Venezuela: Update on currency exchange controls
After the recent changes in the country’s government, Venezuela amended its unique and complex currency exchange regime in early March 2016, after a new regime had only been introduced in 2015. As we understand it, the country now has only two exchange rates instead of the previous three.
For the past decade, Venezuela’s exchange control regime has restricted the conversion of local currency into and out of foreign currency. In March 2016, the Central Bank of Venezuela (BCV) introduced changes to the country’s foreign currency exchange regime that eliminated the previous third exchange rate SICAD. The system now consists of:
- The Official Exchange Rate (CENCOEX, also referred to as Dipro), and
- SIMADI or Dicom (Marginal Currency System), first introduced in February 2015.
As was the case previously, the Official Exchange Rate is limited to only essential public needs and services. After the elimination of SICAD, the only option available for the insurance sector appears to be the floating SIMADI / Dicom.
A number of details around the setting of the individual rates and application remain unclear for the moment and will most likely be subject to more specific regulations in the near future.
Please note that the update provided constitutes Lloyd’s understanding and should not be interpreted as definite advice tailored for the insurance sector. It is therefore recommended that Lloyd’s managing agents follow the guidance sought from local intermediaries before entering into potential transactions.
For the actual individual rates please check the BCV’s website for official updates.
Lloyd’s trading status
Lloyd’s underwriters are not licensed to write insurance in or from Venezuela. Lloyd's is registered as a foreign reinsurer in Venezuela. This registration enables Lloyd's underwriters to write reinsurance business on a cross-border basis only.
Local brokers should be consulted for further information on these exchange systems, and reinsurance documentation must specify the exchange system, and rate of exchange, that is to apply when converting premiums and claims into a settlement currency.
Full details regarding Lloyd’s trading position in Venezuela can be located on Crystal. If you require additional information or wish to discuss this matter in more detail, please contact LITA.