DOING BUSINESS IN ARGENTINA AND BRAZIL: LEGAL ASPECTS OF FINANCIAL REGULATIONS

FOREWORD.

The phenomenon of the lack of financial development in Latin America might be attributed to several causes. While some of them are rooted in macroeconomic and political nature, some others should be attributed to inadequate regulation and enforcement, tax treatment and tax administration, foreign exchange controls, barriers to trade in financial services (mainly in restrictions to capital flows), among many others. This guide is purported to address this last set of causes with focus on the jurisdictions of Argentina and Brazil to be regarded as a reference.

In this summary below are several topics regarding the regulatory and legal framework in connection with financial issues and capital markets in Argentina and Brazil. The financial aspects reviewed include subjects such as: (i) regulatory matters, such as: exchange rate regimes, capital controls, capital market regulation and other legal aspects of the financial sector; (ii) tax treatment of financial instruments; and, (iii) anti-money laundering and financing of terrorism laws.

Financial markets develop in complex regulated structures at the national level; therefore the task of integrating these markets involves some degree of convergence of rules and regulations of the countries taking part on the integration.

Brazil and specially Argentina, as we will review in the following pages, seem quite far from such a process.

As for this guide, the following section will address several issues related to foreign exchange, capital mobility and the regulation of markets. Section III will be devoted to tax issues, especially focusing on the taxation of financial instruments, while section IV will review anti-money laundering issues.

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