Published January 3, 2024.

By Miguel CASSAGNE.

1. Introduction

Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) is a matter of vital importance in the global fight against illicit activities. Argentina, as an active member of the international community and a full member of the Financial Action Task Force (FATF), has committed to adopting and implementing FATF recommendations and standards to effectively combat money laundering and terrorist financing.

Since late 2021, Argentina has been actively engaged on various fronts, including conducting its first National Risk Assessment on money laundering prevention, proposing, implementing, and ongoing study of significant changes in its regulatory framework for AML/CFT. These efforts aim to align with international standards and strengthen Argentina's anti-money laundering prevention system.

As detailed below, the regulatory changes have been and will continue to be numerous and profound, with the goal of bringing the national system in line with FATF standards and achieving positive results in the ongoing FATF evaluation of Argentina.

2. FATF Mutual Evaluations.

FATF conducts evaluations of AML/CFT systems in each jurisdiction through a process known as "Mutual Evaluation Rounds." This process focuses primarily on analyzing and evaluating the evaluated country in two aspects:

a. Technical compliance with FATF recommendations, determining the degree of implementation of prevention requirements in the evaluated state's legislation (including suggested reforms and ongoing implementations).

b. The effectiveness of the AML/CFT system in terms of the results achieved by the country in prevention matters, assessing how well the legal and institutional framework produces the intended outcomes.

FATF's goal with these evaluations is to encourage countries to continuously improve their AML/CFT systems and work towards higher levels of effectiveness. Evaluation of effectiveness is crucial for identifying areas of improvement and providing specific recommendations to strengthen a country's prevention and control framework.

Based on these reviews, different types of ratings and, if necessary, recommendations to evaluated states can arise. Depending on these ratings, a country or jurisdiction may be included in one of the following lists: 

(a.) Grey List: Countries and jurisdictions with strategic deficiencies but committed to working with FATF to address these deficiencies; 

(b.) Black List: Countries and jurisdictions that have not taken adequate measures to address significant deficiencies in their AML/CFT systems and represent a high risk.

The Black and Grey Lists are two public documents that FATF issues three times a year (to update them), which is crucial when obligated parties or countries must consider them to adjust their risk matrix, implement risk mitigation policies, or countermeasures (as explained below).

Placement on the "Grey List" signifies the country's commitment to promptly address identified strategic deficiencies within agreed timelines and is subject to increased monitoring.

3. FATF Mutual Evaluations of the Republic of Argentina. Historical Background and Previous Evaluations, and the Current 4th Mutual Evaluation Round (in progress).

As mentioned on previous occasions, Argentina has undergone evaluations three times (or Rounds). In the First and Second Mutual Evaluation Rounds in 2002 and 2004, Argentina was notified of several areas for improvement in its AML/CFT system, with FATF making suggestions in this regard.

In the Third Mutual Evaluation Round in 2010, Argentina received a very low score, showing non-compliance with 49 of the 54 evaluated strategic guidelines. Consequently, it was added to FATF's Grey List in October 2010. This led to Argentina's reaction, initiating a regulatory cleanup plan to overturn this result, which began in 2010, resulting in most money laundering resolutions and norms being enacted in the subsequent years (especially between 2011 and 2012).

As a result, Argentina succeeded in being removed from the Grey List at the FATF Members' Plenary in 2014, based on the results of this evaluation, and has not been re-listed since that date.

Despite the three aforementioned evaluation rounds, Argentina is currently undergoing the Fourth Mutual Evaluation Round.

In this regard, since May 31, 2023, Argentina has been immersed in a comprehensive evaluation process by FATF, including training national authorities from the executive and judicial branches, the Public Prosecutor's Office, and regulatory bodies. As highlighted by the Central Bank of the Argentine Republic (BCRA) in its Communication "C" No. 96096 dated September 6, 2023, the process of this 4th Round of Mutual Evaluations consists of several key milestones, including:

(a.) Technical Compliance Forms Submission (September 2023), marking the official start of the evaluation process,

(b.) Effectiveness Forms Submission (November 2023), providing a more detailed view of the approach and effectiveness of policies and measures implemented in the country,

(c.) On-Site Visit (March 2024) by the FATF evaluation team to examine the Argentine AML/CFT system,

(d.) Face-to-Face Meeting (June 2024) between Argentina and the FATF evaluation team to define the Final Report of the fourth round of evaluations,

(e.) FATF Plenary (October 2024) where the approval of Argentina's Mutual Evaluation Report will be discussed and decided, and

(f.) GAFILAT Plenary (December 2024) where the approval of Argentina's Mutual Evaluation Report will be addressed.

4. Influence of Mutual Evaluations on the Improvement of the Argentine System.

As evidenced by Argentina's historical actions over the years, knowing about the ongoing 4th Round of Mutual Evaluations, Argentina decided to prepare and carry out different actions and reforms to its internal AML/CFT legal framework for some time. This framework had not undergone significant changes since 2011 and 2012 (except for some aspects related to the Risk-Based Approach introduced between 2016 and 2018).

