Perjury as Part of Real Estate Purchase Process

Elpanada

Registered
" Some argentines refuse to put the full amount on the contract. Many foreigners are not comfortable with this and walk away. we always encouraged our clients to do things legally if they could. This includes bringing money into the country, something you need to be very careful with. The vast majority of foreigners are bringing money into the country illegally and most don't know that that's the case (often because agencies and individuals helping them don't tell them). Arranging to bring money into the country legally is probably the biggest hassle in what we do, but we think it's important as there are likely to be consequences down the line for those who haven't done so by the book. "
I've heard this said before that if you don't bring the $ in legally that you'll probably face future problems but isn't that just being too negative and paranoid? I once heard the theory mentioned that while this won't be a problem for you now that new laws may be created and that you'll be asked to say where you got your money from when you sell the property. Before I start criticizing that theory I want to state that I am aware of the fact that I am the first person to mention it under this topic. But yes I don't know it just seems a little bit too crazy, I know of no other country which has a similar law and a law like that might be very hard to implement. Where I am from our equivilant of the IRS contacts us sometimes when we make purchases and asks us where we got the cash from, if you didn't borrow it and you aint recieving a huge salary then you may have some what of a beaurocratic problem on your hands. But when you sell things you don't usually run into the question "where did you get the money from to buy that thing".
But yes I think that hearing peoples knowledge, opinions and experiences regarding this matter would be most informative so what are the likely consequences down the line for those who have bring in money without following the rules and regulations regarding that process? and why is it likely that there will be consequences down the line?
 

realba

Registered
it's not the selling part, per se, it's the repatriation of funds that have been illegally introduced into argentina. No one really knows for sure what will happen. But my accountants and my escribano are extremely wary of getting involved with people who don't do things by the book. The fact is, that by bringing money in under the table, you are defrauding the Banco de la Nacion (all foreign monies must be converted into pesos and then to dollars and the bank takes its cut) and breaking the laws of this country. Also, Argentina is on the US' terrorist watchlist (hezbollah in the Triple Frontera apparently) and, as such, the argentine government is being put under enormous pressure to stop these illegal movements of money. 2-3 years ago, nobody cared where the money came from. Now, money transfers are being watched ever more closely by both the US and argentine governments.

Now this country has an unfortunate tendency to blame everyone but itself when things start to go wrong. It is always the 'foreigner's' fault. Locals are starting to realise that all these foreigners buying property here is not necessarily a great thing for them, mainly because they are now even more priced out of the market than they were before. The market is in a bubble which is liable to burst within the next 2-3 years. When it does it will help bring down the rest of the economy (which will have been heading in that direction anyway, most likely after a worldwide drop in commodity prices) and people and especially the government will inevitably start looking for a scapegoat that isn't them. Who might they choose? There's no IMF involvement this time so i'd guess that foreigners who have bought up large amounts of residential and country property will be on the hit list.

So it's my guess (and something quite a few people i know agree with) that the populist and extremely nationalist government will jump on the bandwagon of blaming the foreign investors and invent some law that will state that any foreigner wanting to sell their property will have to prove how they bought it and got the money into the country in the first place. This will actually help the economy as it will reduce the capital flight that has proved so disastrous for the country in the last few crises.

All very subjective, i know, but study a little argentine history and you'll see a many more wilder and more insane scenarios.

And even if you don't agree with that then you have to agree that by bringing money into the country illegally is, er, illegal. And if you're a non-resident foreigner i'd sugget it's not a good idea to break the laws of a country that has a long history of screwing foreign investors and therefore running even the slightest risk that you might not be able to get your money out of the country again.
 

bigbadwolf

Registered
"realba" said:
it's not the selling part, per se, it's the repatriation of funds that have been illegally introduced into argentina. No one really knows for sure what will happen. But my accountants and my escribano are extremely wary of getting involved with people who don't do things by the book. The fact is, that by bringing money in under the table, you are defrauding the Banco de la Nacion (all foreign monies must be converted into pesos and then to dollars and the bank takes its cut) and breaking the laws of this country. Also, Argentina is on the US' terrorist watchlist (hezbollah in the Triple Frontera apparently) and, as such, the argentine government is being put under enormous pressure to stop these illegal movements of money. 2-3 years ago, nobody cared where the money came from. Now, money transfers are being watched ever more closely by both the US and argentine governments.
Concur with the rest of your post (superlative again), so have snipped it to save bandwidth. There have been at least two US agency reports of Al Qaeda involvement in Ciudad del Este (a Google search will turn them up), and while I consider the reports a complete crock, it does indicate -- as you've stated -- that Argentina is likely to be on a watchlist with regard to financial transfers. The second point is that the US Treasury is twisting the arms of all governments to stop any murky financial transfers. This is part of the "War on Terror." In fact, the US has even been pressuring SWIFT to reveal details of fund transfers. For these reasons alone, any real estate investor would be advised to bring in his money legally.
It's a pity there aren't more posts, more blogs, and more sites giving sober cold-blooded assessments such as yours.
 

