Published by Thomson Reuters in the prestigious legal magazine "LA LEY" on April 17, 2023.
Written by Miguel Cassagne.
1. Introduction.
Money laundering is a crime that takes on transnational characteristics and can be a manifestation of transnational organized crime. Such crime poses a serious threat to the global economic stability in general and to nations in particular, particularly affecting the integrity of global financial systems and the increase of criminal activity.
This illicit activity is often fueled by funds from drug trafficking and political corruption, or sometimes a combination of both factors. Additionally, it involves abominable crimes such as human trafficking, sexual slavery, organ trafficking, among others.
2. FATF and its Primary Functions. Effectiveness of its evaluation systems.
2.1. FATF and its Primary Functions.
To combat this crime globally and collectively, the International Financial Action Task Force (FATF) was established in Paris in 1989 through the Group of Seven (United States, Canada, Germany, France, Italy, Japan, and the United Kingdom).
The initial concern of this group was to combat money laundering (mostly originating from the scourge of drugs at that time), and later, following the September 11, 2001 attacks, combating terrorist financing was added.
FATF is an international entity whose primary functions include studying and making recommendations on combating Money Laundering, Terrorist Financing, and the Proliferation of Weapons of Mass Destruction. It evaluates member jurisdictions to verify that they have translated these recommendations into domestic legislation (Technical Evaluation) and analyzes the effectiveness of AML/CFT policies implemented through such legislation.
2.2. Description of FATF Evaluation System and its effectiveness. Soft law.
FATF's evaluation work is carried out through the process called "Mutual Evaluations," in which the member country or jurisdiction is assessed in two central aspects:
a. The technical compliance with FATF Recommendations, involving the determination of the degree of implementation of the prevention requirements arising from them in the domestic legislation of the evaluated State; and
b. The effectiveness of the AML/CFT system in terms of the results achieved by the country in prevention matters. This is to determine to what extent a country's legal and institutional framework produces the intended results. Some key areas evaluated include: Implementation of Customer Due Diligence (CDD) and Know Your Customer (KYC) systems; Effective supervision of financial institutions and relevant non-financial sectors; Number of cases opened by the Financial Intelligence Unit (FIU); Number of suspicious transaction reports (STRs) filed and those reported to the Public Prosecutor's Office; Number of cases opened in the Judiciary and number of convictions; International cooperation and information exchange measures; Identification and mitigation of specific risks related to AML/CFT; Regulation and supervision of financial and non-financial service providers; Confiscation and forfeiture of assets related to illicit activities, etc.
The result of the evaluation is then discussed at the FATF plenary, resulting in two public documents issued by FATF three times a year, identifying jurisdictions that satisfactorily meet the two evaluation parameters mentioned above, as well as those jurisdictions with weak measures to combat money laundering and terrorist financing, requiring special attention (?Grey List?), and jurisdictions designated as "High-Risk" ("Black List").
In the so-called "Grey List," technically referred to as "Jurisdictions under Increased Monitoring," jurisdictions with weak prevention systems are described. In this document, FATF identifies each of the countries actively working with it to address strategic deficiencies in their regimes to counter money laundering, terrorist financing, and proliferation financing.
Placement on the "Grey List" signifies that the country has committed to promptly address identified strategic deficiencies within agreed-upon timeframes and is subject to increased monitoring. However, it also signifies to others the deficiencies in the country's systems to combat money laundering and terrorist financing.
FATF's process of publicly listing countries with weak regimes for preventing money laundering and terrorist financing has proven effective. As of February 2024, FATF has reviewed more than 131 countries and jurisdictions, publicly identifying over 109 of them as having weak regimes, of which 82 have implemented necessary reforms to address their deficiencies in money laundering prevention and terrorist financing and have been removed from the process.
Based on the effects resulting from the consequences of a jurisdiction's publication in FATF lists, FATF Recommendations are considered Soft Law. While non-compliance does not lead to claims before competent international courts, such non-compliance generates indirect sanctions, related to lists and loss of membership, or unfavorable political and economic consequences such as complications in accessing World Bank or International Monetary Fund financing programs, entities that actively collaborate with FATF.
