Compensation accounts and free accounts
In accordance with article 10 of Law 9 of 1991, residents can have foreign currency accounts abroad, with which they can make and receive payments corresponding to the operations of the foreign exchange market; the above through compensation system, which must be regulated by the competent body.
This system has been regulated in accordance with articles 371 and 372 of the Political Constitution by the Board of Directors of the Bank of the Republic in External Resolution 08 of 2000 of the (hereinafter RE 08 of 2000), particularly in its articles 55 and 56; where the first establishes the possibility of residents to have foreign currency accounts abroad to carry out non-foreign exchange operations, and the second establishes the possibility of carrying out foreign exchange market operations, as long as certain requirements are met. The text of the articles is as follows:
Article 55 AUTHORIZATION. Residents may freely establish deposits in bank accounts abroad with currencies acquired in the exchange market or residents in the country who should not channel them through the exchange market.
Any exchange operation other than those that must be channeled through the exchange market in accordance with article 7 of this resolution may be charged to the resources deposited in these accounts. Returns on investments or deposits made under these accounts may also be used for the same purposes.
In these accounts, transfers to or from compensation accounts of the same holder can be received or made.
Article 56º COMPENSATION MECHANISM. In addition to the provisions of the previous article, residents who use bank accounts abroad for operations that must be channeled through the foreign exchange market must register them with the Bank of the Republic under the modality of compensation accounts.
The compensation accounts must be registered at the latest within the month following the date of the execution of an operation that must be channeled through the exchange market.
Residents, if they so agree, must use the compensation accounts to rotate and receive foreign currency corresponding to the fulfillment of obligations derived from internal operations whose payment is not expressly authorized in foreign currency in this resolution.
The Banco de la Republica will regulate the terms and conditions applicable to registration, the presentation of exchange declarations, the provision of information, income, expenses and transfers of foreign currency.
From the aforementioned articles it can be concluded that there are two types of accounts, some accounts that are usually referred to as “free” and the so-called “Compensation Accounts”. Although reference is made to “different” types of accounts, the reader must keep in mind, that in truth it is foreign currency accounts by residents in Colombia, where one is not subject to the compensation mechanism and the second is ; With this, what is being sought is that an account is not created as a compensation account, that is, a compensation account is not “created” as such since its inception, but an account is created in foreign currencies abroad, and if they are made foreign exchange market operations referred to in article 7 of the ER 08 of 2000, then it must be registered under the compensation system before the Bank of the Republic; But this does not mean that the only operations that can be channeled through a clearing account are those of the foreign exchange market, since free operations can also continue.
From the reading of article 56 of the R.E. 08 of 2000 certain obligations and powers that fall on the resident who choose to use a foreign currency account to receive and make payments that are part of the foreign exchange market are released. The first is that from the moment in which a free account is used to make or receive a payment corresponding to the exchange market, the obligation arises to register said account with the Bank of the Republic within the following month as a Compensation Account . And one of the powers granted by the Board of Directors of the Bank of the Republic to residents with compensation accounts, is to be able to hold and pay in foreign currency internal operations; In order for the above to operate, it is worth mentioning that the two residents must have accounts that are under the compensation mechanism, that is, said payment cannot be made in foreign currency if one of the accounts is free.