This was done with the clear aim of adapting the system, complying with the aforementioned FATF recommendations, and providing the system with greater effectiveness to achieve a positive rating in this evaluation process.

A positive rating would be crucial for Argentina to enjoy, among other aspects, the benefits of not being on the Grey Lists of FATF. This would facilitate any process of access to credits or international programs from the International Monetary Fund (IMF) or World Bank, among other benefits.

5. Tasks carried out by Argentina in the context of the current 4th Round of Mutual Evaluations by the FATF - impacting the Argentine System for the Prevention of Money Laundering and Financing of Terrorism.

As an illustrative example, the following highlights, in chronological order, the main actions or tasks, projected normative changes, executed, or in the process of being carried out regarding Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) by the Financial Information Unit (FIU) and other entities that have taken place in this matter:

5.1. FIU Resolution No. 112/2021: New regulation of Ultimate Beneficial Owners.

To adapt the concept and treatment given to Ultimate Beneficial Owners of obligated subjects and those obliged according to the standards dictated in the FATF Recommendations, FIU Resolution No. 112/2021 was published in the Official Gazette on October 21, 2021, and entered into force. Through this resolution, the definition of "ultimate beneficial owner" was modified, and measures were established for obligated entities listed in Article 20 of Law No. 25,246 to verify the identity of the ultimate beneficial owners of their clients.

Previously, individuals who owned at least 20% of the capital or voting rights of a legal entity or a legal structure without legal personality were considered "ultimate beneficial owners." The new FIU Resolution No. 112/2021 reduced this percentage to 10%. Additionally, the concept of "control" was clarified, stating that individuals who exercise the "final control" of clients are also considered ultimate beneficial owners. It was clarified that the concept of ultimate beneficial owner also applies to trusts, investment funds, or affected assets. New measures were adopted for the identification of ultimate beneficial owners of clients (regardless of the assigned risk level) and measures for the identification of ultimate beneficial owners of obligated entities.

5.2. Presidential Decrees No. 652/2022 and 653/2023: National Risk Assessment on AML/CFT in Argentina.

As a way to prepare for this round of Mutual Evaluations, Argentina undertook unprecedented compliance with FATF Recommendation 1, which requires member states to conduct a national assessment of the risks of money laundering and terrorist financing. In this regard, by Presidential Decree No. 653/2022, dated September 22 of that year, approval was obtained for the Report on the First National Risk Assessment of Money Laundering in Argentina (covering the period from January 1, 2017, to December 31, 2021). Additionally, by Decree No. 652/2022, dated September 22, 2022, the second National Risk Assessment of Terrorism Financing and Proliferation of Weapons of Mass Destruction was approved.

As a relevant aspect of this report, the identification of a total of 1,386 money laundering cases initiated between 2017 and 2020 was observed, with an average annual amount affected by the money laundering offense of USD $1,069,524,179.95. Also, in the local context, as per the mentioned Risk Assessment Report of Argentina, it was found that of all identified cases of money laundering with a known preceding offense, 42% were related to tax crimes, 29% to drug trafficking, 10% to property crimes, and 9% to customs offenses.

This national risk assessment aims to be periodically updated, as it must then be taken into account by obligated entities under Law 25,246 to carry out their own risk self-assessments of AML and FT for their businesses (whether current obligated entities or those ultimately considered as such under the terms of the new Article 20 of the draft amendment to the aforementioned law, which is currently under consideration in the National Senate).

5.3. Project for the Reform of Law No. 25,246 and the Penal Code.

On May 31, 2022, the National Executive Power presented to the National Congress of Argentina the substantial reform project of the Argentine Penal Code and Law No. 25,246 to adapt its content and incorporate concepts and terminology in accordance with updates made over more than 20 years to the FATF Recommendations.

In this regard, the presented project, which has already received partial approval (having been approved by the Chamber of Deputies of the Nation on April 20, 2023) and is currently under consideration in the National Senate (since July 11 of the current year), was promoted by and worked on in collaboration with other stakeholders in the system like the Federal Public Revenue Administration -AFIP- (?Administración Federal de Ingresos Públicos'') , the Central Bank of the Argentine Republic -BCRA- (?Banco Central de la República Argentina?), the National Securities Commission -CNV- (?Comisión Nacional de Valores?), the National Institute of Associativism and Social Economy - INAES- (?Instituto Nacional de Asociativismo y Economía Social?), the National Insurance Superintendence -SSN- (?Superintendencia de Seguros de la Nación?), the National Coordination for the Fight against Money Laundering and the Financing of Terrorism, the Public Prosecutor's Office, the Supreme Court of Justice of the Nation, and the Ministries of Economy, Justice and Human Rights, and Foreign Affairs, International Trade and Worship at that time. It responds to the need to update and adjust the existing regulatory framework to both the evolution the system has undergone over time and the modifications to the FATF standards.

In general terms, the proposed changes in the mentioned project to the country's AML/CFT system focus on three main axes:

5.3.1.) Modification of the Penal Code:

- Inclusion of typical verbs into the criminal offense of money laundering (Article 303).

- Addition of foreign terrorist fighters and "funds or other assets" to the criminal offense of terrorism financing (Article 306).