2.3. Evaluations of Argentina. Current Fourth Round of Mutual Evaluation.
Regarding Argentina specifically, the country has been evaluated four times, with the latest evaluation currently underway since May 31, 2023. This process includes training for national authorities and regulatory bodies to demonstrate the country's commitment to preventing money laundering and terrorist financing.
In this regard, purely descriptively, and as indicated by the Central Bank of the Argentine Republic (BCRA) in its Communication "C" No. 96096 of September 6, 2023, the process of the 4th Round of Mutual Evaluations includes:
(i) Submission of Technical Compliance Forms in September 2023, marking the official start of the evaluation process;
(ii) Submission of Effectiveness Forms in November 2023, offering a detailed view of the approach and effectiveness of policies and measures implemented in the country;
(iii) On-site Visit by the FATF evaluation team in March 2024 to examine the anti-money laundering and counter-terrorist financing system in Argentina;
(iv) Face-to-Face Meeting between Argentina and the FATF evaluation team in June 2024 to define the Final Report of the fourth round of evaluations;
(v) FATF Plenary in October 2024, where the decision on the approval of Argentina's Mutual Evaluation Report will be discussed; and
(vi) GAFILAT Plenary in December 2024, where the approval of Argentina's Mutual Evaluation Report will be addressed.
2.4. Were FATF Evaluations Effective in the case of Argentina? (From List to Regulation)
As will be observed shortly, FATF evaluations have had a tremendous impact on our country, demonstrating their great effectiveness. The evolution of Argentina's repressive and preventive system for money laundering and terrorist financing has been established based on regulations that have, in almost all cases, been approved as a result of the desire to adhere to international standards and as a reaction to undergoing Mutual Evaluations and the process of addressing the observations made over the years, in order to avoid unfavorable consequences. The result of adhering to international requirements is the Argentine regulatory framework in this area, from which its Prevention System derives.
3. Historical Evolution of Argentina's Legal Framework to Combat These Crimes. Clear Influence of FATF Evaluation System's Effectiveness and Argentina's Political Will to Avoid Sanctions.
Indeed, in the domestic fight against money laundering and terrorist financing, Argentina has not been immune to the international treatment these crimes have received over the years, impacting the evolution of local treatment and configuration of criminal types incorporated into the Argentine Criminal Code, concerning the repressive stage of this fight, and influencing the modalities in which the regulatory framework regarding the preventive stage, forming Argentina's Anti-Money Laundering and Counter-Terrorist Financing (AML/CFT) System, was prepared and updated.
3.1. First Stage.
In this regard, in a first stage, through Law 23.737 of 1989, Argentina criminalized money laundering as a form of concealment, limited to the predicate offense of illegal drug trafficking, in line with the 1988 United Nations Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances. However, this Convention did not encompass other predicate offenses such as tax evasion, fraud, kidnapping, and robbery.
3.2. Second Stage.
In a second stage, starting in the year 2000 when Argentina became a member of FATF, the country, as a consequence, began its path to align with the said Group. In this sense, in that same year, Law 25.246 was enacted, through which Argentina modified the criminal treatment of money laundering to adapt to the new forms agreed upon in international conventions, especially the Palermo Convention of 2000, and FATF Recommendations.
Consequently, Article 278 was incorporated into the Criminal Code, admitting not only drug trafficking as a predicate offense but any offense within the criminal system. However, until this point, money laundering was treated as concealment.
Regarding the preventive aspect, with the enactment of the mentioned law, the foundations of Argentina's preventive system were laid, with the creation of the FINANCIAL INFORMATION UNIT (FIU), the determination of its powers and obligations, the determination of the obligated entities under the law, the description of the obligations applicable to them, the sanctioning system, and other guidelines for the establishment of the mixed system (state/private) for preventing money laundering and terrorist financing.
