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Argentina’s Battle Against Money Laundering: Not There Yet

Argentina has taken significant strides in its fight against money laundering (ML) and terrorist financing (TF). Since the previous mutual evaluation in 2010, the country has updated its laws and processes, attempting to align with international standards. However, the recent joint Financial Action Task Force (FATF) and GAFILAT mutual evaluation reveals a mixed picture, highlighting both progress and critical gaps.

The March 2024 on-site assessment examined Argentina’s compliance with FATF recommendations and the effectiveness of its anti-money laundering (AML) and counter-terrorist financing (CFT) measures. While international cooperation remains a strong suit, the nation faces pressing domestic issues that undermine its overall effectiveness.

Domestic Risks and Weaknesses

Argentina, an upper-middle-income country, grapples with domestic money laundering threats originating from drug trafficking, tax evasion, corruption, smuggling, fraud, and human trafficking. Despite efforts, the understanding of ML and TF risks—especially laundering linked to corruption and informal financial services—remains insufficient.

The judicial outcomes underscore this challenge. Although authorities have improved the identification, prosecution, and conviction of money laundering cases, the numbers tell a different story. With only 91 convictions over the review period, the results fall short given Argentina’s size and risk profile. Furthermore, while confiscations were achieved in most cases, the amounts recovered are modest, reflecting the need for a more aggressive approach.

Terrorist financing presents additional concerns. Although Argentina’s regulatory framework is adequate, the limited number of investigations and the absence of convictions suggest a mismatch between its medium-low risk profile and actual outcomes. Enhancing investigative and prosecutorial efforts in this area is critical.

Strengths in Cooperation and Coordination

Argentina has demonstrated notable strengths in domestic cooperation. Public prosecutors and investigative judges effectively leverage financial intelligence sourced from various channels. This cooperation facilitates better decision-making and case management.

However, challenges remain in high-risk sectors. Suspicious transaction reporting by securities, real estate, and virtual asset service providers (VASPs) is inconsistent. Similarly, cross-border cash movement intelligence is underutilized, limiting its impact on AML/CFT efforts. Addressing these gaps is vital to bolster national security and economic stability.

Internationally, Argentina’s performance is commendable. The country provides constructive legal assistance, extradition, and diverse forms of cooperation, with minor areas requiring improvement. This capability strengthens Argentina’s position as a reliable partner in global AML/CFT efforts.

Sector-Specific Challenges

The financial sector in Argentina generally exhibits a solid understanding of money laundering risks. However, terrorist financing awareness varies significantly. Enhanced training and resource allocation could ensure that institutions—including gatekeeper professions such as lawyers, accountants, and real estate agents—are better equipped to identify and mitigate threats.

The report also highlights the uneven understanding of ML/TF risks among Designated Non-Financial Businesses and Professions (DNFBPs). While these sectors align with Argentina’s National Risk Assessments, they often lack detailed insights into sector-specific risks. Strengthening this understanding through tailored guidance and oversight is essential.

On the non-profit organisation (NPO) front, Argentina must adopt a more risk-based approach to mitigating abuse risks. This adjustment will enable the country to comply with FATF’s Recommendation 8 while avoiding unnecessary disruptions to legitimate NPO activities.

Resource and Technology Constraints

A significant barrier to effective AML/CFT supervision in Argentina is resource limitations. The Financial Intelligence Unit (FIU) faces serious constraints in human and information technology (IT) resources. While the supervision framework is well-designed and risk-based to some extent, these challenges hinder its effectiveness.

Financial institutions generally perform well in risk identification, but resource bottlenecks prevent optimal enforcement of AML/CFT measures. Investing in advanced technologies and expanding the workforce within regulatory bodies can enhance Argentina’s ability to combat financial crimes.

Conclusion: The Path Forward

Argentina’s efforts to strengthen its AML/CFT framework showcase a commitment to combating financial crimes. However, the mixed results from the 2024 mutual evaluation indicate that there is still much work to be done. From addressing domestic ML/TF risks to enhancing resource allocation and sector-specific awareness, a multifaceted approach is essential.

By refining its strategies and leveraging international cooperation, Argentina can position itself as a leader in AML/CFT efforts in the region. The country’s progress will be closely monitored, with the FATF expecting updates in one year as part of its enhanced follow-up process.