Elpanada

Registered
"realba" said:
So it's my guess (and something quite a few people i know agree with)
that the populist and extremely nationalist government will jump on the
bandwagon of blaming the foreign investors and invent some law that
will state that any foreigner wanting to sell their property will have
to prove how they bought it and got the money into the country in the
first place. This will actually help the economy as it will reduce the
capital flight that has proved so disastrous for the country in the
last few crises.



All very subjective, i know, but study a little argentine history and you'll see a many more wilder and more insane scenarios.



And even if you don't agree with that then you have to agree that by
bringing money into the country illegally is, er, illegal. And if
you're a non-resident foreigner i'd sugget it's not a good idea to
break the laws of a country that has a long history of screwing foreign
investors and therefore running even the slightest risk that you might
not be able to get your money out of the country again.
Hi Realba, thanks for explaining this to me. It now makes a whole lot more sense to me. I still however think that this is a little bit farfetched. I would assume that most foreigners who have bought properties here have some sort of visas such as the rentista visa, the reason why I would assume so is that it sounds like getting such a visa isn't all that dificult so if you have the time and $ to buy properties here then you probably also have the time and $ to get yourself a visa. With that visa in hand foreigners can apply for citizenship after half a decade or so and doing so would make them nationals.I mentioned all of this to show my point of view that a law which names foreigners only wouldn't be all that usefull. So the laws would either have to name foreign residents, new citizens and foreigners, dual citizens, foreign companies or all Argentinians either way it sounds complicated and messy. The easiest way to do this however would be to have the law apply to all Argentinians, companies and foreigners but this would be sorta disasterous since many Argentinians stored their $ in their mattresses before they made their moves on the realestate market and since there are ofcourse Argentinians who either have their $ abroad or get their $ through dubious ways.This theory still doesn't really add up for me but yes I ofcourse am not about to encourage anyone to do anything illegal. Also if accountants and escribanos here are unwilling to work with people that have moved their $ into the country in this way then there's also a very good reason for doing things the legal way.
 

realba

Registered
I would say that 90% of non-resident foreigners are bringing in money illegally and it's probably the same percentage buying property without legal residency/on tourist visas mostly through ignorance of the rules and also because some of these so called experts that are helping foreigners buy property can't be bothered with the hassle of doing things properly or also don't know the rules.

Using a money transfer firm is illegal. Using a private bank is illegal. The only way to bring money legally into this country for buying property is through a bank that has the government permits for this type of transaction. We've used Banco Piano, which has the permits, in San Martin (opposite the back entrance to Falabella) on numerous occasions. They charge 2% of the money to be brought in. Private banks charge between 1 and 2% to do this illegally.

Why is it illegal to use a money transfer firm or private bank? Because the government introduced a law to discourage currency speculation. 30% of any foreign funds sent into argentina by a non-resident are witheld by the government for a year without interest being earned. The only exception is when you buy property.

non-residents can open a bank account with a normal bank but are not allowed to bring in large amounts of money. banks are not allowed to sell more than us$5000/month to non-residents and as any money sent into the country is automatically transferred into pesos you'll be unable to change more than us$5000 a month back into dollars.

if you need money to renovate or for any other purpose then it's best to bring it in illegally or you'll lose 30% of it for a year. if you're buying property you're better off doing things as legally as possible. part of the problem is that the bank asks for all sorts of proof of where the money came from. it's a complete hassle but i think it's worth doing things properly.

once you get residency, all your problems disappear. you can send money into the country through a normal bank and you also don't need permission from the tax authorities to sell your property.

easy, eh?
 

Elpanada

Registered
"bjrutledge" said:
I would not assume that everyone who buys property here also has a residence visa. In fact, I would guess otherwise --- that Europeans, Americans, Australians, etc. might choose to buy property here as an investment, without intending to obtain residence and move here. There is a fair bit of paperwork involved in getting a visa, much more than the paperwork involved in purchasing a property.



I think most people bringing money into the country do so legally, if simply because it is a little unnerving to carry considerable amounts of cash on one's person. So most people dealing with large amounts of money probably have some sort of bank transfer, although it is admittedly difficult to open a bank account here without residence. I know of cases where money was transferred to the escribano's account. Alternatively, you can arrange a money transfer through some of the exchange houses here.



By the way, Americans who carry $10,000 or more in cash, traveller's checks, etc. out of the US are legally obliged to file a form with the Treasury Department. In my opinion, there is no reason NOT to do so, and filing the form (which is done before you leave the US, at the port of departure) does not announce to the airline staff or anyone else that you have the money with you. What it DOES do is give you a nice, legal-looking, stamped document that basically shows that the money is clean. The banks and realtors will be very happy to see that form, since money laundering is a major concern, I am told. You don't have to file the form if you transfer money through a bank, since banks automatically notify the US government of all transactions of $10,000 or more.



Concerning obtaining Argentine citizenship after so many years here --- there are good reasons NOT to do so. Alien residents here are obliged to pay taxes on income and personal assets from outside this country, but the requirementg is waived if they have been outside the country for 90 days or more per year. But Argentine citizens, like American citizens, owe money on worldwide income (and unlike the US, the Argentine government requires that you pay taxes on personal assets, not just income).



