FATF AML Deficiency List
US Dept of State Money Laundering assessment
Corruption Index (Transparency International & W.G.I.)
World Governance Indicators (Average Score)
Argentina is no longer on the FATF List of Countries that have been identified as having strategic AML deficiencies
Latest FATF Statement - 24 October 2014
The FATF welcomes Argentina’s significant progress in improving its AML/CFT regime and notes that Argentina has established the legal and regulatory framework to meet its commitments in its action plan regarding the strategic deficiencies that the FATF had identified in June 2011. Argentina is therefore no longer subject to the FATF’s monitoring process under its on-going global AML/CFT compliance process. Argentina will work with the FATF and GAFISUD as it continues to address the full range of AML/CFT issues identified in its mutual evaluation report.
Compliance with FATF Recommendations
27 June 2014 - FATF confirmed that Argentina has made significant progress in addressing the deficiencies in its anti-money laundering/countering the financing of terrorism (AML/CFT) measures as identified in the mutual evaluation report of October 2010. The assessment team conducting the mutual evaluation, rated Argentina non-compliant (NC) or partially compliant (PC) on all of the Core and Key Recommendations. As a result of this lack of compliance with the Core and Key Recommendations, the FATF Plenary placed Argentina in an enhanced follow-up process. The follow-up process is a desk-based review that monitors that a country takes the necessary steps to strengthen its AML/CFT framework.
US Department of State Money Laundering assessment (INCSR)
Argentina is categorised by the US State Department as a Country/Jurisdiction of Primary Concern in respect of Money Laundering and Financial Crimes.
Argentina faces many of the same challenges confronted throughout the region, including stemming the tide of illicit proceeds from narcotics trafficking and public corruption. Illicit finance threats posed by corruption, including proceeds generated domestically and stemming from Venezuela, remain high. The Tri-Border Area (TBA) shared with Brazil and Paraguay is one of the principal routes into Argentina for multi-billion dollar TBML, counterfeiting, drug trafficking, and other smuggling offenses. In addition, many of the money laundering organizations in the TBA have known or suspected links to the terrorist organization Hizballah.
In recent years, Argentina has taken significant steps to strengthen its AML/CFT regime. In 2019, Argentina issued a Presidential Decree officially designating Hizballah as a terrorist organization. The government also created a National Committee for Combating Money Laundering and Terrorist Financing to coordinate the country’s money laundering and terrorist financing policies, including the development of national risk assessments (NRA) and a national strategy to combat those crimes. Despite these positive steps, limited regulatory and criminal enforcement capabilities continue to raise concerns about the government’s ability to reduce significantly the flow of illicit proceeds.
There are no international sanctions currently in force against this country.
BRIBERY & CORRUPTION
Rating (100-Good / 0-Bad)
Transparency International Corruption Index 42
World Governance Indicator – Control of Corruption 53
Corruption is a high risk for companies in Argentina and presents major challenges to business operations. While corruption exists in all levels of society, businesses should note the especially high risk in public procurement. Argentina's anti-corruption provisions are largely contained in the Criminal Code (in Spanish), which prohibits the active and passive bribery of public officials and bribery of foreign public officials. The Code does not provide an exception for facilitation payments, and gifts are prohibited, but enforcement of anti-corruption provisions is lacking. Companies consider irregular payments and bribes to be a standard way of conducting business in many sectors. For further information - GAN Integrity Business Anti-Corruption Portal
Argentina benefits from rich natural resources, a highly literate population, an export-oriented agricultural sector, and a diversified industrial base. Although one of the world's wealthiest countries 100 years ago, Argentina suffered during most of the 20th century from recurring economic crises, persistent fiscal and current account deficits, high inflation, mounting external debt, and capital flight.
A severe depression, growing public and external indebtedness, and an unprecedented bank run culminated in 2001 in the most serious economic, social, and political crisis in the country's turbulent history. Interim President Adolfo RODRIGUEZ SAA declared a default - at the time the largest ever - on the government's foreign debt in December of that year, and abruptly resigned only a few days after taking office. His successor, Eduardo DUHALDE, announced an end to the peso's decade-long 1-to-1 peg to the US dollar in early 2002. The economy bottomed out that year, with real GDP 18% smaller than in 1998 and almost 60% of Argentines below the poverty line. Real GDP rebounded to grow by an average 8.5% annually over the subsequent six years, taking advantage of previously idled industrial capacity and labor, an audacious debt restructuring and reduced debt burden, excellent international financial conditions, and expansionary monetary and fiscal policies. Inflation also increased, however, during the administration of President Nestor KIRCHNER, which responded with price restraints on businesses, as well as export taxes and restraints, and beginning in 2007, with understating inflation data.
Cristina FERNANDEZ DE KIRCHNER succeeded her husband as president in late 2007, and the rapid economic growth of previous years began to slow sharply the following year as government policies held back exports and the world economy fell into recession. The economy in 2010 rebounded strongly from the 2009 recession, but has slowed since late 2011 even as the government continued to rely on expansionary fiscal and monetary policies, which have kept inflation in the double digits.
