Due to the years of clever techniques used in laundering money, transferring money to Colombia has numerous controls. Foreigners often find these processes frustrating but if you understand the proper procedure to manage this, it does not have to be as complicated as it might appear at first glance.
An individual can bring up to $10,000 US in cash into Colombia. From a security standpoint this is not advisable but nonetheless some people do this.
Besides the safety concern, cash may present three challenges. First of all it will have to be converted into Colombian Pesos. Cambios or Exchange Houses, take a substantial exchange on your money so one must evaluate whether this is in your best interest. The next question is what to do with the money. If you are going to buy a car or other goods, then fine but if you do not have a cedula – or Colombian identification, then a local bank account is almost impossible. The third consideration is if you want to use this money for investment and you would like to repatriate the money at some point, it will not have been registered properly. If you tried to wire the money back out of the country you would have to prove that you had paid tax on the $10,000 – even if you did not earn that money here. This tax might be upwards of 33%.
If you are planning on purchasing a property, you can wire the money directly into the account of the seller. This is something that most attorneys will not recommend. First of all, even if you think that you know this person, until you have a signed buy/sell agreement (called a promesa de compraventa) or a final sales agreement (the escritura or deed), you are taking a risk. Generally at the signing of these documents the seller expects to receive their deposit or final payment. As a buyer you are not going to want to send the money before the agreement is signed. The seller is not going to want to give you the keys until they have been paid. The other challenge that you may face is that if you wire the money directly to the seller, they may very well not register your finds properly. This can lead to two problems that you do not want to face.
Money being wired into Colombia must be registered with the Bank of the Republic. This may be registered on a Form 5 as ''Mercado Libre'' (personal purchases) or a Form 4 which is the registration as a Foreign Investment. If you wish to move your money out of the country at some point without incurring tax on this original amount, you must register it on a Form 4 and it must be used as an investment. Please review this link : http://www.steckenreiterserna.com/#!REGISTRATION-OF-FUNDS-IN-COLOMBIA/colb/552bbd020cf21933cd589abb
It is important that this registration is done in a timely matter and properly. If not you could face substantial fines from the Colombian government. You need to seek out an entity or an attorney that understands this process. Not all banks or lawyers understand this process and I have seen cases where the funds were registered improperly and were disqualified as a foreign investment or triggered an investigation and/or a penalty. This is most frustrating as many individuals plan to make use of the investment as a vehicle to obtain a visa and then discover that they are not eligible.
If you have a Colombian ID you can open a bank account and transfer the money into your Colombian account. Banks tend to take a ''healthy'' exchange on your funds. They are also obliged to collect the ''cuatro por mil'' tax which was initiated in the 1990's. This means for every thousand pesos, the government claws back 4 pesos. Let's say that one thousand pesos is worth two dollars. In this example, the tax would be 8 cents. On $200,000 US then the tax would be $400.00 US. This is important to keep in mind as you budget for any transaction.
If you are going to transfer a large sum to your Colombian account, you will need to notify the bank that you are doing so and you will need to provide some information as to what is the source of money and what it will be used for. If you are not going to be in the country you will need to have assigned a power of attorney to someone to authorize them to negotiate the exchange and send the Form 4 or 5.
It is advisable to wire your funds as USD or you may pay a double exchange. The Colombian Peso is not a deliverable currency and only a Colombian financial institution can make the conversion into pesos. Once your funds have arrived at your institution, the exchange must be negotiated before 1 p.m. Depending on the company/bank there will be a set number of days that you have to negotiate the exchange.
If you do not have a Colombian ID, then there is a solution to moving your finds here and managing your money. We work with established brokerage houses who can open accounts for foreigners. Of course their long term goal is to manage more than just the transfer of your funds but nonetheless they offer a secure, efficient and cost effective manner to carry out a financial transaction in Colombia.
To open a brokerage or security account you generally will need three to six months of bank statements. This is because you must prove the ''provenance'' of your funds - or where the money came from. You will also need a copy of your passport and the previous year's tax statement. The broker or brokerage house may want to speak with you or meet with you in person, if possible. They may also ask for a letter of reference or a letter from your accountant. You will also need to fill out a form that indicates a certain amount of background information about yourself and your finances. To a foreigner this may seem invasive but it is required by law. Brokers, brokerage houses and bank managers take on a personal responsibility to know who their clients are and may lose their jobs if they accept a client who is moving illegal funds. After you submit your documentation it will generally take 2 or 3 days for the paperwork to be reviewed and processed. before your account will be opened.
Brokerage houses manage your transactions with a slight variance in commissions and costs for processing your cheques. At least one of the companies that we work with does not charge for cheques. If you are planning to make to transfer or purchase then allow yourself 2 or 3 days for the money to arrive, be negotiated and the cheques readied. Sometimes this can be done in a 24 hour period but you must remember that the exchange must be done before one in the afternoon.
When the money has been exchanged, then the bank or brokerage house will require the Form 4 or Form 5 to be completed and signed. Often an attorney will be involved in the filling out of these forms. Some will charge a commission of .5% to 1.5% of the amount to provide this documentation. Others will charge you based on an hourly rate. If this exchange is part of a real estate transaction, some lawyers will just consider this as part of their real estate service. It is important that you ask in advance as 1.5% on a transfer of $100,000 US is $1,500 US.
If you intend to bring coins or gold into the country, it is important that you realize that gold and art are very common means of laundering money. If you have a gold coin collection and have it evaluated as a coin collection rather than the value of the gold, you may have difficulty in exchanging it for its true value. At the moment it is also easier to produce an illegal kilo of gold than a kilo of cocaine so precious metals are something that you must be cautious in handling. If you plan to open an account in Colombia with money that you have gained from the recent exchange of gold or silver in another country, then the bank or brokerage house may a great deal of reservation accepting your business.
It is important that you manage the transfer of your funds into Colombia in a proper and legal manner. If you intend on applying for a visa based on an investment in Colombia, whether it be real estate or purchases of stocks and bonds of Colombian companies, then your investment must be registered correctly and the documents processed in the proper manner.