FATF Status

Uruguay is not on the FATF List of Countries that have been identified as having strategic AML deficiencies

Compliance with FATF Recommendations

The last Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in Uruguay was undertaken in 2019. According to that Evaluation, Uruguay  was deemed Compliant for 16 and Largely Compliant for 23 of the FATF 40 Recommendations. It was deemed Highly Effective for 0 and Substantially Effective for 0 of the Effectiveness  & Technical Compliance ratings.

US Department of State Money Laundering assessment (INCSR)

Uruguay was last deemed a Jurisdiction of Primary Concern in the US Department of State 2018 International Narcotics Control Strategy Report (INCSR). The Overview from that report was as follows: -

Uruguay uses the U.S. dollar, often as a business currency; about 75 percent of deposits and 55 percent of credits are denominated in U.S. dollars. Laundered criminal proceeds are derived primarily from foreign activities related to drug trafficking. Local drug dealers participate in a range of other illicit activities, including violent crimes. Law enforcement officials and the judiciary assess that Colombian, Italian, Mexican, Paraguayan, and Russian criminal organizations operate locally. Officials are concerned about growing transnational organized crime originating from Brazil and Peru. 

Uruguay continues to make progress combating money laundering by passing new legislation, enforcing laws, and strengthening relevant regulatory agencies. The result is an overall improvement in fiscal transparency and international cooperation. In 2017, Uruguay completed a new risk assessment and as of December 2017 it was finalizing its 2020 AML strategy. On November 1, Uruguay transitioned from the inquisitorial legal system to the accusatorial penal code system, a change the government believes will help advance AML/CFT investigations. 

Uruguay needs to increase transparency regarding non-financial entities, improve its AML system of analysis, provide for criminal liability for legal persons, and improve the management and disposition of seized assets and funds.

Rating                                                                           (100-Good / 0-Bad)

Transparency International Corruption Index                           73

World Governance Indicator – Control of Corruption             92

Corruption is a low risk for companies operating in Uruguay, which is considered the least corrupt country in Latin America. Uruguay has a strong rule of law and transparent institutions, and it actively prosecutes corruption offenses. Corruption-related obstacles are most likely to occur when operating in the public procurement sector. The Anti-Bribery Law (in Spanish) prohibits public officials from accepting bribes or facilitation payments, while individuals who offer or pay the bribe or facilitation payment will be held criminally liable. The maximum punishments are fines or jail of up to six years, but companies cannot be held liable. Facilitation payments and gifts are rare in practice. For further information - GAN Integrity Business Anti-Corruption Portal

The Government of Uruguay recognizes the important role foreign investment plays in economic development and offers a stable investment climate that does not discriminate against foreign investors. Uruguay’s legal system treats foreign and national investments equally, and most investments are allowed without prior authorization. Investors can freely transfer capital and profits from their investments abroad. International investors can choose between arbitration and the judicial system to settle disputes. Local courts recognize and enforce foreign arbitral awards.

U.S. firms have not identified corruption as an obstacle to investment. In 2022, Transparency International ranked Uruguay as the most transparent country in Latin America, and the second most transparent in the Western Hemisphere after Canada. Uruguay is a stable democracy, one of only three full democracies in the Western Hemisphere and ranked 11th in the world in 2022, according to the Economist Intelligence Unit, an increase from 2021. As of March 2023, Standard & Poor’s and Moody’s rated Uruguay one step above the investment grade threshold with a stable outlook. Fitch Ratings rated it at the investment grade threshold with a stable outlook.

Investment rose substantially from 2004-2014 as a result of an historic commodities boom but dropped significantly 2015-2019 as the boom flagged. However, investment picked up again in 2021 and 2022 as a result of: tax incentives for investors; a dynamic tech industry; and a $2 billion foreign investment in a pulp-mill opening in 2023.

About 180 U.S. firms operate locally in a wide array of sectors –including forestry, tourism and hotels, services, and telecommunications– and employ over twenty-five thousand workers. The IT services sector is a significant recent growth area, with several Uruguayan companies listing on U.S. stock markets, or being bought by U.S. companies. Uruguay has bilateral investment treaties with over 30 countries, including the United States. Uruguay and the United States also have agreements on mutual customs recognition, social security totalization, trade facilitation, promotion of small and medium enterprises, and open skies.

Uruguay is a founding member of Mercosur – the Southern Cone Common Market – created in 1991 and headquartered in Montevideo, along with Argentina, Brazil, and Paraguay. (Note: Venezuela joined the bloc in June 2012 but was suspended in December 2016.) Bolivia, Colombia, Ecuador, and Peru are associate members. Uruguay and Mexico have had a comprehensive trade agreement in place since 2004, and in 2018, Uruguay extended its existing free trade agreement with Chile to increase trade in goods and services.

Over the past decade, Uruguay strengthened bilateral trade, investment, and political ties with the People’s Republic of China (PRC), which was its principal trade partner in goods from 2013 until 2022 when it fell to second place behind Brazil. In 2018, Uruguay was the first country in the Southern Cone to join the PRC’s Belt and Road Initiative. Uruguay formally joined the Asian Infrastructure Investment Bank in 2020. In September 2021, the government announced that it would start negotiating a free trade agreement with the PRC, independently from its Mercosur partners. A feasibility study was concluded in July 2022, but negotiations have not advanced as of writing. In 2022, Uruguay’s Mercosur partners made unprecedented joint public statements opposing Uruguay’s efforts to seek a bilateral trade agreement with the PRC as well as Uruguay’s push to adhere to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.

A 2018 survey by Uruguay’s Ministry of Economy and Finance showed that about half of foreign investors were satisfied or very satisfied with Uruguay´s investment climate, principally due to its rule of law, low political risk, macroeconomic stability, strategic location, and investment incentives. Almost all investors were satisfied or highly satisfied with Uruguay’s twelve free trade zones (FTZs) and its free ports. However, roughly one-fourth of investors were dissatisfied with at least one aspect of doing business locally, expressing concerns about high labor costs, taxes, union/labor conflicts and high energy costs.

Uruguay’s strategic location (in the center of Mercosur’s wealthiest and most populated area), and its special import regimes (such as free zones and free ports) make it a well-situated distribution center for U.S. goods into the region. Several U.S. firms warehouse their products in Uruguay’s tax-free areas and service their regional clients effectively. With a small market of mostly middle-class consumers, Uruguay can also be a good test market for U.S. products.

There are no significant risks to doing business responsibly in areas such as labor and human rights. Additionally, the government’s long-term climate strategy, announced in December 2021, focuses on mitigation and adaptation to climate change and seeks to reach carbon neutrality, with stable emissions of methane and nitrous oxide in its agricultural sector, by 2050. The government is gradually including environmental variables in designing public economic and capital market policies. 

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Country Links

Central Bank of Uruguay