However, despite the enactment of the law, Argentina did not regulate it for over ten years, resulting in a gap in the issuance of specific FIU resolutions to regulate and standardize the specific obligations regarding money laundering prevention for the economic subjects indicated in Article 20 of the aforementioned law as Obligated Entities to report to said agency, issues related to inspection and supervision regimes, etc.
Regarding the internal treatment of terrorism and terrorist financing crimes in its repressive aspect, they were only incorporated into the Criminal Code in June 2007 with the enactment of Law No. 26.268, which introduced criminal types in Articles 278 ter (terrorism) and 278 quater (terrorist financing) respectively, with penalties ranging from 5 to 20 years of imprisonment and 5 to 15 years of imprisonment.
In its preventive aspect, the same law introduced a series of reforms to Law No. 25.246, in order to expand the jurisdiction of the Financial Information Unit to investigate these new crimes of Terrorism and Terrorist Financing.
After these reforms, Argentina underwent the 3rd Round of Mutual Evaluations by FATF, and due to deficiencies in its preventive and repressive system regarding the Prevention and repression of money laundering and terrorist financing, it received a very low score. At that time, the report showed a non-compliance with 49 of the 54 strategic guidelines, which led to Argentina being added to FATF's Grey List in October 2010.
3.3. Third Stage.
Argentina's inclusion in the aforementioned Grey List led to what can be considered the beginning of the third stage of evolution of our internal system for combating money laundering and terrorist financing.
It arose from our country's reaction to this adverse situation, through the implementation of an ambitious plan to overturn this result, which resulted in modifications to the criminal types of money laundering, terrorism, and terrorist financing, and the issuance of most of the AML/CTF regulations and norms issued by the FIU in the following years (especially between 2011 and 2012) - norms that, as we will see later, were only updated as a result of the 4th round of mutual evaluations, between 11 and 12 years later.
In this regard, in June 2011, Law 26.683 was enacted, amending the argentine Criminal Code, changing money laundering from being treated as concealment to being considered an autonomous offense, defined in the new Article 303 of the Penal Code, thus adapting to FATF Recommendations.
In this article, money laundering is defined as the act of converting, transferring, managing, selling, encumbering, concealing, or circulating assets derived from a criminal offense, with the possible consequence of appearing to have a lawful origin, provided that their value exceeds $300,000.
As for terrorism and terrorist financing crimes, following the same political purpose of aligning with FATF Recommendations, in December 2011, Law No. 26.734 was enacted, repealing Articles 278 ter and 278 quater (incorporated by Law No. 26.268), modifying the criminalization of Terrorism, by incorporating Article 41 quinquies of the Criminal Code, and that of Terrorist Financing in Article 306.
Through these, it was understood that we were facing terrorism "When any of the crimes provided for in the Argentine Penal Code had been committed with the purpose of terrorizing the population or forcing national public authorities or foreign governments or agents of an international organization to carry out or refrain from carrying out an act."
On the other hand, from the text of Article 41 quinquies, terrorist financing was considered to be directing resources to the operation and support of terrorist individuals/groups or for the commission of terrorist acts.
These criminal types, over time, became outdated regarding the recommendations made by FATF in this regard, which is why they will later be updated through Law 27.739, which we will detail further.
Evaluated all the changes introduced to the Argentine preventive and repressive system in this stage, Argentina was able to show significant progress to FATF in the implementation of measures to combat the aforementioned crimes, which led to its removal from the Grey List at the FATF Plenary of Members in 2014, based on the results of this evaluation.
Although there were significant improvements in this stage, after almost a decade of these changes being in effect, the Argentine system needed to be updated and adjusted to international standards and FATF Recommendations, which are also subject to constant change and updating (to accommodate new typologies and forms of organized crime).
3.4. Fourth Stage.
Between 2017 and 2018, during the government of Engineer Mauricio Macri and with Dr. Mariano Federici as the president of the FIU, some changes were introduced into the FIU regulations regarding Politically Exposed Persons (FIU Res. No. 134/2018), the application of the Risk-Based Approach in certain regulations regarding obligated subjects in the financial sector (Financial entities - FIU Res. No. 30-E/2017-, Capital Market - FIU Res. No. 21/2018-, insurance sector - FIU Res. No. 28/2018-), and supervisions and inspections to be carried out both by FIU (FIU Res. No. 154/2018) and by the Central Bank of the Argentine Republic (FIU Res. No. 97/2018) and other Specific Control Bodies such as CNV, SSN, and INAES (FIU Res. No. 155/2018).
