El Salvador’s Financial Regulatory Bodies: Navigating Payments, Banking, and Credit in Central America’s Small but Vibrant Economy

Financial Transactions and Trade Finance in El Salvador

When conducting business with El Salvador, the U.S. Commercial Service advises exporters to take careful considerations with payment terms. Some recommended methods include:

1. Advance payments
2. Irrevocable letters of credit

Initial transactions typically favor these payment methods to mitigate potential risks, although open account transactions are common among established business partners. Open account transactions allow importers to benefit from cash flow advantages but increase the risk for U.S. exporters.

To reduce this risk, exporters can employ various credit techniques like:

• Export working capital financing
• Export credit insurance
• Export factoring

These services can be obtained from local financial institutions. El Salvador has three credit-rating agencies authorized by the Financial System Supervisor (SSF):

1. INFORED
2. Transunion El Salvador
3. Equifax Centro America

Collection agencies, however, are not regulated. Instead, U.S. companies may collaborate with reputable law firms offering extra-judicial collection services.

El Salvador’s Banking Sector and Financial Supervision

El Salvador’s financial sector is supervised by two main entities: the Financial System Superintendency (SSF) and the Central Bank.

The Financial System Superintendency (SSF)

The SSF is El Salvador’s independent financial regulatory body, responsible for regulating and supervising all financial institutions.

The Central Bank

The Central Bank of El Salvador administers:

1. The payment system
2. Currency exchange
3. The international reserves

Private banks, branches of foreign banks, state-owned banks, and credit unions operate freely in the country. Interested parties can access the country’s financing information in El Salvador’s ICS section on the U.S. Department of State Investment Climate Statement website.

International Transactions and El Salvador’s Banking System

Since 2011, all transactions in Salvadoran banks must be conducted in U.S. dollars. The leading private banks include:

1. Banco Agrícola S.A.
2. Banco Cuscatlán
3. Banco Davivienda Salvadoreño S.A.
4. Banco de América Central S.A.
5. Banco Promerica

The government-owned banks, Banco Hipotecario, and Banco de Fomento Agropecuario, hold the remaining market share.

Foreign Exchange Controls and U.S. Banking Relations

El Salvador does not impose foreign exchange controls. Its legal tenders are the U.S. dollar and Bitcoin. The contact information for U.S. banks and local correspondent banks can be found in the article or by contacting each bank or the Salvadoran Bank Association (ABANSA) for up-to-date information. Some participating banks include:

1. Banco Abank
2. Banco Agrícola S.A.
3. Banco Azul
4. Banco Cuscatlán de El Salvador, S.A.
5. Banco Davivienda Salvadoreño, S.A.
6. Citibank N.A.
7. Banco Promérica S.A.
8. Banco de América Central, S.A.
9. Banco Atlantida
10. Banco Industrial, S.A.