francés” that “blue chip swap” transactions are not a criminal offense. In such connection, Section “B” of this Chamber said that applying the Criminal Exchange Regime set forth by Law 19,359 to these financial transactions constitutes a breach to the principle of legality set forth by Section 18 of the National Constitution.

Although still subject to an appeal by the Prosecutor, the decision recognizes and applies a largely established principle in criminal law: judges cannot punish actions which are not strictly comprised within the criminal law. In other words, analogy cannot be used in criminal law in order to deem an action as a criminal offense if it has not been declared as such by law.

Analogy, which consists in applying a law to cases which are not literally comprised by such law but which are similar to those which have been comprised, is valid in civil law, but in no way can be admitted in criminal law. Likewise, it is important to point out that other principles that make somehow blurry the application of criminal law cannot be used in criminal exchange law. A typical example is the “economic reality”, which has been set forth by Section 47 e) of Law 11,683 in tax matters, but which cannot be extended to foreign exchange matters.

The “blue chip swap” is a transaction under which someone locally purchases securities denominated in foreign currency (which are traded both in Argentine and abroad) and then transfer them to an account held outside Argentina for its sale and settlement. The same proceeding can be used inversely and, starting from a purchase of securities with foreign currency, transfer them into Argentina for their local sale and settlement.

This transaction was even recognized by the Central Bank, which rule don it and imposed certain requirements, which can be summarized in two main principles: (a) Transfer of securities: there must exist a real and effective transfer; and (b) No simultaneity: the purchase and sale of the securities cannot occur simultaneously, but a certain term must elapse between each purchase and sale, pointing out that simultaneous transactions are deemed as a single and indivisible unit aimed at (unduly) circumventing foreign exchange regulations.

Certainly, these requirements can only be demanded as from the date of the regulation which imposed them, i.e., Communication “A” 4864, since claiming to comply with them retroactively would be a breach to the principle of legality. In this sense, it must be reminded that Section 1 of Law 19,359 states that “sanctions contemplated in this law will apply to (…) f) Any action or omission which breaches rules on foreign exchange regime.”

In other words, the law delegated the to the foreign exchange authority (the Central Bank) the “filling” of this concept, through the issuance of regulations on foreign exchange. Thus, for as long as these transactions with securities complies with the requirements set forth by Communication “A” 4864 (i.e., with the relevant area of the “foreign exchange”, there is not breach and is not comprised in Section 1 f) of Law 19,359. On the other hand, as it was said above, it the transactions were prior to Communication “A” 4864, then, simply, there has been no breach of regulations issued by the Central Bank.


AR$ 60 million syndicated loan granted to Carsa S.A.

Legal counsel to Banco de Servicios y Transacciones S.A., Banco Comafi S.A., BACS Banco de Crédito y Securitización S.A., Banco Hipotecario S.A., Banco Mariva S.A. and Banco Coinag S.A, as lenders in a sindicated financial loan granted to Carsa S.A. for an aggregate of AR$ 60,000,000. (2015)