Money Laundering on the Rise in Uruguay: A Growing Concern
Uruguay’s Central Bank has issued a warning about a significant spike in money laundering cases tied to drug trafficking, sparking concerns over the country’s susceptibility to financial crimes.
A Lax Regulatory Environment
Experts have long warned that Uruguay’s lax regulations make it vulnerable to financial crimes. A recent analysis by Alejandro Aparicio Montesdeoca for the National Secretary Against Money Laundering and Terrorism Financing (SENACLAFT) found that the country has invested little in preventing, detecting, and prosecuting financial crimes.
- Lack of resources: Uruguay has far fewer personnel focused on money laundering than its neighbors.
- Insufficient coordination: Existing investigative units do not sufficiently coordinate or cooperate with each other.
- Limited expertise: Unlike other countries, Uruguay does not have a police unit dedicated to financial crimes.
The Consequences of Lax Regulations
The consequences of lax regulations are evident in the beach town of Punta del Este, which was linked to laundering by Los Cuinis, a Mexican cartel. Uruguayans involved in massive cocaine shipments have also laundered millions through the country’s financial system.
- Increased money laundering cases: Investigations into cases of money laundering connected to drug trafficking nearly doubled from 1,597 in 2018 to 3,021 in 2022.
- Easier for money launderers to operate undetected: The 2020 law raising cash payment limits from $4,000 to $100,000 has only made it easier for money launderers to operate undetected.
A Call for Action
In response to these concerns, Uruguay has taken steps to address its money laundering issues. SENACLAFT funded Montesdeoca’s evaluation, and the country created a prosecutor’s office dedicated to money laundering in early 2023. Now, Uruguay’s legislative branch is discussing changing the 2020 law that raised cash payment limits.
Expert Opinion
“There needs to be a change in how the problem is viewed,” said Montesdeoca. “Uruguay needs to adopt methods beyond just laws and regulations to effectively combat money laundering.”
Paraguay serves as an example of how investing resources can lead to significant progress in combating money laundering. Following an investigation by the Latin America Anti-Money Laundering Group (GAFILAT), Paraguay increased its seizures and convictions related to the crime.
The situation in Uruguay highlights the importance of effective regulation and enforcement in preventing financial crimes. By adopting a more proactive approach, Uruguay can reduce the risk of money laundering and protect its financial system.