Capital controls

In March 2013, Cyprus closed its banks, capped withdrawals and barred most transfers abroad; the last restrictions came off only in April 2015. In June 2015, Greece did the same, and full removal waited until September 2019. Argentina lived for years under the cepo, largely lifted for individuals on April 14, 2025. From 2022, Russia blocked investors from countries it labels unfriendly: dividends and sale proceeds paid into so-called type C accounts, from which the money cannot leave. Capital controls are these measures: a government restricts converting its currency into foreign exchange or moving funds out of the country. For a political risk underwriter, they are the trigger for currency inconvertibility and transfer cover. The insured holds local currency (dividends, loan repayments, sale proceeds) and can neither convert it nor move it out; the insurer pays the hard-currency equivalent and takes over the blocked local currency. The policy sets a waiting period before payment, often several months, to filter out ordinary administrative delays. It also requires the restriction to postdate inception: a control regime already in place on the day the policy is written is a known fact, outside the scope of an insured contingency. The Russian case adds a layer, since Western sanctions and countermeasures overlap, and the cause of the blockage may fall under a sanctions exclusion. Not to be confused with devaluation, the loss of a currency's value. An investor who can still convert and transfer, at a rate that has turned bad, bears exchange rate risk, which inconvertibility cover does not pick up.