- Incorporation into the criminal offense of terrorism (Article 41 quinquies) of five criminal types envisaged in current international conventions.

5.3.2.) Creation of a centralized register of Ultimate Beneficial Owners within the jurisdiction of the AFIP:

- To contain appropriate, accurate, and updated information on the ultimate beneficial owners of individuals and legal structures, ensuring full access by competent authorities. This is necessary since, until now, various public bodies have had information on ultimate beneficial owners, but there has been no centralized register that competent authorities can quickly and efficiently access.

5.3.3.) Amendment of Law No. 25,246, focusing on the most salient particulars detailed below, including:

a.) Strengthening the Administrative Sanctions Regime 

Strengthening the Administrative Sanctions Regime to enhance the deterrent effect of the Argentine AML/CFT system and increase its effectiveness (an element to be evaluated by the FATF). In this regard, proposed modifications to the Sanctions Regime involve:

- New sanctions: Introduction of warnings, disqualification of the compliance officer, and revocation of the authorization to operate for obligated entities. These sanctions will be communicated to supervisory bodies and relevant professionals for enforcement.

- Higher fines: A substantial increase in fine amounts for each AML/CFT system non-compliance, raising the current minimum from $10,000 to $600,000 and the current maximum from $100,000 to $100,000,000. Fines will continue to be 1 to 10 times the value of the unreported suspicious operation (the project refers to fines ranging from 15 to 2,500 Modules).

- Fiscal execution procedure: Establishment of a fiscal execution procedure for the collection of fines, simplifying the recovery process.

- Measurement unit: Introduction of a measurement unit (Modules) for qualitative sanctions, allowing periodic updates by FIU without the need to modify the law. The initial measurement unit in the approved bill by the Chamber of Deputies is $4,000.

b.) Powers for FIU

To align the law with international standards, the project proposes, regarding FIU, among other aspects:

(i) Functional, administrative, and economic autonomy, in addition to financial autonomy.

(ii) Adoption of a risk-based approach for supervisions of the AML/CFT system and for directives and instructions (regulations) issued.

(iii) FIU's authority to impose targeted financial sanctions, i.e., the administrative freezing of funds or other assets, through reasoned resolution and immediate communication to the Public Prosecutor's Office and/or the competent judge, related to suspicious operations of terrorism financing and proliferation of weapons of mass destruction.

(iv) FIU's authority to impose specific risk mitigation measures (countermeasures) on business relationships and transactions with individuals, legal entities, and financial institutions from higher-risk jurisdictions. The reform project also proposes incorporating an article regulating the proper use of information from foreign analogous bodies and amending article 27 to address ambiguities, shortcomings, and omissions in the current legislation through clear mechanisms for the distribution and administration of confiscated assets.

c.) New Obligated Entities

The Reform Project of Law No. 25,246 proposes, among other things:

- Modification of the text of the current paragraph 1 of Article 20 of the aforementioned law, adding as obligated entities, in addition to financial entities subject to the regime of Law No. 21,526 already mentioned in the current text of this paragraph, all entities to which the Central Bank of the Argentine Republic extends its application in the exercise of its competencies.

- Retaining companies dedicated to the transportation of valuables currently mentioned in paragraph 10 of Article 20 of Law No. 25,246 and expressly incorporating as new obligated entities all companies providing custody or safekeeping services for funds or valuables.

• Eliminating from the list of obligated entities in Article 20 of the law the legal entities that receive donations or contributions from third parties, moving them to a special treatment chapter according to international standards. 

The reform project proposes that these organizations undergo a risk analysis for terrorism financing and, accordingly, establish adequate and proportional measures to identified risks.

- Modifying the current text of paragraph 23 of Article 20 of the law (which names legal entities that perform organization and regulation functions of professional sports) by expressly incorporating associations and/or affiliated entities. 

Until now, the FIU has limited itself to regulating and considering as obligated entities in this area only those related exclusively to professional football, such as the Argentine Football Association (AFA) and clubs whose teams participate in First Division and National B Football Tournaments organized by the AFA.

- Considering as obligated entities any professional (other than accountants, notaries, and lawyers expressly indicated) who, on behalf of and/or on behalf of their clients, prepare or effectively carry out transactions such as the purchase and/or sale of real estate; administration of money, securities, and/or other assets; administration of bank accounts, savings, and/or securities; organization of contributions for the creation, operation, or administration of legal entities or other legal structures; creation, operation, or administration of legal entities or other legal structures; and the purchase and sale of legal transactions and/or interests in legal entities or other legal structures. 

Given the generic nature of the term "other professionals" used in the proposed text of paragraph 17 of Article 20 of Law No. 25,246, the FIU will later determine its scope when defining the term "Obligated Entity" in the specific resolution that regulates AML/CFT obligations for the entities indicated in the proposed paragraph 17 of Article 20. FATF Recommendation 22 on non-financial designated activities and professions states: "22. DNFBP: Customer due diligence *. Customer due diligence and record-keeping requirements apply to Designated Non-Financial Businesses and Professions (DNFBPs) in the following situations: ... (d) Lawyers, notaries, other independent legal professionals, and accountants - when preparing for transactions or conducting transactions for their clients on the following activities: buying and selling real estate; administration of the client's money, securities, or other assets; administration of bank accounts, savings, or securities; organization of contributions for the creation, operation, or administration of companies; creation, operation, or administration of legal entities or other legal structures, and purchase and sale of commercial entities."

