Título XV. Entidades fuera de plaza

For purposes of this Law, offshore entities or off shore entities shall be understood as those entities principally engaged in financial intermediation, constituted or registered under the laws of a foreign country, which carry out their activities principally outside said country.

To operate in Guatemala, off-site entities or off shore entities shall obtain operating authorization from the Monetary Board, upon prior opinion of the Superintendency of Banks, declare that they form part of a financial group of Guatemala, and prove compliance with the following requirements:

a)That it unconditionally and irrevocably accepts in writing to be subject to the consolidated supervision of the Superintendency of Banks of Guatemala, under the terms set forth in Article 28 and to the legislation against money laundering or other assets and for preventing and suppressing the financing of terrorism;

b)That it submits all information required of it by the Superintendency of Banks and by the Bank of Guatemala, which may be verified at any time by the Superintendency of Banks. Information on its active, passive and contingent operations shall be presented in detailed form;

c)That it is obligated to comply with requests for information from the Superintendency of Tax Administration regarding depositors and investors. The information request made by the Superintendency of Tax Administration shall comply with the procedure established in the Tax Code. For these purposes, deposits established in off-site entities or off shore entities are subject to the provisions established in Article 63 of this Law and in the Tax Code;

d)That it proves before the Superintendency of Banks of Guatemala that it authorized the supervisory authorities of its country of origin to carry out exchange of information concerning it;

e)That the banking supervisory authorities of its country of origin apply international prudential standards, at least as stringent as those in force in Guatemala, relating, among others, to minimum capital and liquidity requirements. If not, it shall be subject to the prudential and liquidity rules set by the Monetary Board, upon proposal of the Superintendency of Banks for these entities, which may be the same as or the equivalent, as applicable, of those applied to banks domiciled in Guatemala;

f)That it communicates in writing to its depositors that deposits made by them are not covered by the Fund for the Protection of Savings and that the legal regime applicable to such deposits and other liabilities shall be that of the country in which the off-site entity or the off shore entity was constituted or registered. Deposits and other liabilities established in off-site entities or off shore entities, with respect to access to information by the Superintendency of Banks for supervisory purposes, and by the Superintendency of Tax Administration for tax purposes, shall be governed by the provisions of Article 63 of this Law and the Tax Code; and,

g)That both the opening value of each deposit account and the monthly average balance thereof is not less than ten thousand Dollars (US$10,000.00) of the United States of America or its equivalent in another currency. If the account shows an average balance lower than that established, for two (2) consecutive months, it shall be closed, and the depositor shall be informed thereof.

This requirement shall not be applicable when accounts are established with the exclusive purpose of:

i.Crediting interest generated by time deposits, referred to in this subsection, established in the off-site entity or off shore entity; or,

ii. Automatically debiting payment of principal and interest on loans granted by the off-site entity or off shore entity, provided that the original amount of such loans exceeds fifty thousand Dollars (US$50,000.00) of the United States of America or its equivalent in another currency.

Off-site entities or off shore entities that do not obtain operating authorization or that, once authorized to operate, fail to comply with one or more of the requirements imposed on them by this article, may not engage in financial intermediation in Guatemala, either directly or through third parties, with the exception of the matter indicated in subsection c) of this article, which shall be sanctioned as provided in the Tax Code. Third parties shall be understood to mean any natural person or legal person who participates in any phase of the procedure used to raise funds from the public in Guatemala, destined for such off-site entities. If they engage in financial intermediation in violation of the provisions of this paragraph, they shall be subject to the provisions of Article 96.

The provisions of this article shall be regulated by the Monetary Board upon proposal of the Superintendency of Banks.

The Monetary Board, upon prior report of the Superintendency of Banks, and observing due process, shall revoke the operating authorization of off-site entities or offshore entities, when one or more of the following cases occur:

a)They fail to comply with one or more of the requirements referred to in Article 113;

b)The entity is convicted by final judgment, within or outside the Republic of Guatemala, for the crimes of money laundering or other assets, financing of terrorism or other crimes in effect in the country, and which in the opinion of the Superintendency of Banks warrant such measure;

c)It is proven that the applicant or applicants submitted false information or documentation in their application for authorization to operate in Guatemala;

d)Due to intervention, dissolution, liquidation or bankruptcy of the off-site entity or offshore entity or the cancellation of its license by the competent authorities of the country where it is legally constituted;

e)When it ceases to form part of a financial group or when the same is dissolved;

f)When the equity deficiency is greater than fifty percent (50%) of the required equity of the off-site entity; and,

g)For other reasons duly substantiated in a report of the Superintendency of Banks.

From the date of revocation, off-site entities or offshore entities shall have a time limit of six (6) months for the closure of their operations in Guatemala, which may be extended by the Monetary Board at the request of the Superintendency of Banks.