Financial Crime World

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Argentina’s Anti-Money Laundering Efforts Lacking, Report Says

According to the 2022 International Narcotics Control Strategy Report, Argentina faces significant challenges in combating money laundering (ML) and the financing of terrorism (TF).

Hotbed of Money Laundering Activity

The country’s Tri-Border Area (TBA), shared with Brazil and Paraguay, is a hotbed of ML activity, including:

  • Trade-based money laundering
  • Counterfeiting
  • Drug trafficking
  • Smuggling

Many organizations in the TBA have suspected links to the terrorist organization Hizballah.

Limited Progress in Implementing Anti-Money Laundering Measures

Despite these challenges, Argentina has made little progress in implementing anti-money laundering (AML) and combating the financing of terrorism (CFT) measures. The country:

  • Has yet to conduct a national risk assessment
  • Has not developed national strategies to combat ML/TF

Regulatory and Criminal Enforcement Capabilities Limited

Limited regulatory and criminal enforcement capabilities continue to hinder the government’s ability to reduce the flow of illicit proceeds.

Vulnerabilities in Argentina’s Financial System

Vulnerabilities include:

  • Contraband smuggling
  • Narcotics trafficking
  • Public corruption
  • Lack of effective oversight of financial institutions, money value transfer services, exchange houses, real estate, and gaming

Opportunities for Money Laundering/Financing of Terrorism Activity

The country’s cash-intensive economy and large informal sector create opportunities for ML/TF activity. Additionally:

  • The government’s capital controls have driven activity into the informal exchange market and increased the use of cash
  • The lack of effective regulation of digital assets poses risks for ML/TF

Free Trade Zones and Special Customs Area

Argentina has 10 free trade zones and a special customs area in the province of Tierra del Fuego, but lacks adequate controls to prevent cross-border transport of contraband and bulk cash.

Progress Made in Implementing Anti-Money Laundering Laws and Regulations

Argentina has made some progress in implementing its AML/CFT regime, including:

  • Issuance of new regulations on customer due diligence
  • Identification and verification of ultimate beneficial owners of legal persons

The country is also a member of several international organizations dedicated to combating ML/TF, including the Egmont Group of Financial Intelligence Units and the Financial Action Task Force (FATF).

Limited Effectiveness of Anti-Money Laundering Enforcement Regime

However, the report notes that Argentina’s ML enforcement regime effectiveness is limited, with only 35 convictions in 2019 and systemic deficiencies in its justice system, including:

  • Lengthy delays
  • Lack of judicial and prosecutorial independence