Now you can immediately scoff and declare that the Argentine government can never obtain your foreign bank records, etc., so they can't MAKE you pay taxes on personal assets held outside Argentina, or on income earned abroad but not brought into the country. Maybe so. But still it is the law.



I am not sure what advantages someone hopes to gain by obtaining Argentine citizenship, but to me the tax requirements would be something to consider.
You mentioned that there is more paperwork involved in obtaining a visa here than buying a property but I don't know if that's true really, I have a visa here(not the typical rentista kind) and obtaining it was a bit of a hassle but it wasn't that hard though really but another thing to consider when weighing the work of obtaining a visa vs the work involved in buying a property is that there is No risk involved in obtaining a visa here while there are certainly risks involved in purchasing property.
We have discussed laws and the possibility that they may change in the future. It is entirely possible that one day new laws will be passed making it harder for foreigners to immigrate to and live in Argentina. It is however not at all probable that Argentina will one day start deporting its one citizens or adopt other special laws which will make their lifes harder while not having any effect on foreigners living here. You refer alot to the US so I will assume that you are a US citizen. As a US citizen you are forbidden by your own government to travel to Cuba. Since that is the case now who knows how things will devleope the US government might decide to restrict the travels of its citizens even further or to raise the requirements for obtaining a US passport. It might adopt the attitude "No US citizen has a "right" to visit other countries, it is a
privilege granted by the government, and it can be taken away.".There is an excellent article at http://expat-argentina.blogspot.com/2005/08/dual-citizenship.htmlhttp://expat-argentina.blogspot.com regarding Argentine citizenship. I must say that I regret the time that I have spent replying to you. For some reason you always write strange misleading things here, why do you do that?
 

Elpanada

Registered
"bjrutledge" said:
Elpanada: I looked at the article on the blog you referred to. I assume you are not a US citizen, so this comment likely does not apply to you. But for what it's worth, US law, including travel restrictions, still applies to US citizens, regardless of what passport they use. A dual US/Argentine citizen could likely travel to Cuba, for example, without being "caught" by the US government, but it would be illegal nonetheless (under current law). I think it is not so much the travel per se (travel is permitted under certain circumstances, such as for previously approved scientific or cultural exchange), but it is the fact that the traveler would be spending money in a country that is listed on some sort of Treasury Dept blacklist, without prior approval.



Also, a disadvantage of dual citizenship that the blogger does not mention is that the US government does not consider that it has any obligation to intervene in case of problems that arise for the person in the country where he/she has the dual citizenship.



RealBA: I did not realize that exchange houses were not approved --- that is surprising because I thought that the exchange houses also converted dollars to pesos, whether you wanted it or not.



The only way I know to keep dollars as dollars (other than illegally bringing them in that way) is to have travellers checks. If you have a platinum AMEX card, the American Express bank in Retiro will cash travellers checks and give you US$, but as you pointed out, the amount is limited to US $5000 per month.
Take another look, the blogger acctually does address that issue "

Common Misconceptions About U.S. Intervention Abroad
The reader mentioned that the U.S. wouldn't be able to "sue on your
behalf" if a foreign government snatched up your business and house.
Let me first say that unless you're a big campaign contributor to a
number of different politicians, the U.S. isn't going to do anything if
you fall victim to the actions of a foreign government. No one is going
to make an international incident if one American has a dispute in a
foreign country. Forget it. The U.S. government does not get involved
in settling the disputes of its citizens abroad.
Additionally, the only services a consular official can provide when
you are jailed are to refer you to a lawyer as well as communicate
messages to and from your family. They won't intervene in your case,
they won't provide you with any kind of legal services, and they
certainly won't pay for your defense. "
 

oldguy

Registered
The real estate agent we have been dealing with - a supposedly reputable and prominent one with a specialty in foreigners investing in Argentina - made it sound like it was not always possible to purchase property with "white" money in Argentina. It seemed to depend on whether the seller had bank accounts set up to accept "white" money. There seems to be more receptivity to the "white" money with the post 9/11 restrictions on international transfer of funds designed to fight terrorism, but it does not seem that all the sellers in Argentina - not even all the prominent companies owning or developing large buildings - are on board. The agent was not pushing us to go black, just reporting what purported to be the realities of the situation.
Does anyone know what the deal is on purchasing an Argentine (or offshore) corporation that owns the property rather than purchasing the property directly? Does that allow you to avoid some of the problems inherent in the ways Argentines buy and sell property?
 

igor

Administrator
It used to be a common practice to buy real estate in a name of an offshore company (normally SAFI registered in Uruguay). Everything changed after Cromagnon tragedy when almost 200 people died in a disco fire. The club belonged to a Uruguay SAFI and actual owners still remain unknown. In the Capital there was a campaign for transferring properties from virtual offshore companies to physical owners. So I believe now it is next to impossible to use offshore companies for real estate operations.
 

anda

Registered
I would strongly recommend you contact you country´s embassy here, and asking the person in charge of the economic/commercial section for precissions on this topic, as they have to know to advise their government and their national companies.. they may well be able to tell you up to a point and then recommend lawyers to guide you through the process.
I work in exports so it is not my field.... it might be better to get advice fromn them directly...
 
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