- Considering as obligated entities the issuers, operators, and providers of collection and/or payment services, as well as non-financial credit providers.

- Expanding the scope of the obligated entity status (in the gambling sector) not only to individuals and/or legal entities or other structures that - as a habitual activity - operate gambling but also to those who manage, operate, or in any way organize, on their own or through third parties, any form or system of gambling acquisition. Modifying the current regime for real estate brokers, where only registered real estate agents and companies exclusively dedicated to real estate brokerage are considered obligated entities, proposing to designate "individuals and/or legal entities, or other structures with or without legal personality, that engage in real estate brokerage," i.e., intermediaries in normal, habitual, and onerous transactions between the supply and demand in third-party real estate businesses, participating in them by carrying out acts or actions aimed at achieving their realization.

- Maintaining insurance companies as obligated entities and including in this category reinsurers authorized by the National Insurance Superintendence (SSN). Suppressing the obligated entity status for certain figures acting as intermediaries in the insurance business, limiting this status to insurance intermediaries and agents authorized by the SSN acting as Instructing Agents, Insurance Producer Companies, and Insurance Brokers, whose activities are governed by Laws No. 17,418, 20,091, and 22,400, their amendments, concordances, and complements, operating in the marketing of life insurance with savings or retirement insurance.

- Modifying, following the guidelines of section (d) of FATF Recommendation 22 quoted above, the current consideration that every Public Notary is an obligated entity (Article 20, paragraph 12 currently in force), reserving this condition only for notaries who perform the activities specifically indicated in the proposed text of Article 20, paragraph 17, in the reform project. 

In this regard, the text of paragraph 17 of Article 20 incorporated into the Reform Project proposes to designate as obligated entities only those notaries who, on behalf and/or on behalf of their clients, prepare or effectively carry out transactions such as the purchase and/or sale of real estate; administration of money, securities, and/or other assets; administration of bank accounts, savings, and/or securities; organization of contributions for the creation, operation, or administration of legal entities or other legal structures; and the creation, operation, or administration of legal entities or other legal structures and the purchase and sale of legal transactions and/or interests in legal entities or other legal structures.

- Modifying, also in line with the text of section (d) of FATF Recommendation 22 quoted above, the universe of Public Accountants who are currently considered Obligated Entities, reserving this category for those who perform the activity described in the text of paragraph 17 of Article 20 proposed in the reform project, i.e., those public accountants who, acting on behalf and/or on behalf of their clients, prepare or effectively carry out transactions such as the purchase and/or sale of real estate; administration of money, securities, and/or other assets; administration of bank accounts, savings, and/or securities; organization of contributions for the creation, operation, or administration of legal entities or other legal structures; and the creation, operation, or administration of legal entities or other legal structures and the purchase and sale of legal transactions and/or interests in legal entities or other legal structures. Also, those who prepare limited review reports on financial statements under the conditions established by regulation and prepare audit reports on financial statements.

- Incorporating, in line with the text of section (e) of FATF Recommendation 22 quoted above, as new obligated entities individuals and/or legal entities, or other structures with or without legal personality, who habitually prepare or effectively carry out transactions on behalf and/or on behalf of their clients: acting as the creator of legal entities; acting on their own or facilitating the actions of others, such as a director, attorney-in-fact, partner, or a similar position depending on the legal entity or legal structure concerned; providing legal, commercial, or postal legal address and/or physical space for legal entities or other legal structures; and acting as a trustee on their own (or facilitating the actions of others) of a non-financial trust or performing the equivalent function for another form of legal structure.

- Replacing paragraph 5 of Article 20 of the aforementioned law (according to the current text since 11.05.2018) with the text of paragraph 8 of Article 20 proposed in the project, which considers as obligated entities Crowdfunding Platforms and other legal entities authorized by the National Securities Commission (CNV) to operate in the context of crowdfunding systems through the use of websites or other analogous means, with the main purpose of professionally connecting a plurality of individuals and/or legal entities acting as investors with individuals and/or legal entities seeking financing as crowdfunding entrepreneurs. It should be noted that the current text of Article 20, paragraph 5, considers as obligated entities "legal entities authorized by the National Securities Commission to operate in the context of crowdfunding systems through the use of websites or other analogous means and other legal entities registered with the aforementioned body responsible for opening the file and identifying the client's profile for investment in the capital market."

- Incorporating as obligated entities, also in line with the text of section (d) of FATF Recommendation 22 quoted above, lawyers and any other professional, only when they, acting on behalf and/or on behalf of their clients, prepare or effectively carry out transactions such as the purchase and/or sale of real estate; administration of money, securities, and/or other assets; administration of bank accounts, savings, and/or securities; organization of contributions for the creation, operation, or administration of legal entities or other legal structures; and the creation, operation, or administration of legal entities or other legal structures and the purchase and sale of legal transactions and/or interests in legal entities or other legal structures.

