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Argentina Misses Out on Crucial Beneficial Ownership Verification System

Tax Evasion, Money Laundering, and Corruption Concerns Rise

In a move that has raised concerns about tax evasion, money laundering, and corruption, Argentina has failed to implement a comprehensive beneficial ownership verification system. Despite signing the Global Forum Punta del Este declaration in 2018, committing to use information to combat these issues, Argentina’s recent beneficial ownership resolution lacks clarity and fails to cover crucial aspects.

Omissions and Shortcomings

One of the most significant omissions is the lack of coverage for trusts. Annex I of the new AFIP resolution excludes trusts from its scope, despite requiring them to register all parties by AFIP Resolution 3312 from 2012. However, this resolution does not require entities that own or control a trust to identify their beneficial owners.

Transparency and Verification

The ownership chain is crucial for verifying beneficial ownership, as it shows all intermediate layers up to the ultimate owner. While companies must keep this information, they are not required to register it with the tax administration. This lack of transparency makes it difficult to detect and prevent money laundering and corruption.

Expert Recommendations

Despite these shortcomings, experts believe that Argentina has the potential to improve its beneficial ownership verification system. The country’s financial intelligence unit and anti-corruption office should have access to this information, which would enable them to tackle tax evasion and corruption more effectively.

Here are some recommended measures to improve Argentina’s beneficial ownership verification system:

  • Publish Guidance and Organize Trainings: Publish clear guidance for the private sector and organize trainings to provide clarity on the new regulation.
  • Establish Registration Requirements for Trusts: Establish registration requirements for trusts to ensure transparency in beneficial ownership.
  • Sign Memoranda of Understanding: Sign memoranda of understanding with local authorities to allow access to beneficial ownership information.
  • Publish Beneficial Ownership Information: Publish basic beneficial ownership information through Argentina’s National Register of Companies.
  • Verify Information: Verify beneficial ownership information obtained under the new regulation with data already available to AFIP.

Consequences and Recommendations

Argentina’s failure to implement a comprehensive beneficial ownership verification system is a missed opportunity to tackle tax evasion, money laundering, and corruption. The country’s authorities must take immediate action to address these shortcomings and ensure that its financial system is transparent and secure.

It is essential for Argentina to strengthen its beneficial ownership verification system to prevent and detect these illegal activities. The country’s financial stability and reputation depend on it.