According to the 2007 U.S. Department of State (DoS) report, the Argentine anti-money laundering regime, which includes the criminalization of money laundering, the Financial Intelligence Unit (UIF) and administrative penalties are set up by Law No 25.246 of 2000. Since 2002, the UIF has set guidelines for reporting requirements and types of activities related to customer due diligence, record keeping, suspicious transactions reporting, and internal control procedures. In 2005, Argentina ratified the United Nations International Convention for the Suppression of the Financing of Terrorism. The DoS report notes that since 2006 the government of Argentina has taken several important steps to combat money laundering and terrorist financing. For instance, Law No. 25.246 was amended to address the Financial Action Task Force's (FATF) concerns about Argentine money laundering and terrorism-financing legislation. In June 2007, the authorities passed the long-awaited terrorist financing Law No. 26.268, "Law of Terrorism Criminal Association and Financing of Terrorism," which provides the legal foundation to investigate and prosecute crimes relating to terrorism and terrorist financing. In October 2003, the FATF conducted a mutual evaluation of Argentina. Its findings, based on the FATF's old methodology, were published in 2004. Despite the existence of various reports on Argentina's anti-money laundering and terrorist financing regime, there is little information subsequent to the 2004 FATF's report addressing Argentina's compliance with the FATF's recommendations.

General Overview

Based on the 2007 U.S. Department of State (DoS) report, Law No. 25.246 criminalizes money laundering in Argentina. The core element of the anti-money laundering (AML) framework in the country is the Law on Money Laundering No. 25.246, enacted in 2000. This law set administrative penalties for money laundering and created the Financial Intelligence Unit (UIF). The law requires customer due diligence (CDD), record keeping of suspicious transactions (STRs), the prohibition against opening or maintaining accounts under fictitious names, and the confiscation of laundered assets. However, Santander's 2001 report notes that the law is not clear prescribing the predicate offences for money laundering. The DoS adds that the UIF is an autonomous institution that operates under the Ministry of Justice, responsible for the analysis and dissemination of information in order to prevent laundering of assets of illegal origin. Santander noted that the UIF applies penalties when obligated entities do not comply with the UIF requirements. Three separate authorities are responsible for supervising financial institutions and monitoring their compliance with AML provisions: the Central Bank of Argentina (BCRA), the National Securities Comisión (CNV) and the Superintendency of Insurance (SSN). According to the 2004 Financial Action Task Force (FATF) report, the UIF provides the legal framework for these institutions. In 2006, the introduction of Laws No. 26.087 and 26.119 facilitated UIF's investigation process on anti-money laundering. The 2007 Law on Illicit Terrorist Associations and Financing of Terrorism No. 26.268 criminalized the financing of terrorism. In 2007, Machado and Jorge reported that Argentina had achieved "only instances of formal compliance, and small improvements [have been] taken in response to serious threats of being excluded from global administrative mechanisms" (p.3). This may explain why there have not been any convictions on money laundering offences . The DoS adds that there is still need for legislation to deal with existing deficiencies. For instance, at present the UIF only investigates money laundering arising from six specific crimes, there is no prosecution for the laundering of money obtained from a criminal act, and only illegal transactions exceeding 50,000 pesos can be prosecuted as money laundering.

The DoS report further notes that there is no coordination among government agencies on money laundering, but adds that a newly formed National Coordination Unit may address this problem. In addition, the penalties imposed for noncompliance with reporting requirements are inadequate. Additionally, the criminal justice system needs greater capacity and the UIF needs more resources. Machado and Jorge 2007 also point out that laundering the proceeds of crimes by family members is not criminalized. Finally, the 2007 Unidos Por la Justicia report affirms that the transaction reporting system is inefficient and slow. The DoS 2007 report states that Argentina is strengthening its AML framework, beginning with several important initiatives in 2006. In that year, Law No. 26.087 was passed creating the National Coordination Unit within the Ministry of Justice and Human Rights and establishing a Special Prosecutors Unit within the Attorney General's Office for money laundering and terrorist financing cases. This should improve the enforcement capability of the AML system. Law No. 26.087 amended Law No. 25.246, addressing many of the FATF's concerns about Argentina's money laundering and terrorist financing legislation. The new law sets limits on banking secrecy, reduces the amount of required evidence for the UIF to start a prosecution, and increases the UIF's access to banks' STRs.