- Finally, following the guidelines established by the Financial Action Task Force - FATF - in its Recommendation 15 ("New Technologies") and its Interpretative Note, proposing to incorporate Virtual Asset Service Providers (VASPs) as Obligated Entities. 

The Reform Project defines VASPs as any natural or legal person conducting one or more of the following activities or operations for or on behalf of another natural or legal person as a business: i. Exchange between virtual assets and legal tender (fiat currency); ii. Exchange between one or more forms of virtual assets; iii. Transfer of virtual assets; iv. Custody and/or administration of virtual assets or instruments that allow control over them; and v. Participation and provision of financial services related to the offer of an issuer and/or sale of a virtual asset. Additionally, the reform project defines "Virtual Assets" as the digital representation of value that can be traded and/or transferred digitally and used for payments or investments. The said project adds that in no case will legal tender in the national territory and currencies issued by other countries or jurisdictions (fiat currency) be considered a virtual asset.

To date, the FIU has only issued in this matter: (a) FIU Resolution No. 300/2014, where, in addition to defining the concept of "Virtual Currency" (understood as "the digital representation of value that can be the subject of digital trade and whose functions are to constitute a medium of exchange, and/or a unit of account, and/or a store of value, but that has no legal tender, is not issued, and is not guaranteed by any country or jurisdiction"), it establishes the obligation of Obligated Entities to: (i) Pay special attention to the emerging risk of transactions with such Virtual Currencies; (ii) Establish monitoring mechanisms for these operations, and (iii) Report all operations carried out with Virtual Currencies (Report of Operations Carried Out with Virtual Currencies); and (b) The Statement on Operations with Virtual Assets of 20.05.2020, through which the FIU: (i) Suggests that the increase in operations with Virtual Assets could be linked to money laundering and terrorism financing activities; (ii) Reiterates the obligations of the Obligated Subjects to make reports and establish enhanced monitoring according to FIU Resolution No. 300/2014; and (iii) Indicates its intention to adapt Argentina's Anti-Money Laundering system to what is provided by the GAFI in its Recommendation 15.

d.) Definition of the Risk-Based Approach. 

The Reform Project of Law No. 25.246 proposes to incorporate into the Law expressly the definition of the Risk-Based Approach (RBA) following the guidelines outlined by the GAFI in its Recommendation 1, a concept that the FIU has been incorporating since 2016 in various Resolutions issued by it. 

Specifically, the project defines the RBA as the regulation and application of measures to prevent or mitigate money laundering and the financing of terrorism and the financing of the proliferation of weapons of mass destruction, proportional to the identified risks, which includes processes for their identification, evaluation, monitoring, administration, and mitigation, in order to focus efforts and apply resources more effectively. 

GAFI Recommendation 1 expressly states, with regard to the Risk Assessment and application of a risk-based approach, that "Countries must identify, assess, and understand their risks of money laundering/terrorism financing, and must take action, including the designation of an authority or mechanism to coordinate actions to assess risks, and apply resources aimed at ensuring that risks are effectively mitigated. 

Based on this evaluation, countries must apply a risk-based approach (RBA) to ensure that measures to prevent or mitigate money laundering and terrorism financing are proportionate to the identified risks. 

This approach must be an essential foundation for the effective allocation of resources throughout the anti-money laundering/combating the financing of terrorism (AML/CFT) regime and the implementation of risk-based measures in all GAFI Recommendations. When countries identify higher risks, they must ensure that their respective AML/CFT regimes adequately address such risks. When countries identify lower risks, they may choose to allow simplified measures for some GAFI Recommendations under certain conditions."

e.) Rules on Customer Due Diligence and Know Your Customer (KYC) and Inclusion of obligations related to self-assessment. 

The reform project of the Law proposes, regarding the obligations applicable to obligated subjects, to unify them in Article 21 of said Law, in which, in addition to the impossibility for obligated subjects to initiate or continue the relationship with clients for whom they have not been able to identify properly or for whom they have not been able to carry out monitoring and/or continuous due diligence of the commercial, contractual, economic, and/or financial relationship, the obligation to determine the risk of money laundering, terrorism financing, and financing the proliferation of weapons of mass destruction associated with the client and its operations, products, services, transactions, operations, or distribution channels, the geographical area involved, perform a self-assessment of such risks and implement suitable measures for their mitigation.

5.4. FIU Res. No.14/2023 - Specific Resolution applicable to Financial and Exchange Entities. 

This resolution, published in the Official Gazette on February 2, 2023, entered into force on April 1, 2023, rendering ineffective the previous FIU Res. No. 30-E/2017, thus updating the regulatory framework on AML/CFT for banks and financial entities (obligated subjects of Article 20 paragraphs 1 and 2 of Law No. 25.246), under a RBA. 