The government has taken multiple steps in recent years to deal with these problems. It expanded state intervention in the economy throughout 2012. In May 2012 the Congress approved the nationalization of the oil company YPF from Spain's Repsol. The government expanded formal and informal measures to restrict imports during the year, including a requirement for pre-registration and pre-approval of all imports. In July 2012, the government also further tightened currency controls in an effort to bolster foreign reserves and stem capital flight. In October 2013, the government settled long standing international arbitral disputes dating to before and following the 2001 Argentine financial crisis. During 2014, the government continued its expansionary fiscal and monetary policies and foreign exchange and imports controls. Between 2011 and 2013, Central Bank foreign reserves had dropped $21.3 billion from a high of $52.7 billion. In July 2014, Argentina and China agreed on an $11 billion currency swap; the Argentine Central Bank has received the equivalent of $3.2 billion in Chinese yuan, which it counts as international reserves.
In 2014, the government also took some measures to mend ties with the international financial community, including engaging with the IMF to improve its economic data reporting, reaching a compensation agreement with Repsol for the expropriation of YPF, and agreeing to pay $9.7 billion in arrears to the Paris Club over five years, including $606 million owed to the US. In July 2014, Argentina made its first payment to Paris Club creditors. At the same time, the Argentine Government in July 2014 entered a technical default on its external debt after it failed to reach an agreement with holdout creditors in the US. The FERNANDEZ DE KIRCHNER government rejected repeated attempts by the court to encourage a negotiated solution with holdouts. Throughout much of 2015, negotiations to repay holdout creditors stalled. The government’s delay in reaching a settlement and the continuation of interventionist policies contributed to high inflation and a prolonged recession.
After being elected into office on December 10, President MACRI has taken significant steps to liberalize the Argentine economy. His administration lifted capital controls; floated the peso, negotiated debt payments with holdout bond creditors, and removed export controls on some commodities.
Investment Climate - US State Department
Argentina is one of Latin America's largest and wealthiest countries, possessing abundant human and natural resources, highly diversified industries, and a 43 million person market. Argentina is estimated to have the world’s second largest shale gas resources and fourth largest shale oil resources in the world. Argentina has grown increasingly attractive to investors due to economic reforms and reengagement with the international community under the new leadership of President Mauricio Macri.
Immediately after taking office in December 2015, President Macri began undertaking reforms to correct macroeconomic imbalances and improve the investment climate. The government lifted capital controls, devalued the Argentine peso, reduced import restrictions, and removed most export duties. A new Energy Ministry started the process of reducing massive energy subsidies, which had been the main driver of Argentina’s fiscal deficit. The government also has taken steps to revamp its statistical agency, reengage in consultations with the International Monetary Fund, and pay outstanding arbitral awards. The Macri administration reached deals with most of Argentina’s creditors, allowing the country to exit sovereign default and raise funds in international capital markets to pay creditors and finance its budget deficit.
President Macri has increased dialogue with the private sector, provincial authorities, labor unions, and the international community. Argentina has voiced its intention to ratify the World Trade Organization’s Trade Facilitation Agreement and deepen its engagement with the Organization for Economic Cooperation and Development (OECD). The Macri administration has signed numerous bilateral commercial and investment cooperation agreements including with the United States, France, and Italy, and revived bilateral trade talks with Brazil, which lapsed in 2012.
During the visit of U.S. President Barack Obama to Argentina in March 2016, the United States and Argentina signed a Trade and Investment Framework Agreement and a Memorandum of Intent to establish a Commercial Dialogue. These bilateral mechanisms will facilitate public-private ties and communication on trade and investment issues, such as market access, intellectual property rights, and agriculture. Argentina is actively engaged with the United States in resolving a few trade disputes, including a World Trade Organization case stemming from restrictive import policies introduced by the last administration.
There is significant potential to expand two-way trade and investment, particularly in infrastructure, health, agriculture, information technology, energy, and mining. More than 500 U.S. companies operate in Argentina, and several of them have announced plans to invest nearly $3 billion over the next 12-18 months. The Argentine government recently passed new renewable energy regulations and revamped its hydrocarbons framework with the aim of attracting new investments to develop Argentina’s energy resources. A special committee under the new Ministry of Communications is drafting a new communications law with the goal of increasing transparency and opening the market to competition.
Significant near-term challenges remain, including a large fiscal deficit, regional economic headwinds, and slowing global trade. Another top government priority is reducing inflation of over 30 percent to a single digit in three years. The latest International Monetary Fund Economic Outlook Report for Argentina predicts that macroeconomic adjustments will reduce activity in the short term and prompt a contraction of real GDP by one percent for 2016, but will boost net exports, investment and private consumption for an increase of 2.8 percent for 2017. Most analysts expect the new administration’s business-friendly and collaborative approach to policymaking will boost investor confidence.
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