In February of 2013, the Central Bank of Venezuela announced that offers for the sale of securities would not be processed and requests for the purchase of securities would not be granted through the Sistema de Transacciones con Títulos en Moneda Extranjera (“SITME”), which essentially suspended SITME indefinitely. After weeks of speculation, the acting president of Venezuela, Nicolas Maduro, announced the creation of a complementary system to support the Comisión de Administración de Divisas. This new system, tabbed as SITME’s successor, is called the Sistema Complementario de Administración de Divisas (“SICAD”). According to Venezuelan public officials, SICAD will assume a similar function to SITME but at different exchange rates and with greater transparency and minimized potential for corruption.

On March 25, 2013, the Venezuelan Ministry of Planning and Finance through the Superior Authority for the Optimization of the Currency Exchange System announced that the first auction under SICAD would be held the week of March 25, 2013 to March 29, 2013 (the “Convocatoria”). According to the Convocatoria, participation in the first SICAD currency exchange auction is limited to private companies in the “National Product Sector” that are duly registered with the Registro de Usuarios del Sistema de Administración de Divisa and are active with the Servicio Nacional Integrado de Administración Aduanera y Tributaria.

Over the last few years, U.S. regulators have increased their scrutiny of financial institutions’ policies and procedures with respect to the handling of currency exchange restrictions imposed by foreign countries (including SITME). Similarly, self regulatory organizations have expressed their concern over the origin of foreign sovereign debt securities that are either transferred into an account or settled through DVP transactions.

With the adoption of SICAD, financial institutions may need to review, revise and enhance their policies and procedures to mitigate potential risks relating thereto.

Read the Convocatoria: Convocatoria a Subasta N° 1

For more information regarding the SICAD, the Convocatoria or the adoption of policies and procedures designed to mitigate risk relating to the foregoing, please contact Andres Fernandez or Gabriel Caballero.

This publication is for general information only. It is not legal advice, and legal counsel should be contacted before any action is taken that might be influenced by this publication.

Established in 1925, Gunster is one of Florida’s oldest and largest full-service law firms. The firm’s clients include international, national and local businesses, institutions, local governments and prominent individuals. Gunster maintains its presence in Florida with offices in Fort Lauderdale, Jacksonville, Miami, Orlando, Palm Beach, Stuart, Tallahassee, Tampa, The Florida Keys, Vero Beach and its headquarters in West Palm Beach. Gunster is home to more than 160 attorneys and 200 committed support staff, providing counsel to clients through 18 practice groups including banking & financial services; business litigation; construction; corporate; environmental & land use; government affairs; health care; immigration; international; labor & employment; leisure & resorts; private wealth services; probate, trust & guardianship litigation; professional malpractice; real estate; securities and corporate governance; tax; and technology & entrepreneurial companies. Gunster is ranked among the National Law Journal’s list of the 250 largest law firms.

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