The main points of the new regulation are: (a) It requires entities to develop a risk assessment methodology considering factors such as clients, products, channels, and geographical areas; (b.) Obliges to prepare a Risk Self-Assessment, a Technical Report on Risk Self-Assessment, and a Risk Tolerance Statement; (c.) Establishes the mandatory performance of an Independent External Reviewer (IER) who will issue an annual report on the quality and effectiveness of the prevention system; and (d.) Creates a monthly operational information regime and an annual institutional computer regime.

5.5. FIU Res. No. 35/2023 - Regime for Politically Exposed Persons (PEP). 

This resolution, published in the Official Gazette on March 2, 2023, and in force since April 1, 2023, applicable to all obligated subjects of Law No. 25.246, renders ineffective the previous FIU Res. No. 134/2018, thus updating the regulatory framework on AML/CFT related to PEP in accordance with international standards.

5.6. FIU Res. No. 61/2023 - Supervision Regime of the FIU on all Obligated Subjects. 

This Resolution, published in the Official Gazette on April 17, 2023, and in force since its publication (April 17, 2023), renders ineffective the previous FIU Res. No. 154/2018, thus updating the regulatory framework on AML/CFT related to the supervisions carried out by the FIU on the obligated subjects of Law No. 25.246, now established under a RBA.

5.7. FIU Res. No. 66/2023 - FIU Cooperation with International Organizations. 

This resolution, published in the Official Gazette on April 18, 2023, and in force since its publication, regulates the international cooperation of the FIU in accordance with FATF recommendations in this regard.

5.8. FIU Res. No. 72/2023 - Regime of Supervision of Specific Control Bodies. 

This resolution, published in the Official Gazette on May 4, 2023, and in force since its publication (May 4, 2023), incorporates the concept of RBA to the new supervisions carried out by the SSN, INAES, CNV, and BCRA (as Specific Control Bodies) to the obligated subjects of Law No. 25.246 that operate under their control, rendering ineffective the previous FIU Res. No. 155/2018 (applicable to supervisions carried out by SSN, INAES, and CNV) and 97/2018 (applicable to supervisions carried out by BCRA).

5.9. FIU Res. No.78/2023 ? Specific Resolution applicable to the Capital Market. 

Directed at agents to the obligated subjects indicated in Article 20 paragraph 4 of Law No. 25.246, namely: Negotiation Agents (AN); Liquidation and Compensation Agents (ALYC); Natural or Legal Persons registered with the CNV acting in the Placement of FCI or other collective investment products; Legal Persons, contemplated in paragraph 22 of Article 20 of Law No. 25.246 and its amendments, acting as Financial Trustees whose fiduciary values have CNV authorization for public offering, and registered agents involved in the placement of negotiable securities issued under financial and collective investment trusts. 

This resolution, published in the Official Gazette on May 10, 2023, entered into force on July 1, 2023, rendering ineffective the previous FIU Res. No. 21/2018, thus updating the regulatory framework on AML/CFT for the obligated subjects of Article 20 paragraph 4 of Law No. 25.246, under a RBA. Its relevant provisions include: (a) Risk Self-Assessment with factors such as clients, products, channels, and geographical areas; (b) Preparation of Technical Report on Risk Self-Assessment, Risk Self-Assessment Methodology, and declaration of risk tolerance; (c) Annual performance of IER; (d) Establishment of special obligations for Obligated Subjects operating as Financial Trustees; (e) Creation of a monthly operational information regime and an annual institutional computer regime.

5.10. FIU Res. No.84/2023 ? Automatic Threshold Update by SMVM.

Through this Resolution, published in the Official Gazette on May 19, 2023, and effective from July 1, 2023, the updating of thresholds is established, from which certain obligated subjects must carry out due diligence measures on their clients, taking as a new parameter the Minimum Vital and Mobile Salary (SMVM) set by the National Employment, Productivity, and Minimum, Vital, and Mobile Salary Council.

This resolution provides for the semi-annual automatic updating of the threshold. For the January/June semester of a calendar year, the SMVM in force on December 31 of the previous calendar year must be considered, and for the July/December semester of a calendar year, the SMVM in force on June 30 of that same year must be considered.

In this way, the goal is to keep the AML/CFT System updated and thereby increase its effectiveness, as required by the FATF.

5.11. FIU Res. No.99/2023 ? Specific Resolution applicable to mutual associations and cooperatives.

This resolution, published in the Official Gazette on June 16, 2023, and directed at mutual aid associations and credit cooperatives, entered into force on August 1, 2023, rendering ineffective the previous FIU Res. No. 11/2012, thus updating the regulatory framework on AML/CFT for the obligated subjects of Article 20 paragraph 20 of Law No. 25.246, under a Risk-Based Approach (RBA).

Its most important points are: (a.) For small mutuals and credit cooperatives, the IER can be carried out every 2 years; (b.) Risk self-assessment must consider clients, products, channels, and geographical areas; (c.) The first Risk Self-Assessment Report, Risk Tolerance Statement, and IER are submitted in 2025 and 2026, as the case may be; (d.) Establishes monthly and annual reporting regimes.

