An investigative report says Argentina’s national anti-money laundering body neglects to fully investigate reports of suspicious activities by Argentine citizens and companies, opening a giant escape hatch for nearly $100 billion in illegal proceeds.
According to La Nacion, the main government body charged with analyzing intelligence on money laundering in Argentina, the Financial Information Unit (UIF), has to have the person or business registered as a possible suspect in Argentina before it follows up on reports of suspected money laundering outside the country. Thus, the unit has ignored alerts coming from world tax havens including Switzerland, Lichtenstein, the Isle of Man, and Nauru.
According to La Nacion, this means that domestic money launderers who leave the country with a clean record are unlikely to face sanctions later, and has led to $95.8 billion dollars in illegal funds leaving the country between 2000 and 2009.
UIF Head Jose Sabbatella denied La Nacion's charges and accused the paper of producing "false information."
InSight Crime Analysis
This is not the first time that Argentina has been criticized for failing to regulate money laundering. In February 2011, the country was nearly sanctioned after the Financial Action Task Force (FATF), an inter-governmental organization that investigates money laundering, found legal loopholes and irregularities in Argentina’s financial system. In March 2012, the country was downgraded on the US list of countries of concern for non-compliance with many FATF recommendations.
La Nacion's report comes during the same week that the UIF produced two resolutions aiming to increase its oversight regarding illegal financial activities, reported the newspaper Cronista. The resolutions expand the circumstances in which it is obligatory to report suspicious information.
The recent regulations passed by the UIF could arguably be interpreted as the agency intensifying its efforts against money laundering. But if La Nacion's reports are correct and the government body is not doing enough to monitor suspicious activity by Argentines overseas, this is only looking at a small part in the money laundering chain.
Argentina's struggles to properly monitor transnational businesses for suspicious activity is a regional problem. British bank HSBC was recently forced to pay nearly $2 billion in fines after a US court found that it had failed to regulate irregular activities conducted by its Mexico branch. However, the bank was not indicted, leading some critics to wonder whether HSBC was "too big to prosecute."
