Cadivi requirements
The Comision de Administracion de Divisas (CADIVI) has revised the Providencia 82 – a regulation on foreign exchange operations – by the introduction of Article 20, which sets out additional operational requirements for financial transactions related
documents.
Consequently, reinsurance companies and reinsurance brokers domiciled abroad
are now required to provide SUDESEG (Insurance Superintendency) with a list of
authorised individuals who are entitled to sign documents (ie authorise placement
of risks and settlement of claims) on behalf of their companies. Additionally, the
relevant documentation must be in Spanish and apostilled or legalised. Having
provided this, companies will be allowed to carry out financial transactions and use
the official rate of exchange.
Following an internal agreement between CADIVI and SUDESEG, Lloyd’s is exempt from the provisions of Article 20. Therefore, Lloyd’s underwriters are not required to provide any list of authorised individuals or subsequent signatures in order to support their financial transactions. This is expected to be reflected in future regulation.
Criminal Exchange Law – selling goods and services in foreign currency
More recently, another change, unrelated to the above, has been made in order to
further tighten foreign currency control in Venezuela. In January 2008, the Criminal
Exchange Law was enforced, which prohibits any public or private offering of
purchase, sale or lease of goods and services in foreign currency. Companies or
individuals who fail to comply with this will be fined double the amount of the
transaction in Bolivars, the local currency.
Lloyd’s International Market Access sought legal advice on the matter and it has
been confirmed that, based on the ‘Law of the Insurance Contract’, insurance does
not qualify as goods or services and, therefore, does not fall under the Criminal
Exchange Law. Underwriters may therefore continue issuing policies in foreign
currency. They are, however, recommended to avoid public offering of policies in
foreign currency.
