Incentives to repatriate funds
transferred abroad since 2017

Central Bank asks banks to pay

higher interest, waves mandatory reserves

The Central Bank (BDL) has allowed banks to offer incentives to depositors to repatriate funds transferred abroad.

The funds must be in excess of $500,000, been transferred since July 2017, and are capped at 15 percent of the total money previously transferred. The cap is extended to 30 percent for major stakeholders in banks (shareholders and management) as well as politically exposed people (PEP). “Banks should prod their clients… to make deposits into a five-year-term special account,” BDL said in a circular.

The circular does not require depositors to repatriate any funds. It lays out preferential conditions if they do.

It allows banks to offer higher interest rates than caps currently in place on deposits. It has exempted these funds from the 15 percent mandatory reserves at BDL normally applied to deposits in foreign currency. Banks should take the necessary legal steps to assure their clients that, at the expiration of the five-year term, deposited funds will be freed to be transferred back abroad, no matter the circumstances.

The circular also applies to importers. They are required to transfer from abroad up to 15 percent of the total value of letters of credit opened over the period 2017-2019. The money would also be locked for five years.

The circular directs banks to use the repatriated funds to finance foreign trade operations.

It has mandated each bank to comply, by the end of February 2021, with the directive of having, as free deposit, at least three percent of its total holdings of foreign currencies at a correspondent bank abroad.