Argentina at High Risk of FATF ‘Grey Listing’ Due to Money Laundering Issues

Argentina’s President “Javier Milei” has intended to propose a “blanqueo” whitewash amnesty that has not been disclosed yet. However, this strategy can make the country a target for Financial Action Task Force oversight.

Another “RIGI investment incentive scheme” worth millions of dollars has been under the supervision of the FATF.

Argentina’s Financial Strategies

The government of Argentina has a plan to take two actions in the next two months:

• First, it will try to convince “Elisa Anda Madrazo”, the new President of the Financial Action Task Force (FATF), and a Mexican lawyer as well to give positive political feedback in favor of the administration of President Javier Milei instead of negatively evaluating the anti-money laundering (AML) measures of the country.
• In addition, it will attempt to attract investments speedily and enhance the flow of dollars through a “blanqueo de capitales’ (assets amnesty for capital repatriation).”

Economic Goal Before FATF’s Sanction

The primary purpose is to improve the country’s economy before FATF implements any sanction to disturb the financial goals of Argentina and increase the money in the Central Bank.

Actions to Avoid FATF’s Greylisting

Due to these reasons, the government will try to implement all possible measures and work hard to win this battle against time. In Paris, discussions are already going on for deciding whether to put Argentina on the “grey list.”

The grey list includes all the countries or organizations that violate the AML laws or have weak AML compliance and are under increased supervision by FATF.

Read Also: Guide to FATFs Grey List and Black List

Impact on Argentina’s Investment Projects

If Argentina faces the sanctions, it will destroy its positive plan to bring money into the country by issuing its “RIGI (Régimen de Incentivo a las Grandes Inversiones)major investment incentive scheme.” It will have a negative impact on the administration of Milei, which aims to enhance the flow of local and foreign money.

These measures are significant in helping Argentina bring in more funds before deciding to switch entirely to the US dollar.

Discussions with FATF members

“Perfil” was connected by a senior management authority who declared that negotiators of  Argentina are trying hard to convince FATF members not to impose any potential sanctions.

Expected Bad News from FATF

The libertarian official stated, “It is a process. I understand that the meetings in Paris about the draft they had prepared were positive. And they will continue to work until the formal evaluation date.”

Perfil sources confirmed the outcome “will not be beneficial for the country” in the upcoming meeting in late October in Paris.

Any country’s downfall related to  AML regulation awareness will be “due to the lack of resolution of reported cases,” sources declared.

Read Also:

• Monaco and Venezuela Made It To FATF’s ‘Grey List’
• FATF Plenary Meeting To Be Held In Paris From Feb 21-23
• FATF highlights high-risk Jurisdictions Lacking AML Measures

FATF Considers Adding Argentina  to Greylist

Perfil stated that the FATF was established in 1989 by seven major countries; they are deciding to add Argentina to its grey list. 20 other countries are already present in this list, including “Burkina Faso, Cameroon, Haiti, Kenya, Syria, Monaco, Croatia and Venezuela.”

Another list, the “Black List,” includes countries with deeper concerns about financial crimes and other illicit activities, such as “Iran, Burma, and North Korea.”

Another source confirmed and stated, “Inclusion on the grey list is almost a foregone conclusion. In the best-case scenario, the country can hope that the FATF will give it a period of approximately one year to regularise the points in question,” which guided money-laundering watchdog “Unidad de Información Financiera (UIF)” during the Kirchner government.

Possible Consequences of Sanctions

If the sanction gets approved, it will negatively affect the inflow of money in the financial sector that the administration of Milei relies on, thus damaging the movement of dollars within the country.

FATF’s requirement for Suspicious activities

A lot of court cases related to corruption and money laundering are still pending, and these are two major concerns for the government and FATF.

In Paris, officials from FATF require Argentina to invest more resources in assessing “Suspicious activities” as this will assist them in detecting the irregular patterns of illicit activities.

Its primary goal is to achieve “more effective judicial action, with more magistrates and dissuasive and proportionate sanctions.” This is a basic requirement for countries that are included in the grey list.

Discussion Regarding K2 Integrity Consulting’s Rejection

The FATF was concerned when the “K2 Integrity consultancy firm”, led in Argentina by the ex-head of UIF (during the government of Mauricio Macri from 2015 to 2019), was not allowed to help.

The multinational company, which focuses on issues related to money laundering, took part in discussion meetings with the government but was later dismissed due to disagreement. However, it acquired some confidential data anyway.

Dissatisfaction with Argentina’s Judicial Supervision

One expert from a relative field stated, “Sloppiness left a bad precedent.” Federici criticized “Ariel Lijo, the federal judge” who is the choice of the Milei administration for the Supreme Court, declaring that the judge didn’t finish the financial investigation  “unfinished in order to guarantee impunity for [ex-vice-president Amado]) Boudou and some powerful businessmen linked to the political financing of [former lower house Speaker] Sergio Massa.”

President Milei Faces Delayed FATF Review

The new president, Milei has to deal with the Review of Argentina, which was pending and had to happen in 2020 but had delayed due to the Covid-19 pandemic. UIF, led by Federici until December 2019, was concerned about the country’s assessment related to money laundering activities.

Hiring of New Auditors for AML Assessment

During the 2019-2023 time period under the supervision of ex-president Alberto Fernández, two individuals, “Carlos Cruz and Juan Carlos Otero” were selected as auditors for an anti-money laundering firm.

Political Difficulties and Issues for Argentina’s Government

As the sources have claimed, the government can’t do anything about the criticism that FATF expects related to anti-money-laundering efforts. Intermediaries are worried about it, as per the report.

Another source reported, “It is a political resolution and is linked to the ability they will give Milei to increase the flow of dollars into the country, much of which will leave the so-called ‘tax havens’ to settle in Argentina, under the extraordinary conditions of a moratorium and the development of high-yield activities, such as energy and mining,”