5.12. FIU Res. No.126/2023 ? Specific Resolution applicable to the Insurance Sector.

This resolution, published in the Official Gazette on July 14, 2023, applicable to insurance companies, local reinsurance companies, and insurance producer companies, instigating agents and insurance advisor producers operating in the marketing of life savings or retirement insurance, entered into force on September 1, 2023, rendering ineffective the previous FIU Res. No. 28/2018, thus updating the regulatory framework on AML/CFT for the obligated subjects of Article 20 paragraphs 8 and 16 of Law No. 25.246, under a RBA.

Its relevant provisions include: (a.) Risk self-assessment with factors such as clients, products, channels, and geographical areas; (b.) Preparation of Technical Report on Risk Self-Assessment, Risk Self-Assessment Methodology, and risk tolerance statement; (c.) Annual performance of IER.

5.13. FIU Res. No.126/2023 ? Organizational Structure of the FIU.

This resolution, published in the Official Gazette on July 14, 2023, and effective from its publication, modifies the internal structure of the Financial Information Unit, rendering ineffective the organizational chart approved by FIU Res. No. 152/2016.

5.14. FIU Res. No.169/2023 - Specific Resolution applicable to capitalization and savings operators.

This resolution, published in the Official Gazette on July 14, 2023, applicable to issuing companies of capitalization and savings, entered into force on November 1, 2023, rendering ineffective the previous FIU Res. No. 50/2013, thus updating the regulatory framework on AML/CFT for the obligated subjects of Article 20 paragraph 13 of Law No. 25.246, under a RBA.

The main points introduced are: (a.) Risk self-assessment must analyze clients, products, channels, and geographical areas; (b.) The first Risk Self-Assessment Report and Risk Tolerance Statement are submitted in 2026; (c.) IER is required for entities with annual revenues exceeding $10 billion, and its first submission is in 2026; (d.) Updates the thresholds for monthly reports of real estate transactions, constitution of legal entities, etc.; (e.) Establishment of an annual institutional activity report.

5.15. FIU Res. No.194/2023 - Specific Resolution applicable to the Gambling Sector.

This resolution, published in the Official Gazette on September 29, 2023, is applicable to individuals or legal entities that operate Gambling - national, provincial, municipal, or private casinos, under any form of exploitation; Bingos and Lotteries; Racetracks and places where bets related to animal races are made at risk; Subjects operating gambling through the Internet or any other electronic means; Any other individual or legal entity that habitually operates gambling; Concessionaires and permit holders of gambling, and any other legal entity are Independent Obligated Subjects of the grantor for the purposes of the application of this Resolution and with regard to the granted game).

It entered into force on December 1, 2023, rendering ineffective the previous FIU Res. No. 199/2011, thus updating the regulatory framework on AML/CFT for the obligated subjects of Article 20 paragraph 3 of Law No. 25.246, under a RBA.

The main points introduced are: (a.) Risk self-assessment must analyze clients, products, channels, and geographical areas; (b.) Submission of Risk Self-Assessment Report and Risk Tolerance Statement; and (c.) Requirement of IER.

5.16. FIU Res. No.242/2023 - Specific Resolution applicable to the Notary Sector.

This resolution, published in the Official Gazette on October 30, 2023, applicable to notaries, will enter into force on March 1, 2024, rendering ineffective the previous FIU Res. No. 21/2011, thus updating the regulatory framework on AML/CFT for the obligated subjects of Article 20 paragraph 3 of Law No. 25.246, under a RBA.

The main points it introduces are: (a.) Risk self-assessment must consider factors such as clients, products, channels, and geographical areas; (b.) The first Risk Self-Assessment Report must be submitted in 2026; (c.) IER review every two years or replaceable by an audit by the professional association; (d.) Updating of thresholds for monthly reports of real estate transactions, constitution of legal entities, etc.; (e.) Establishment of an annual institutional activity report.

5.17. DNU - Scope of action of the FIU.

By Decree of Necessity and Urgency issued by the National Executive Power on December 8, 2023, Article 5 of Law No. 25.246 is modified to the effect that the FINANCIAL INFORMATION UNIT, until then operating under the Ministry of Economy, now operates under the Ministry of Justice of the Nation.

6. Pending Regulatory Update Tasks.

The challenging balance between the state's regulatory capacity to impose obligations to meet international standards and the care it must take regarding the small obligated subject (so that the obligations imposed are tailored as closely as possible to their small structures).

As of the writing of this report, the National Executive Power, within the framework of the change of government that occurred in Argentina from December 10, 2023, had begun to outline the new authorities of the FIU, suggesting Dr. Ignacio Yacobucci to assume the position of President of the organization, replacing Dr. Juan Carlos Otero.

It is worth noting that by the date of the report, the FIU had already progressed in outlining, through various working groups with the corresponding sectors, the necessary aspects for the drafting of new specific resolutions applicable to the obligated entities in the sector of Professionals in economic sciences (accountants) and Virtual Service Providers. In these cases, the final text was conditioned once the draft reform of Law No. 25,246 is finally promulgated and enacted into law.

Furthermore, beyond these two specific cases where the FIU clearly advanced in the pursuit of a resolution that can be issued and implemented as soon as the aforementioned legislative reform is completed, the trend of the governing body of the Argentine PLAFT system was to continue updating other specific FIU resolutions that have not yet been updated or incorporated the concept of the RBA.