However, it was clear that our internal regulations still had many pending issues that needed to be addressed before being evaluated again.
In this regard, with the exception of the 2018 reforms mentioned above, and considering that most of the updates dated back to 2011 and 2012, over time, the identification of areas where more efforts needed to be made accumulated, such as the effective application of sanctions, the identification of ultimate beneficial owners in certain cases, the conduct of a national risk assessment of money laundering and terrorist financing in Argentina, the application of the Risk-Based Approach in the regulations and policies to be demanded from obligated entities, etc. This, in addition to the need to include in the criminal types of the aforementioned crimes small changes recommended by FATF.
3.5. Fifth Stage.
Knowing that Argentina would be subject to the Fourth Round of Mutual Evaluations, which the country is currently undergoing, the political will of the Argentine government to prepare for this evaluation was observed once again, taking action to update to the maximum extent Argentina's repressive and preventive system for money laundering and terrorist financing to international standards, and addressing observed aspects, in order to stay up to date with international practices and avoid being incorporated again into FATF's Grey List.
Based on this, what we could call the fifth stage of evolution and updating in the fight against these crimes, of its preventive and repressive system, began in 2021, involving a marathon task that included carrying out all the following actions described very briefly in the next section, including the National Risk Assessment, the systematic reform of all FIU Resolutions - mostly under the presidency of Juan Carlos Otero in said organization - and the reform of Law 25.246 and the Criminal Code, carried out by Law 23.379, which we will describe in more detail in the following points.
Again, all this was done to comply with the aspects of the Recommendations that Argentina had not yet incorporated into its internal regulations, in order to qualify positively in its technical evaluation.
4. Actions taken by Argentina since 2021 to align its system with FATF Recommendations.
In preparation for the Fourth Round of FATF Evaluations, Argentina has undertaken various actions and reforms to its domestic regulatory framework concerning anti-money laundering and counter-terrorism financing. These actions aim to adapt the Argentine system to the FATF recommendations and enhance its effectiveness, with the hope of securing a favorable rating in the evaluation process, facilitating access to international credits or programs from the IMF or World Bank, among other aspects.
In this regard, the following regulations were enacted and actions were taken:
4.1. FIU Resolution No. 112/2021. (Regarding Beneficial Ownership Policies):
Through this resolution, published in the Official Gazette in October 2021, the definition of "beneficial owner" was modified, and measures were established for obligated entities to verify the identity of the beneficial owners of their clients, reducing the percentage required to be considered an beneficial owner.
Previously, individuals who owned at least 20% of the capital or voting rights of a legal entity or legal structure without legal personality were considered "beneficial owners" before the enactment of this resolution. The new FIU Resolution No. 112/2021 reduced this percentage to 10%.
Additionally, it clarified the concept of "control," stating that individuals who exercise "ultimate control" over clients are also considered beneficial owners. It clarified that the concept of ultimate beneficial owner also applies to trusts, investment funds, or asset-owning structures.
4.2. Presidential Decrees No. 652/2022 and 653/2023. (National Risk Assessments).
In preparation for the Fourth Round of FATF Mutual Evaluations, Argentina dedicated unprecedented efforts to comply with Recommendation 1 of this organization, which requires member countries to conduct a national risk assessment of money laundering and terrorist financing.
Accordingly, through Presidential Decrees No. 653/2022 and No. 652/2022, both dated September 22, 2022, the Reports of the First National Risk Assessment of Money Laundering and the National Risk Assessment of Terrorism Financing and Proliferation of Weapons of Mass Destruction were approved, covering the period analyzed from January 1, 2017, to December 31, 2021.
