IIEffective Insolvency and Creditor Rights Systems
According to a 2004 World Bank presentation available on the Internet, Bolivia passed a new Voluntary Reorganization Law in 2003 in order to allow troubled but still-viable firms avoid liquidation. However, the World Bank's current Doing Business Project webpage devoted to Latin American insolvency reforms notes that the voluntary workout option is no longer available, leaving only the lengthy and costly liquidation process as the only insolvency option in the country. The United Nations Commission on International Trade Law website discloses that Bolivia has not adopted the Model Law on Cross-Border Insolvency. Beyond these facts, however, there is insufficient publicly available information directly addressing Bolivia's compliance with the Principles and Guidelines for Effective Insolvency and Creditor Rights Systems developed by the World Bank.
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IDInternational Financial Reporting Standards
In March 2006, the Inter-American Development Bank (IDB) approved the funding of a project aimed at providing assistance to the adoption of International Financial Reporting Standards (IFRSs) and International Standards on Auditing in Bolivia. Although Bolivia has its national accounting standards, the IDB Donors Memorandum issued in 2006 explains that the Bolivian standards are not consistent with IFRSs. Moreover, the domestic accounting framework is incomplete since Bolivia has 14 accounting standards as compared to more than forty IFRSs. The main objective of the project, as mentioned in the IDB Memorandum, is to ensure that business financial reporting in Bolivia is "technically reliable" and transparent. The 36-month long project is expected to harmonize Bolivian standards with international standards and provide access to the harmonized standards to Bolivian accounting professionals. In addition, a project primarily funded by the Swedish International Development Cooperation Agency was also underway with the objective to develop the Uniform Chart of Accounts (PUCs) and thereby enhance Bolivia's legal, regulatory, and institutional structures by means of standardized PUCs.
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IIPrinciples of Corporate Governance
In November 2003, the Organization for Economic Co-operation and Development (OECD) published a White Paper on Corporate Governance in Latin America in which it provides a summary review of Bolivia's initiatives on corporate governance. According to the paper, the Bolivian government drafted a bill in early 2003 titled the "Law on Governance of Stock Companies" which was presented to the Bolivian congress in November 2003. The White Paper notes that many companies expressed opposition to its content. As of 2008, no further information was available on the status of the above-mentioned bill. Further, the paper points out that in 2002, as an outcome from the privatization process, the government enacted a law specifically for "capitalised" public companies, which covers various aspects of corporate governance. In addition, the banking regulations include various governance requirements for banks and other financial institutions with regards to creation of audit committees, participation of directors on credit committees, regulation of activities of internal supervisors and rotation of external auditors. A Donors Memorandum available on the Inter-American Development Bank website points out that the securities exchange is in an early stage of development in Bolivia. The Memorandum explains that this is not only due to the size of the companies but also because of an "adverse business culture" that lacks transparency and accountability. Overall, there is insufficient publicly available information directly addressing Bolivia's compliance with OECD's principles of corporate governance.
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IDInternational Standards on Auditing
According to the 2006 Inter-American Development Bank Donor's Memorandum, the existing accounting and auditing framework in Bolivia is incomplete. Bolivia has approved just five auditing standards and none of the Bolivian standards are consistent with the International Standards on Auditing (ISAs) promulgated by the International Auditing and Assurance Standards Board. Therefore, in March 2006, the IDB approved the funding for a project to aid the adoption of International Financial Reporting Standards and ISAs in Bolivia. The 36-month long project is divided into three main components comprising (1) the alignment of national standards with international standards, (2) dissemination and training on the application of the newly developed standards, and finally (3) a voluntary certification system to improve the quality of Association of Auditors of Bolivia professional services. Upon completion, it is expected that Bolivian accounting and auditing standards will be harmonized with the international standards.
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IDAnti-Money Laundering/Combating Terrorist Financing Standard
The Financial Action Task Force of South America Against Money Laundering (GAFISUD) conducted a mutual evaluation of Bolivia's Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) regime against the Financial Action Task Force (FATF) 40+9 recommendations and special recommendations. GAFISUD published its findings in a 2006 report, in which it concludes that Bolivia is compliant with 3 recommendations and special recommendations; largely compliant with 7; partially compliant with 15 and; non-compliant with 24. The GAFISUD mutual evaluation cites several areas where Bolivia's AML/CFT regime could be enhanced. Perhaps the most important of these is that Bolivia still lacks legislation that specifically criminalizes the financing of terrorism. Therefore, Bolivian authorities also lack the ability to identify, freeze or seize assets linked to terrorist individuals or organizations. The 2008 U.S. Department of State report observes that, in 2006, the Office of the Superintendence of Banks and Financial Institutions (SBEF) received a draft law to criminalize terrorist financing. However, as at the release of the report in March 2008, the bill had not yet been submitted to Congress for further consideration. Furthermore, the mutual evaluation rates Bolivia as non-compliant with all the FATF recommendations pertaining to Designated Non-Financial Business and Professions (DNFBPs), due partly to DNFBPs not being under the supervision of any regulatory body for compliance with AML/CTF standards. Money laundering is criminalized pursuant to Law No. 1768 of 1997, which modifies the Bolivian Penal Code and contains three categories of predicate offenses: narcotics trafficking, organized criminal activities, and public corruption.
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IICore Principles for Systemically Important Payment Systems
The Sistema de Pagos de Alto Valor (SIPAV) is the large-value, time critical payment system in Bolivia. This interbank payment system was launched in 2001 as a real-time gross settlement system by the country's central bank, the Central Bank of Bolivia (BCB). A joint 2006 report by the Center for Latin American Monetary Studies and the World Bank implies that Bolivia considers the SIPAV a systemically important payment system. The SIPAV is owned, operated and overseen by the BCB. There is, however, little publicly available information that addresses Bolivia's compliance with the Core principles for Systemically Important Payment Systems promulgated by the Committee on Payment and Settlement Systems.
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