2023 Laws of Puerto Rico › TITLE SEVEN - Banking (§§ 1 — 3116) › PART I - Banks (§§ 1 — 278) › Chapter 16 - International Banking Center (§§ 231 — 232x) › § 232j - Permitted transactions; prohibited transactions

(a) Upon receipt of a license to operate an international banking entity in accordance with § 232e of this title, an international banking entity may:
(1) Accept deposits from foreign persons in checking accounts as well as demand or fixed term deposits and interbank deposit of funds, or otherwise borrow money from international banking entities and from any foreign person pursuant to the regulations adopted by the Commissioner.
(2) Accept properly collateralized deposits or otherwise borrow duly secured money from the Government Development Bank for Puerto Rico and the Economic Development Bank for Puerto Rico.
(3) Make or place deposits in, and otherwise give money as a loan to, the Government Development Bank for Puerto Rico, in the Economic Development Bank for Puerto Rico, in any international banking entity, or in any bank, including banks organized under the laws of Puerto Rico, and branches in Puerto Rico of banks that are foreign persons.
(4) Make, procure, place, guarantee, or service loans; Provided, That none of such loans may be granted to a domestic person, except as provided in subsection (3)(a) of this section and in the cases of financial securities for debt issue transactions in Puerto Rico.
(5)
(A) Issue, confirm, give notice, negotiate or refinance letters of credit; Provided, That the client and the beneficiary requesting the letter of credit is not a domestic person, or
(B) issue, confirm, give notice, negotiate, or refinance letters of credit in transactions for the financing of exports, even if the beneficiary is a domestic person.
(6) Discount, rediscount, deal or otherwise trade in money orders, bills of exchange and similar instruments, provided that the drawer and the original debtor, is not a domestic person.
(7) Invest in securities, stocks, notes and bonds of the Caribbean Basin Projects Financing Authority, in securities of the Government of Puerto Rico, its public agencies and instrumentalities, its municipalities, and its political subdivisions, or in other local securities, if there should exist any, exempted from the payment of taxes in Puerto Rico.
(8) Carry out any banking transactions permitted by §§ 232 et seq. of this title in the currency of any country, or in gold or silver, and participate in foreign currency trade.
(9) Underwrite, distribute, and otherwise trade in securities, notes, debt instruments, drafts and bills of exchange issued by a foreign person for final purchase outside of Puerto Rico.
(10) Engage in insurance brokerage for risks or objects that reside, are located or that will be executed outside of Puerto Rico, subject to the regulations established by the Commissioner of Insurance of Puerto Rico.
(11) Underwrite insurance for risks or objects that reside, are located or that will be executed outside of Puerto Rico, subject to the regulations established by the Commissioner of Insurance of Puerto Rico.
(12) Engage in trade financing of import, export, barter and exchange of raw materials and finished products activities with domestic persons, when the Commissioner has determined through regulations or order, that the international aspects of the underlying transaction override any involvement of the local financial and business community, and that such activities would be appropriate for the international banking entity; Provided, that these transactions allowed by exception shall not enjoy the exemption granted by subsection (25) of § 651h of Title 21.
(13) Engage in any activity of a financial nature outside of Puerto Rico which would be allowed to be done, directly or indirectly, by a bank holding company or by a foreign office or subsidiary of a United States bank under applicable United States law.
(14) After obtaining a special permit from the Commissioner, act as fiduciary, executor, administrator, registrar of stocks and bonds, property custodian, assignee, trustee, attorney-in-fact, agent or in any other fiduciary capacity; provided, that such fiduciary services shall not be offered to, nor inure to the benefit of domestic persons.
(15) Acquire and lease personal property at the request of a lessee who is a foreign person, pursuant to a financial lease agreement which complies with the regulations of the Commissioner.
(16) Buy and sell securities outside Puerto Rico, on the order of, or at its discretion, for foreign persons and provide investment advice in relation to such transactions or separate therefrom, to such persons.
(17) Act as a clearinghouse in relation to financial contracts or instruments of foreign persons, as authorized by regulations adopted by the Commissioner.
(18) Organize, manage and provide management services to international financial entities such as investment companies and mutual funds, provided that the stock or participation in the capital of such companies is not distributed directly by the international banking entity to domestic persons.
(19) Engage in such other activities as are expressly authorized by the regulations or order of the Commissioner, or are incidental to the execution of the services authorized by §§ 232 et seq. of this title and the regulations of the Commissioner.
(20) Participate in the granting and securing of loans that originate and/or are secured by the Government Development Bank for Puerto Rico and the Economic Development Bank for Puerto Rico.
(21)
(A) Finance, through loans or financial securities, projects in those areas of priority for the Government of Puerto Rico in those cases designated as extraordinary by the Secretary of the Treasury and the Commissioner.
(B) The Commissioner shall adopt the pertinent regulations to implement this provision. However, said regulations shall require, in all cases, the prior authorization of such loans by the Secretary of the Treasury and the Commissioner.
(22)
(A) Establish, with the Commissioner’s authorization, branches outside of Puerto Rico, in the United States mainland and its possessions, or in other foreign countries. The Commissioner of Financial Institutions is hereby empowered to provide, through regulations, the procedure to obtain said authorization, and the amount payable for application investigation expenses and annual quota fees for each one of said branches.
(B) The Commissioner is hereby empowered to authorize an international banking entity to establish a service unit or office in Puerto Rico, in which only specific operations related to the services of the international banking entity shall be conducted, in the manner and form provided through regulations, but by no means shall said service unit or office constitute a branch.
(23) With the prior authorization of the Commissioner, provide to other international banking entities or to foreign persons or entities outside of Puerto Rico, those services of financial nature, as these are defined and generally accepted in the banking industry of the United States and Puerto Rico and which are not listed in this section.
(b) The international banking entity shall not:
(1) Accept deposits nor borrow money from domestic persons, except from the Government Development Bank for Puerto Rico, the Economic Development Bank for Puerto Rico and the international banking entities.
(2) Make, procure, place, secure, or service loans, unless all loan proceeds are to be used outside of Puerto Rico, with the exception of the cases permitted in clauses (20) and (21) of subsection (a) of this section.
(3) Issue, confirm, or give notice of letters of credit, unless all proceeds of the letter of credit are to be used outside of Puerto Rico, and that both the issuer and the beneficiary are foreign persons, with the exception of export financing transactions in which the beneficiary is a domestic person.
(4) Discount bills of exchange, unless all the proceeds of the bills of exchange would be used outside of Puerto Rico and that both, the drawer and the beneficiary, are foreign persons.
(5) Purchase or hold any of its own capital stock, or the capital stock of or the interest in the capital of the person of which it is a unit, except when previously authorized by the Commissioner.
(6) Grant any kind of financing or credit to any of its directors, officers, employees or stockholders, except when previously authorized in writing by the Commissioner.
(7) Directly or indirectly place, underwrite, insure or reinsure risks or objects that reside, are located or will be executed in Puerto Rico, or participate in reciprocity or retrocession arrangements or agreements covering or relating to such risks or objects, or assign insurance to, or assume reinsurance from any insurer authorized to do or who is doing insurance business in Puerto Rico.
(c) An international banking entity which is a unit of another person shall segregate and keep separated all transactions made or conducted by such unit, from every other transaction made or conducted by the person of which the international banking entity is a unit.
History —Aug. 11, 1989, No. 52, p. 178, § 12; Aug. 11, 1996, No. 121, § 5.