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FATF Ignored: Argentina’s Path Toward Financial Illicitness

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Argentina’s decision to dismantle core anti-money laundering controls has sent shockwaves through the compliance community, undermining Argentina’s AML compliance and exposing the country to heightened financial crime risks. With the government moving to eliminate suspicious transaction reviews and raise reporting thresholds to USD 100,000, longstanding FATF recommendations are being sidelined, and the fight against illicit finance is effectively being stifled.

Argentina’s Mutual Evaluation Report, published on 18 December 2024 by the Financial Action Task Force (FATF) and GAFILAT, highlighted that “there are some important shortcomings in both ML and TF risk understanding, including the lack of in-depth understanding of ML risks stemming from informality and corruption.” Despite incremental progress over the past decade, the FATF identified critical gaps in the country’s ability to detect and deter money laundering and terrorist financing (ML/TF), recommending a risk-based approach to supervision, enhanced suspicious transaction reporting, and strengthened sanctions regimes.

Contrary to these findings, the Milei administration has enacted measures that effectively deregulate financial flows and weaken institutional safeguards. On 22 May 2025, President Javier Milei’s economic team—led by Minister Luis Caputo and Central Bank President Santiago Bausili—issued Decree 351/2025, increasing the threshold for disclosing the origin of funds to USD 100 000 and eliminating the obligation to file suspicious transaction reports (STRs) for high-value card, notarial, real estate, vehicle, and banking transactions. The move aims to fuel endogenous dollarization but ignores the recommendations of the main international organizations overseeing financial operations that may be linked to criminal activities.

Mechanics of financial crime proliferation

Deregulation of reporting requirements and the removal of STR obligations create fertile ground for laundering proceeds from narcotics trafficking, corruption, tax evasion, and human trafficking. The FATF report emphasises that “the low or inexistent STR reporting from high-risk sectors (real estate, securities, VASPs and lawyers), significant quality issues in STRs … are significant gaps.” By nullifying transaction monitoring, Argentina effectively dismantles its Financial Intelligence Unit’s (FIU) ability to generate actionable financial intelligence, which currently triggers half of the investigations in the federal financial crimes prosecutor’s office (PROCELAC).

Without mandatory STRs, law enforcement agencies lose a primary source of leads. Real estate transactions, vehicle sales, and high-value cash deposits have long been exploited by organized crime syndicates to integrate illicit proceeds. The elimination of these controls contradicts FATF Recommendation 20, which mandates reporting of suspicious transactions by financial institutions and designated non-financial businesses and professions (DNFBPs).

Regulatory rollback and legal framework alterations

Decree 351/2025 and associated resolutions effectively amend Law 25 246 on the Prevention of Money Laundering and Financing of Terrorism, originally enacted in 2000 and amended in 2013. While the law requires customer due diligence (CDD) and record-keeping by obliged entities, the recent measures exempt key transaction types from scrutiny, eroding the legal framework’s integrity.

The Central Bank of Argentina (BCRA) and the Federal Administration of Public Revenues (AFIP) have traditionally supervised banks, brokerage firms, and DNFBPs, leveraging risk-based guidelines to allocate oversight resources. The FATF recommended that Argentina “strengthen the implementation of its risk-based anti-money laundering and counter-terrorist financing supervision by … allocating additional resources to FIU registration and supervision teams; implementing prompt and effective risk-based supervision of value-added service providers and lawyers; implementing effective, dissuasive and proportionate sanctions; and developing and delivering country- and sector-specific guidelines.” By rolling back transaction reviews, Argentina abandons these recommendations.

Systemic vulnerabilities and international repercussions

The dismantling of AML controls does not occur in isolation. Argentina’s porous borders and the informal economy—estimated at one-third of GDP—amplify money laundering risks. Corrupt actors can exploit neighboring jurisdictions, particularly in the Tri-Border Area with Brazil and Paraguay, to smuggle illicit funds. The FATF cautioned that Argentina must “develop risk-based policies and action plans to suppress or formalize informal money service providers and prevent their potential abuse for money laundering and terrorist financing.”

International partners have taken notice. Banks globally may implement enhanced due diligence on Argentinian counterparties, increasing compliance costs and potentially restricting correspondent banking relationships. Such de-risking can isolate Argentina’s financial system, driving more activity into unregulated channels and cash hoarding. The World Bank has warned that de-risking measures can exacerbate financial exclusion.

Strategic misalignment with global standards

Argentina’s economic strategy focuses on endogenous dollarization, encouraging citizens to repatriate hoarded US dollars by simplifying offshore asset declarations. However, this approach overlooks the FATF’s emphasis on quality, threat-based financial intelligence and targeted sanctions to combat serious ML threats such as corruption and tax evasion. Misplaced policy priorities risk Argentina falling back into the FATF’s enhanced monitoring process, potentially culminating in the country being grey‑listed or even black‑listed if deficiencies persist.

Grey‑listing impedes foreign direct investment and raises the cost of international borrowing. The FATF’s grey list includes countries under increased monitoring due to strategic deficiencies in their AML/CFT regimes. Argentina must demonstrate tangible improvements—particularly in transaction monitoring, STR quality, and enforcement—to avoid reputational harm and economic sanctions.

Conclusion: urgent course correction required

Argentina’s current trajectory undermines both domestic and international efforts to combat financial crime. By sidelining FATF recommendations, raising reporting thresholds to USD 100 000, and dismantling STR obligations, policymakers risk plunging the country into a regulatory abyss. Effective AML/CFT frameworks require robust transaction monitoring, high-quality financial intelligence, and a risk-based approach to supervision and enforcement. Reversing these measures and recommitting to FATF standards is imperative to restore Argentina AML compliance, safeguard the financial system, and maintain global partnerships.