These include those applicable to obligated entities in the public sector, such as BCRA, SSN, INAES, CNV (as obligated entities), Public Registries of Legal Entities and IGJ, Real Estate Registry, Automotive Registry and Chattel Credits, National Registries of Boats and Aircraft, as well as other obligated entities in the private sector such as Customs Brokers, Money Remitters, AFA and Professional Football Clubs, sellers of works of art, individuals engaged in the buying and selling of yachts and aircraft, Trustees of Non-Financial and non-publicly offered Trusts, real estate agencies, and car dealerships. 

It is expected that the new authorities can resume the study of these issues and establish criteria to update the resolutions of both old and new obligated entities, setting guidelines for the correct implementation of PLAFT policies as close as possible to international standards.

The challenge will be to balance the recommendations of the FATF with the reality of each of the small obligated subjects (whether they are individuals without structure or with a very small structure, or small or micro-enterprises) that, in many cases, may not be able to afford the payment of large sums of money to acquire internal professionals and external expert services to delve into the world of constant self-assessment of their money laundering and terrorist financing risks, drafting of Technical Reports and statements of risk tolerance, and/or the payment of Independent External Auditors to conduct a double audit (beyond the internal one that they already have to finance). All of this is in favor of helping the State combat crime within the national territory and ensuring compliance with the guidelines, standards, and international evaluations to which it has been subjected, as in the case of the currently ongoing 4th Round of Evaluations.

The economic-financial capacity, organizational structure, internal infrastructure, and resource availability of a financial institution in its effort to help the state combat money laundering (an entity that also carries out hundreds of thousands of monthly operations and has a supreme risk) are not the same as the capacity and resources that a neighborhood car dealership or real estate agency or a smaller entity (individual or micro-enterprise) can have, which lacks economic-financial capacity, almost no infrastructure, organizational structure, and resources to invest in resolutions that seek to impose obligations on these small entities, identical obligations imposed on the financial and capital market sector. Moreover, considering that the number of operations that the latter can conclude is exponentially lower than that of a financial institution or a securities firm (as is the case with notaries).

In this case, equating them with the same demand for PLAFT obligations imposed on large obligated entities in the financial sector would complicate, in some cases, the viability of the business of those who (due to their activity - albeit minimal) are considered obligated subjects and, of course, generate a contingency (if they do not assume the cost of being well advised and up-to-date on the matter) that could leave them off the path and without any business.

In this sense, the new authorities must find a balance in the small obligated entities whose resolutions have not yet been updated, where not only the items to be covered to comply with international standards are considered but also a way to apply them in strict relation to the type of subject to whom it is intended to impose based on the new regulations, so that the State can obtain assistance from the small individual, and at the same time, the State helps the individual not to harm or even make their business unviable (due to the fact of helping).

7. Conclusions

As observed, Argentina in general and FIU in particular, have actively worked on updating and improving their AML/CFT system. This involves strengthening the Sanctioning Regime of the FIU - to give greater deterrent and effectiveness to the system - and keeping internal norms and resolutions on AML/CFT obligations for different obligated entities and those related to control systems updated, incorporating the prevention of money laundering and terrorism financing from a Risk-Based Approach. This approach allows the identification of risks in each sector, profiling and monitoring in accordance with the assigned risk level, to more effectively mitigate them.

On the other hand, it can be inferred that Argentina has shown a clear trend in recent years towards an increasing alignment of its domestic policies for the prevention of money laundering and terrorism financing with the best global practices disseminated by the FATF. The adoption of a risk-based approach, the updating of specific resolutions for different actors, and the greater demand in reporting regimes are evidence of this convergence with the international regulatory framework. If this trend is sustained over time, it will contribute to giving the local prevention system greater efficiency in combating these serious financial crimes that affect economic and social progress.

The trend towards increased controls, obligations, and sanctions for obligated entities is here to stay. Compliance with AML/CFT regulations is not optional and is not subject to a cost-benefit analysis. It is a state policy that has been institutionalized and will continue to deepen in the coming years.

However, these aspects still need to be updated in the AML/CFT policies of several obligated entities, a circumstance that is expected to occur after the activity of the FIU stabilizes, once the change of authorities of the organization is made due to the change of government that occurred in the country from December 10, 2023.

While the implementation of these regulatory changes takes time and resources, they are essential to improve national preventive systems and align with global standards in this matter. However, a policy must be clear that prioritizes the balance between the regulatory capacity of the State so that the small obligated subject helps it and the economic and resource reality of that same subject (so that the State, being helped in its management by the individual, does not harm the individual's business). 

The new authorities must address this challenge, ensuring a balance between the demands of the FATF and, especially, the reality of small obligated entities, considering their economic-financial limitations, structural limitations, and those of their businesses (avoiding imposing regulations on them that are impossible or very difficult to comply with). 

The goal is to achieve effective implementation of AML/CFT policies that comply with international standards without jeopardizing the viability of small-scale businesses. ThisThis approach requires flexible and tailored criteria for each type of obligated entity so that the State can count on their collaboration without harming their business interests.