The board structure of the UIF has been changed through Law No. 26. 119. At present it has a permanent president and vice-president. These individuals are political appointees. The DoS report suggests that this new structure appears to have cleared up previous internal conflicts and improved relations with other government agencies. Mathus Ruiz reports in 2007 that legal reform aimed at treating money laundering as an independent, autonomous crime and criminalizing the financing of terrorism has been initiated. The DoS identified the primary deficiency in Argentina's combating the financing of terrorism (CFT) regime as its failure to formally criminalize terrorism and the financing of terrorism by law. The Law on Illicit Terrorist Associations and Financing of Terrorism was enacted in June 2007 as Law No. 26.268 for the investigation and prosecution of crimes related to terrorism and terrorist financing and to define specific money laundering offenses. However, as of November 2007 there is no subsequent information to confirm that deficiencies in the Argentina's money laundering and financing of terrorism legal framework have been overcame.

Reporting in 2007, Unidos Por La Justicia noted that financial operations and bank deposits represent 31.3 % of the legal means used for money laundering, bank transaction 29.2 %, and capital contributions 6,3%..Argentina is a member of the 1988 United Nations (UN) Drug Convention (Vienna Convention) and the 2000 UN Convention against Transnational Organized Crime (Palermo Convention).

The Principles

1. Legal Systems and Related Institutional Measures

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There is little information publicly available addressing Argentina's compliance with the recommendations and special recommendation relating to this Principle. Law No. 25.246 of 2000 criminalizes money laundering, sets the framework for the AML regime, and provides administrative penalties for noncompliance, according to the DoS and Santander's 2001 reports. Nevertheless, the DoS points out some weaknesses, such as the failure to treat money laundering as a separate offence and the stipulation that only transactions over 50 000 pesos constitute a money laundering offence. Furthermore, Santander states that the law does not provide a clear definition of the different predicate offences. Mathus Ruiz reports in 2007 that the government is working on reform legislation that more clearly defines money laundering and treats it as an autonomous crime. The Law on Illicit Terrorist Associations and Financing of Terrorism was enacted in June 2007 as Law No. 26.268 for the investigation and prosecution of crimes related to terrorism and terrorist financing and to define specific money laundering offenses. However, as of November 2007 there is no subsequent information to confirm that deficiencies in the Argentina's money laundering and financing of terrorism legal framework have been overcame.

Santander 2001 notes that provision for the seizure and confiscation of laundered assets is included in Law No. 25.246. The DoS adds that BCRA Circular B-6986 of 1994 provides for the freezing of funds and assets of all individuals and entities mentioned in the U.S Specially Designated Global Terrorists List. However, no assets have yet been confiscated under the law. Law No. 25.246 of 2000 established the UIF as a regulatory body tasked with detecting and preventing money laundering activities arising from a specific list of offences. Santander 2001 writes that the UIF may demand cooperation from the government information service, and is empowered to provide guidelines for the obligated parties. It may also obtain documentation and information from public organizations and citizens and call for the Public Ministry to order the search of premises, the seizure of documentation, and the deferral of suspicious proceeds. It can also order the Public Ministry to commence criminal prosecution. The UIF is in charge of applying penalties when obligated entities do not comply with UIF's requirements. Nevertheless, the 2007 U.S. DoS report indicates that the UIF's investigations are limited to six specific crimes. Moreover Machado and Jorge affirmed in 2007 that the UIF has been hampered by a scarcity of resources and the refusal by other public agencies to share information. KPMG published a survey in 2006, which found that only 26% of its respondents felt that the UIF has sufficient powers to efficiently combat the problem of money laundering. Moreover, 77% deemed the UIF insufficiently resourced to properly combat money laundering. The DoS report adds that Law No. 26.087 improved the UIF's investigative powers and reduced the amount of evidence required for submission to official prosecutors. The Law also increases the UIF access to banks' SRTs .

