Population: 33 million

Wealth in domestic bank deposits: 90 billion USD (December 2023)

Offshore expatriated wealth: 7.4 billion USD

Main offshore banking locations: N/A

Number of individual brokerage accounts: N/A

Crypto adoption (% of population): 860,000 (2.5%)

TLDR

Peru has a generally open and welcoming investment climate anchored by macroeconomic stability, strong fundamentals, and steady growth. The economy is increasingly diversified, though mining remains important. Peru encourages foreign investment through a liberal trade and exchange rate regime, while ensuring financial oversight.

Regulation allows free flow of capital and foreign exchange. Investors can repatriate profits freely and convert between currencies. Minor pension fund restrictions remain. Cryptocurrency lacks a legal framework but new proposals are emerging.

A distinction between qualified and non-qualified investors exists. Only the former can access sophisticated products. Foreign securities must register for public trading, meeting disclosure, custody and tax rules.

Exchange controls

Peru has a liberal foreign exchange regime underpinned by constitutional guarantees of free currency convertibility. The 1993 Constitution ensures the freedom to hold and dispose of foreign currencies, and eliminates restrictions on profit, dividend, royalty, and capital remittances. However, foreign investors are advised to register investments with ProInversion (Private Investment Promotion Agency) to ensure these guarantees.

Exporters and importers do not need to channel transactions through the central bank and can buy/sell currencies freely on the open market. Individuals and firms can open and maintain foreign currency accounts with local banks without issue. Under trade agreements like PTPA, US portfolio managers can also provide services to Peruvian mutual and pension funds.

Some minor controls remain. Pension funds face limits on foreign assets, though this has gradually increased to 42% in 2015. The central bank occasionally intervenes to curb exchange rate volatility but doesn’t impose controls. Peru has also seen the economy become less dollarized over time. Overall, the system allows free flow of investment funds and easy conversion between domestic and foreign currencies.

Distribution rules for foreign investment products

Peru has a legal framework that promotes foreign direct investment and guarantees equal treatment for foreign and national investors. Foreign investors can own and transfer property, invest in national companies, export goods, and enter into stability agreements with the Peruvian state to freeze the tax and labor laws under which certain investments are made.

The Superintendency of Banking, Insurance and AFP (SBS) is the primary regulator for the financial services sector and provides operational guidance. The SBS regulates the activities of banks, insurance companies, pension funds, securities firms, mutual funds, and other financial intermediaries. The SBS also supervises the compliance with anti-money laundering and counter-terrorism financing rules.

The Peruvian Securities Market Superintendency (SMV) is the regulator for the securities market and oversees the public offering and trading of securities, as well as the activities of issuers, intermediaries, stock exchanges, clearing houses, rating agencies, and other market participants. The SMV also approves the registration of foreign securities in the Peruvian securities market registry.

The sale and marketing of foreign financial products (securities) in Peru are subject to the following rules and regulations:

• Foreign securities must be registered with the SMV before they can be offered or traded in Peru. The registration process requires the submission of information and documents regarding the issuer, the securities, the offering, and the risk factors. The SMV may also request additional information or impose conditions for the registration.
• Foreign securities must comply with the same disclosure and reporting obligations as domestic securities, including periodic financial statements, material events, corporate governance practices, and shareholders’ meetings.
• Foreign securities must be denominated in Peruvian soles or US dollars and must be deposited in a local custodian authorized by the SMV. The custodian must issue depositary receipts that represent the foreign securities and are traded in the Peruvian securities market.
• Foreign securities must be rated by a local rating agency authorized by the SMV or by an international rating agency recognized by the SMV. The rating must reflect the credit risk of the issuer and the security.
• Foreign securities must comply with the applicable tax rules in Peru, including withholding tax on interest and dividends paid to non-resident investors.

Qualified investors

Peru distinguishes between qualified and non-qualified investors under securities law. Qualified investors are defined as those with the knowledge, experience, and capacity to assess investment risks/benefits. They must meet criteria set by the securities regulator including:

• Minimum net worth of 350,000 soles (around $87,000) or annual income of at least 140,000 soles ($35,000)
• At least 2 years of experience in securities markets or related financial/economic activities
• A university degree in economics, finance, accounting or business administration fields

Qualified investors can access a wider range of products like private placements, derivatives, hedge funds, and structured products. They have fewer disclosure requirements and obligations.

Non-qualified investors require more regulatory protection. They can only invest in public securities offerings registered with the regulator, and are subject to stricter suitability, risk disclosure, and education rules.

Cryptocurrency regulation

Peru does not have a specific legal framework for cryptocurrencies and they are not considered legal tender or financial assets. The Central Bank has stated it does not plan to regulate cryptocurrencies, warning about risks like volatility, money laundering, and fraud.

However, initiatives have been proposed to regulate crypto assets and providers. A 2021 legislative draft aims to define virtual asset service providers (VASPs) like exchanges and wallets, establish a public VASP registry, and require AML and consumer protection compliance. Another proposal suggests regulation to combat illicit crypto use.