JPMorgan Will Close Accounts of Argentines With Undeclared FundsBy , , and
Bank urges clients to participate in tax-amnesty program
Citizens have until Monday to open special amnesty accounts
JPMorgan Chase & Co. warned its Argentine clients with undeclared funds to participate in the government’s tax-amnesty program or risk losing their accounts.
“Big banks like JPMorgan will require that all funds be duly declared, and if not, we will close the accounts," Facundo Gomez Minujin, who heads the New York-based bank’s Argentina unit, said in an interview.
President Mauricio Macri announced a tax amnesty in May to capture some of the undeclared funds citizens keep everywhere from safe-deposit boxes to Swiss bank accounts to properties in Uruguay’s Punta del Este, a popular beach resort. Argentines who come clean on their untaxed savings by March 31 will pay a one-time fine of as much as 15 percent. They can also invest in three-year and six-year Treasury bonds or make long-term investments in infrastructure projects, housing, mortgages or small and medium-size businesses.
Under the program, participants must open a special bank account before Oct. 31 and have until Nov. 21 to deposit undeclared cash. The final deadline to participate in the amnesty plan is March 31.
Argentines held approximately $400 billion in offshore assets in 2012, according to calculations by the Economic and Financial Center for the Development of Argentina, or CEFIDAR. That number is likely to have increased to $500 billion, or about the same as the nation’s annual gross domestic product, according to Jorge Gaggero, founder of the Tax Justice Network for Latin America and the Caribbean.
In the past, there were few incentives to declare such funds, and “since the risk of detection was low, many people didn’t participate,” Minujin said. Now banks are pressuring clients and “information agreements with most of the relevant countries will likely increase the risk of detection,” he said.
An international tax-sharing agreement that begins in 2017 will make it much more difficult for Argentines to continue hiding funds abroad, Finance Minister Alfonso Prat-Gay said.
“We expect the tax-amnesty plan to be very successful,” Alejandro Guevara, head of banking coverage for JPMorgan in Latin America, said in an interview.
Guevara estimated the government could generate tax revenues of $8 billion to $10 billion through the program.
“These inflows will alleviate the fiscal deficit and reduce funding needs, which is something that investors monitor,” he said. “We expect that the debt market will continue to be receptive and fully open for Argentina next year.”
JPMorgan is increasing its Argentina staff from its 2015 levels as part of a three-year plan to make the country its regional hub. It had hired approximately 450 employees in the country as of the end of June.
The bank was one of four global coordinators in Argentina’s record $16.5 billion bond sale in April, which marked the country’s return to overseas credit markets after its 2001 default. It was also one of the foreign banks that together lent Argentina $5 billion to bolster its reserves in January, a month after Macri took office. Daniel Pinto, head of JPMorgan’s corporate and investment bank, is an Argentine native.
— With assistance by Charlie Devereux