The modifications to the foreign exchange rules centralize the system under one government agency, the National Center of Foreign Trade. They also establish a number of criminal penalties to thwart the use of exchange rates other than those permitted.

Venezuela has published Decree No. 2,167 (Special Official Gazette No.6,210 of December 30, 2015), modifying the foreign exchange rules.

Article 7 of the Decree requires the Vice-Presidency with competence in economic matters, jointly with the Vice-President of the Republic, to develop the regulations for the creation and administration of a Production Certificate System. A production certificate must be obtained in order to request foreign currency for importing specific supplies, services, capital goods, and any other productive component. The Production Certificate System will be centralized, implemented, and executed by the National Center of Foreign Trade (CENCOEX).

The aforementioned regulation would set minimum production or commercialization quotas for the public sector, as well as regulations for contracts or agreements for foreign currency granting and use, including specific obligations, and ways to refund or compensate the government in the event of a breach of contract.

The regulations also will cover any other aspects that will allow for the efficient administration of foreign currency awarded through the mechanisms managed by the relevant authorities of the foreign currency administration system and the protection of public assets.

Article 13 of the Decree prohibits CENCOEX from authorizing foreign currency amounts to satisfy obligations already extinguished or commitments previously contracted by the requestor without the prior relevant approval, except in those cases in which CENCOEX, upon prior reasoned order, authorizes the foreign currency under the public interest exception.

Article 16 of the Decree requires individuals and corporations to report their foreign transactions conducted in Venezuela to CENCOEX in the manner provided by CENCOEX.

Article 22 of the Decree imposes criminal penalties on those who promote, commercialize or determine the prices of goods and services by reference to any exchange rate other than those permitted under the exchange regulations or the rates set for the specific exchange transaction. Violators of the exchange rate regulations may be subject to seven to 12 years of imprisonment and a fine of 200% of the difference obtained by subtracting from the foreign currency value set by the offender the proper transaction value, in accordance with the applicable exchange rules.

Article 24 of the Decree establishes that whoever, either directly or indirectly, engages in deception or contrivance, to spread: (1) by electronic, television, radio or other communication means of any kind, or (2) in writing, signs, images or sounds, false or fraudulent information relating to the exchange rate applicable for foreign currency in the Bolivarian Republic of Venezuela, shall be punished with 10 to 15 years of imprisonment. False or fraudulent information relating to the exchange rate applicable for foreign currency in the Bolivarian Republic of Venezuela shall be construed as any information that contravenes or distorts the values applicable to the exchange rate set by the National Executive and the Central Bank of Venezuela.

Article 29 of the Decree also establishes a refund provision for situations in which a foreign currency refund is not feasible. Under the provision, the prosecutor may order the refund in bolivars, in addition to the payment of 15 Tax Units, at the value in effect at the date of the sentence, for each US dollar or the equivalent in other foreign currency.

In the event of repeated offenses, pursuant to Article 31, anyone who after a conviction, recidivates in any offense, among those established in this chapter, shall be subject to the same penalty, increased by four times, in accordance with the provisions of the Criminal Code. If a relapse is determined, the offender shall be precluded from access to the mechanisms managed by the foreign exchange administration authorities for a term equal to that of the offender's sentence.

Article 26 of the Decree establishes that any goods derived from the perpetration of an offense included in the Decree might be seized if such offense involves foreign currency amounts: (1) authorized or cleared through the mechanisms managed by the foreign exchange administration authorities; and (2) associated with public assets. In the sentence, the prosecutor should indicate which assets are subject to seizure.

Article 44 imposes a penalty of double the amount determined for an offense if an offender, after having been imposed a firm sentence, commits any offense among those set forth in the Decree. In addition, the offender is subject to suspension from the Registry of Users of the Foreign Currency Administration System for a two-year term from the date of payment of the defined penalty amount.

Article 45 states that foreign currency approvals for online purchases and credit card use abroad shall be considered a benefit to which only Venezuelans with permanent residence in the territory of the Bolivarian Republic of Venezuela shall be entitled.

The Decree is effective December 30, 2015.

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