In a 2007 research study by the School of Law and Social Sciences of the University of Buenos Aires, a sample of 750 cases disclosed that only 7% of the economic crimes are successfully prosecuted and result in a sentence. According to Unidos Por La Justicia 2007, 48% are still pending, and 38% are bogged down in the long processing period. Almost 50% of the cases entering the system are dropped prior to resolution. The KPMG 2006 survey found that approximately 95% of respondents believed that there was only a zero to 25% probability that a criminal anti-money laundering filing would be sanctioned. Machado & Guillermo, the Unidos Por la Justicia, and Mathus Ruiz, all writing in 2007, agree that no money laundering cases have been brought through to sentencing. The 2004 report by the FATF notes that Argentina's Tax Authority (AFIP) has the authority to request declarations for cross-border transactions that exceed US$3,500. If the transaction is not declared the AFIP can impose sanctions such as seizure and prosecution for money laundering. The DoS adds that Argentina is party to the 1988 UN Drug Convention, and in 2005 Argentina ratified the United Nations International Convention for the Suppression of the Financing of Terrorism.

2. Preventive Measures - Financial Institutions

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According to the 2006 UIF report, the UIF has begun a review of its own regulatory framework regarding the financial system so as to harmonize its money laundering regulations while at the same time converging with international standards. Nevertheless, there is insufficient information as to Argentina's compliance with FATF's requirements for this principle. The 2007 U.S. DoS report adds that Law No. 25.246 of 2000 requires financial institutions to take measures relating to customer identification and record keeping, and report suspicious transactions. Compliance with AML provisions is monitored by the BCRA, the CNV, and the SSN. According to the FATF's 2002 report,

"the UIF lacks inspection powers. The BCRA, CNV, and SSN remain responsible for monitoring whether AML requirements are properly implemented in their respective sectors. It remains unclear how the division of tasks and responsibilities between the UIF and the supervisory agency works in practice since no sanctions have yet been imposed under the provisions of Article 24 of Law No. 25.246" (p. 8), but it must be noted that the FATF report was based on the 2002 methodology, which has since been revised. Since the time of the report, the UIF issued Resolution No. 2 of 2007 following the advice of the Financial Action Task Force of South America (GAFISUD), which recommends strengthening the requirements for customer identification. This Resolution provides the UIF with powers to set STR's requirements. A 2007 Infobae article notes that the Resolution harmonizes the BCRA with the UIF information requirements in order to facilitate compliance and monitoring.

Law No. 26.087 enhanced the UIF's supervisory powers, resources, and enforcement capabilities. It also set up the new National Coordination Unit within the Ministry of Justice and Human Rights to monitor government agencies AML activities and launched a Special Prosecutors Unit within the Attorney General's Office to handle AML/CFT cases. Moreover the BCRA has established a specialized bank examination unit dedicated to money laundering and terrorism finance. The Law clarifies the role of the UIF and the Attorney General's Office and increases the amount of information they share. The 2007 U.S. DoS report adds that further improvements are in the works to enhance the UIF's resources, to facilitate coordination and cooperation across government agencies, and to impose penalties for noncompliance with reporting requirements. In addition, improvements in the quality of the criminal justice system are ongoing. Banks are required by law to maintain a database of all transactions over 10,000 pesos and regularly submit this data to the BCRA. They must also provide this information to the UIF on demand. The DoS report adds that the UIF provides financial institutions with guidelines on the identification of suspicious transactions. The 2006 KPMG survey, however, urgently calls for the review of such guidelines, noting that CDD procedures are seriously deficient. The KPMG survey discloses that only 24% of the financial institutions responding to the questionnaire acknowledged having the requisite for CDD, even though collecting such data is required by law. The KPMG survey also notes that 80% of its respondents consider the fact of political exposure when evaluating the commercial relationships of their clients, but 57% reported that their IT systems failed to correctly identify clients as "politically exposed persons."

According to the DoS report, UIF Resolution No. 4 of 2005 requires entities to report STRs, regardless of their amount and to maintain transaction reports within a database for a minimum of five years. Upon receipt of a UIF request for client information, a response must be made within 48 hours. In addition, Law No. 25.246 prohibits financial institutions from informing their clients when reporting suspicious transactions, and extends them protection from liability for reporting. In 2007, Machado and Jorge stated that the number of reports has increased, but their quality is low, and the 2006 report by Unidos por la Justicia described STR reporting system as cumbersome and slow. The KPMG survey found that only 6% of its respondents declared a substantial increase in the quantity of those reports, 30% less than has been reported in a global survey on the subject. The KPMG survey cites the UIF's finding that the majority of such reports are incomplete and submitted only after considerable delay, because of which only a relative few are usable as evidence in the courts. KPMG suggests that the UIF review and improve its reporting guidelines.

