Argentina and its Fight Against Money Laundering

ACAMS recently caught up with Gonzalo Vila, director of Latin American operations for ACAMS to discuss what Argentina is doing to strengthen its fight against terrorist financing and money laundering.

FATF recently urged Argentina to strengthen its fight against money laundering and terrorism financing. What is the first step that Argentina should take to heed FATF’s urging?

This recent call from the FATF is related to the tough evaluation the organization did on the country after it reviewed it in October 2010. After the evaluation, Argentina took some measures to strengthen its AML regime but the FATF is still concerned about a good number of AML/CTF deficiencies that were identified in that evaluation that still remain, especially with respect to the implementation of the money laundering criminal offense and the enactment of a law to adequately criminalize terrorist financing. Notwithstanding, the FATF acknowledged that Argentina made progress in addressing some inefficiencies, for example the government submitted to Congress a bill to solve the issue of criminalizing the financing of terrorism (albeit this draft has insufficiencies according to the FATF). Argentina also addressed specific concerns that the FATF expressed regarding an amendment the country did in June 2011 to its AML legislation and steps it took to enhance customer due diligence measures for some institutions.

Among other shortages remaining in Argentina’s AML regime that the FATF highlighted in the recent meeting in Paris, included the requirement of establishing procedures to confiscate funds related to money laundering and to freeze terrorist assets; and to implement a broad AML supervision for all financial sectors.

Argentina will have couple of months to address these concerns and implement the pending measures and reforms, but in the meantime it will continue under the FATF magnifying glass.

What progress has Argentina made in its fight against money laundering and terrorist financing?

The new administration at the FIU in Argentina understood the need of making progress and has taken a much needed proactive attitude since taking office in the beginning of 2010.

If you consider that the result of the FATF evaluation (mostly assessing the AML/CTF performance of the country with the previous FIU administrations) it speaks for itself. Argentina “largely complied” and/or “complied” with just three of the 40+9 recommendations in its evaluation and did “not comply” with 20 of these. If you compare Argentina to some recent evaluations of other countries, Brazil (24 and 7 respectively), France (38 and 1), Netherlands (28 and 1), Mexico (23 and 6) and Uruguay (36 and 2) Argentina is by far the country in the worst shape and needs to do some major improvement. I believe that the new FIU understood this dangerous landscape, considering that Argentina is one of three Latin American countries with FATF membership (the other two are Brazil and Mexico).

There are some red alerts in the current scenario in Argentina, and one of these is the possibility and/or temptation of using the FIU and its tool for other reasons than intended. For example, that its functioning be driven by other concerns with little or no relation to money laundering. For instance, in November the government imposed some rules intended to control the exchange of foreign currency, namely U.S. dollars, and the government alleged that this measure was intended to prevent and control money laundering, dragging the FIU onto the battlefield, when it was widely argued that the real reason behind this measure was intended to control the currency exchange in an effort to stem capital flight—a reason outside the AML scope. The need to verify the origin of the funds is the quintessential pillar in any AML strategy, and no one can argue against it, but one ought to be at least skeptical when the ultimate goal falls outside the AML arena.

What can compliance professionals in Argentina do to help improve AML and CTF in their respective institutions?

As is the case with any other country, first of all compliance professionals need to have clear rules as to what their obligations are and what the regulators expect from them. I strongly believe that AML professionals in institutions in Argentina or any country in the world need to be prepared, trained and aware of all the changes in the international landscape and try to be one step ahead of the game. The world, especially in respect with international relationships, has become a much smaller place so a great deal of the AML rules and obligations apply equally to all across the board. This makes it easier to comply with international standards and observe standardized best practices. Nevertheless, each country has its own reality and threats and AML professionals need to be aware of what are the main risks in their countries, customers, products and relationships. Training and more training is the best advice for any professional in the field of financial crimes, particularly because this is an ever-evolving area. If you want to be at the top of the game you need to be informed and prepared.

What obstacles will Argentina face in 2012 against its terrorist financing fight?

The main goal for Argentina in relation to this will be to approve the terrorist financing law, as I stated before the government submitted a draft of this law to Congress which intends to address the issue of criminalizing the financing of terrorism. The government is looking to have this law enacted by mid next year. Argentina is working persistently to obtain the green light from the FATF next year and leave this “grey list” in which it is now included.

You attended the ACAMS Latin American conference, what were the related and “hot” topics discussed at the conference?

There are several hot issues in the AML landscape, some dealing with the tax matter like the implementation of the new Foreign Account Tax Compliance Act (FATCA) law. Now that the deadline to comply with this controversial U.S. law is approaching and many, many institutions in Latin America (and the rest of the world) do not fully understand the need to comply with this foreign law or not yet realize its extraterritorial impact. Other topics included: drug trafficking, trade-based money laundering, international cooperation, transparency in international wire transfers, new payment methods, FATF new initiatives (the inclusion of tax evasion as predicate crime, beneficial ownership, PEPs, bringing the 40+9 list back to 40 recommendations, among others) and the new FinCEN obligation for internationals MSBs to register and obtain a license in the U.S., other industries and sectors such as casinos and insurance are some of the relevant topics/areas of concern for AML professionals in Latin America, and I would say also in many other regions of the world.

Interviewed by: Karla Monterrosa-Yancey, CAMS, editor-in-chief,

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