FATF Status

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.

Overview

Narcotics trafficking and public corruption present significant anti-money laundering/combating the financing of terrorism (AML/CFT) challenges to Argentina.  The Tri-Border Area (TBA), shared with Brazil and Paraguay, is home to multi-billion-dollar trade-based money laundering (TBML), counterfeiting, drug trafficking, and smuggling.  Additionally, many of the money laundering (ML) organizations in the TBA have suspected links to the terrorist organization Hizballah.  

Argentina has not made material AML/CFT progress in recent years.  Argentina has yet to conduct an AML national risk assessment (NRA) or develop national strategies to combat ML/terrorist financing (TF).  The National Committee for Combating Money Laundering and Terrorist Financing has yet to propose AML/CFT policies.  Limited regulatory and criminal enforcement capabilities continue to raise concerns about the government’s ability to significantly reduce the flow of illicit proceeds

Rating                                                                           (100-Good / 0-Bad)

Transparency International Corruption Index                           37

World Governance Indicator – Control of Corruption             36

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 presents investment and trade opportunities, particularly in agriculture, energy, health, infrastructure, information technology, and mining. However, economic uncertainty, interventionist policies, high inflation, and persistent economic stagnation have prevented the country from maximizing its potential.

The Government of Argentina identified its top economic priorities for 2022 as reaching an agreement with the IMF to renegotiate the 2018 Stand-By Arrangement, controlling inflation, and continuing the post-pandemic economic recovery. The government met some of these goals as Argentina finished 2022 with better-than-expected economic growth at 5.2 percent, but with high poverty (over 43 percent), high inflation at 95 percent (the highest rate in over 30 years), and mounting exchange rate pressure. On March 25, 2022, the IMF Executive Board approved an Extended Fund Facility (EFF) program for Argentina. The EFF contains quantitative targets for continued compliance with the program that include a reduction in the primary fiscal deficit, progress toward elimination of monetary financing of the deficit, and the accumulation of foreign reserves. Argentina has been able to meet the IMF program targets in the first four reviews despite its heterodox economic measures. However, meeting the targets has not helped to rebalance the economy or set it on a sustainable path. Macroeconomic imbalances persist, fueled by weak confidence, low policy credibility, high inflation, and uncertainty ahead of national elections in 2023.

In August 2022, in an effort to address the ongoing economic issues, President Fernandez combined the previous ministries of economy, productive development, and agriculture, along with the energy and mining secretariats, and relations with international financial institutions (IFIS) and bilateral and multilateral lenders into a more powerful Ministry of Economy. Former President of the Chamber of Deputies, Sergio Massa, assumed control of the expanded ministry.

Even as the pandemic receded and economic activity rebounded, the government cited increased poverty and high inflation as reasons to continue, and even expand, price controls, capital controls, and foreign trade controls. Agricultural and food exports such as beef, soy, and flour were frequent targets for government intervention. Beginning in May 2021, the government introduced bans and other limits on beef exports to address increasing domestic prices. The ongoing conflict in Ukraine disrupted some trade with Russia and higher natural gas prices negatively affected Argentina’s balance of payments due to the need to import natural gas for the austral winter. However, the conflict also opened new demand and higher prices for key Argentine agricultural exports.

The Argentine government offered preferential exchange rates to promote soy exports and eliminated export taxes for specific businesses and industries, including small and medium sized enterprises; auto and automotive parts exports over 2021 volumes; and information technology service exports from companies enrolled in the knowledge-based economy promotion regime. There were also investment promotion incentives in key export sectors such as agriculture, forestry, hydrocarbons, manufacturing, and mining.

The high cost of capital affected the level of investments in developing renewable energy projects, despite the potential for both wind and solar power. In an effort to expand production of oil and natural gas, the current administration provides benefits to the fossil fuel industry in an attempt to improve the cost-competitiveness of renewable energy technologies. The government has encouraged the use of biofuels and electric vehicles.

Both domestic and foreign companies frequently point to a high and unpredictable tax burden and rigid labor laws as obstacles to further investment in Argentina. In 2022, Argentina ranked 69 out of 132 countries evaluated in the Global Innovation Index, which is an indicator of a country’s ability to innovate, based on the premise that innovation is a driver of a nation’s economic growth and prosperity. In the latest Transparency International Corruption Perceptions Index (CPI), Argentina ranked 94 out of 180 countries in 2022, dropping 2 places compared to 2021.

As a Southern Common Market (MERCOSUR) member, Argentina signed a free trade and investment agreement with the European Union (EU) in June 2019. Argentina has not yet ratified the agreement. In 2022, Argentina and MERCOSUR concluded negotiations with Singapore. During 2022, there was little progress with ongoing trade negotiations with South Korea, Canada, and Indonesia. Argentina ratified the WTO Trade Facilitation Agreement on January 22, 2018. Argentina and the United States continue to expand bilateral commercial and economic cooperation to improve and facilitate public-private ties and communication on trade, investment, energy, and infrastructure issues, including market access and intellectual property rights. More than 265 U.S. companies operate in Argentina, and the United States continues to be the top investor in Argentina with more than USD $12.5 billion (stock) of foreign direct investment as of 2021.

Country Links

Central Bank of Argentina

Financial Information Unit Argentina (UIF)