In a 2007 Infobae article, it was reported that UIF's Resolution No. 228 of 2007 sets strict procedures for the treatment of occasional customers and strengthens operations requirements in situations where there is doubt that such customers are acting on their own behalf, for long distance operations, for operations in which the customer is a public servant, and for electronic fund transfers. The Resolution also sets new guidelines for STRs, which include the obligation to identify financial products and customer volume. The DoS report notes that Law No. 26.087 sets limits on many fiscal and banking secrecy restrictions, redressing some concerns raised in 2004 by the FATF that the UIF was hindered in gaining access to necessary information. However, the DoS report notes that these limits do not apply to transactions in excess of 10,000 pesos. The FATF 2004 report also raised a concern that financial entities are under no legal obligation to provide meaningful information on the originators of wire transfers. BCRA officials asserted that such information is generally provided, but the FATF report could not get confirmation of this assertion from representatives of the private sector.

The 2006 KPMG survey notes that BCRA "A" 4383 Communication requires financial entities to create committees for the control and prevention of money laundering. Such committees must plan, coordinate, and oversee AML policy, including the policies adopted by foreign authorities governing the operation of foreign branches. At least one member of the entity's board must sit on the committee, thus involving the board itself in AML activities. The survey also disclosed that the BCRA was working with the International Monetary Fund and the World Bank to create an expert inspection team to review Argentina's AML/CFT implementation. However, there is little information as to whether or not this team has actually begun its work. Finally, the FATF report found no information regarding restrictions applicable to the operation of shell banks, and the DoS reported that a Trade Transparency Unit had been created to examine trade data to further prosecution of trade-based money-laundering crimes.

3. Preventive Measures - Designated non-Financial Business and Professions

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There is insufficient information publicly available as to Argentina's compliance with this principle. However, the 2004 FATF report indicates that the following businesses and professions are covered by the Argentine AML provisions: "(1) natural and legal persons who normally run gambling operations; (2) natural and legal persons who buy and sell works of art, antiques or other luxury goods, deal in stamps or coins, or are involved in the export, import, manufacture; or industrialization of jewels or goods containing metals or precious stones; and (3) public notaries" (p. 9).

4. Legal Person and Arrangements & Non-Profit Organizations

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There is insufficient information publicly available as to Argentina's compliance with this principle. According to the 2004 FATF report "the evaluators were not provided with information about the existence of measures relating to charitable non-profit organizations" (p.8).

5. National and International Co-operation

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The 2007 U.S. DoS report notes that Argentina is party to the UN's Vienna and Palermo Conventions and the 1999 UN International Convention for the Suppression of the Financing of Terrorism. Nonetheless, there is insufficient information publicly available as to Argentina's compliance with this principle. The DoS report calls for government agencies to improve their cooperation with regard to AML/CFT. To this end, a new National Coordination Unit has been created. The FATF report of 2004 notes that the authority to freeze and confiscate suspicious assets on the request of a foreign government is provided for in the law. The 2004 FATF/GAFISUD report found that Argentina and the United States signed a Mutual Assistance Treaty in 1993 and an extradition treaty in 2000. In addition, Machado and Jorge write in 2007 that Argentina's UIF participates in 17 Memoranda of Understanding (MoUs) with foreign intelligence units and works cooperatively with international bodies. The 2007 report by Unidos por la Justicia notes, however, that Argentina needs to devise a more efficient approach to information-sharing with other countries. According to the FATF report, "Argentina can be obligated by international agreements to extradite its nationals or can grant the extradition of its nationals within bilateral treaties. In cases where no extradition of the nationals takes place, Argentina will initiate its own investigations and proceedings if the requesting state provides sufficient evidence to do so" (p.5).

The 2007 BCRA report notes that Communication "A" 4384 encourages financial entities to cross-check customers against terrorist watch lists produced by the UN Security Council, the European Union, and the governments of the United States, United Kingdom, and Canada) in order to make sure that potential customers are not included into them. However, the 2006 KPMG report found that only 68% of its survey's respondents reported having these lists or making them available to all employees. Nonetheless, the respondents claimed that they make regular use of such lists and compare them to their customer lists.