These reports revealed significant data, such as the identification of a total of 1,386 money laundering cases initiated between 2017 and 2020, with an average annual amount affected by this crime of USD $1,069,524,179.95.
According to the Risk Assessment, 42% of money laundering cases with identified predicate offenses in the local context were related to tax crimes, 29% to drug trafficking, 10% to property crimes, and 9% to customs offenses.
It is noteworthy that these national risk assessments will be periodically updated, as their results must be considered by obligated entities under Law No. 25,246 to conduct their own money laundering and terrorist financing risk assessments.
4.3. FIU Resolution No. 14/2023. (Applicable to Banks and Financial Institutions).
Published in February 2023, this resolution updated the regulatory framework on AML/CFT for banks and financial institutions, establishing new measures for risk assessment and money laundering prevention based on a Risk-Based Approach.
Among the obligations imposed, it requires the development of a risk assessment methodology considering factors such as clients, products, channels, and geographical areas, the preparation of a Risk Self-Assessment, a Technical Report of Risk Self-Assessment, and a Risk Tolerance Statement, as well as the mandatory engagement of an External Independent Reviewer (EIR).
Effective since April 1, 2023, it repealed the previous FIU Resolution No. 30-E/2017.
4.4. FIU Resolution No. 35/2023. (Regarding Politically Exposed Persons).
Published in March 2023, this resolution updated the AML/CFT regulatory framework regarding Politically Exposed Persons (PEPs) in accordance with international standards.
Effective from April 1, 2023, it applies to all obligated entities under Law No. 25,246, repealing the previous FIU Resolution No. 134/2018.
4.5. UIF Resolution No. 61/2023. (Regarding UIF Supervision Regime).
Published in April 2023, this resolution updated the AML/CFT regulatory framework concerning FIU supervisions of obligated entities, establishing new guidelines under a Risk-Based Approach (RBA). Effective since April 17, 2023, it repealed the previous FIU Resolution No. 154/2018.
4.6. FIU Resolution No. 66/2023. (FIU Cooperation with International Organizations).
Published in April 2023, this resolution regulated the international cooperation of the UIF in accordance with the FATF Recommendations.
4.7. FIU Resolution No. 72/2023. (Regarding Supervision Regime of Other Controlling Bodies).
Published in May 2023, it incorporated the Risk-Based Approach (RBA) into new supervisions carried out by specific supervisory bodies of obligated entities, including Central Bank of the Argentine Republic (BCRA), National Insurance Superintendence (SSN), National Institute of Cooperatives and Social Economy (INAES), and National Securities Commission (CNV).
Effective since May 4, 2023, it repealed FIU Resolutions No. 97/2018 (which established the BCRA supervision regime) and 155/2018 (which did the same for CNV, SSN, and INAES supervisions).
4.8. FIU Resolution No. 78/2023. (Applicable to the Capital Market Sector).
Published in May 2023, this resolution updated the AML/CFT regulatory framework for the Capital Market sector based on the Risk-Based Approach.
Specifically targeting Brokerage Agents (AN), Clearing and Settlement Agents (ALYC), Individuals and/or Legal Entities registered with the CNV participating in the Placement of Investment Funds or other collective investment products, Legal Entities covered by section 22 of article 20 of Law No. 25,246 and its amendments, acting as Financial Trustees whose fiduciary securities are authorized for public offering by the CNV, and registered agents participating in the placement of negotiable securities issued within financial trusts and collective investment.
This resolution, effective as from July 1, 2023, revoked the previous FIU Resolution No. 21/2018. Among its provisions, it established the obligation for obligated entities to conduct a risk assessment considering factors such as clients, products, channels, and geographical areas, the preparation of a Technical Risk Assessment Report, a Risk Assessment Methodology, and a risk tolerance declaration, and the implementation of a monthly operational reporting regime and an annual institutional computerized reporting regime, among others.
4.9. FIU Resolution No. 84/2023. (Automatic Update of Thresholds for KYC Policies).
Published in May 2023, this resolution established the automatic update of the threshold for due diligence measures of obligated entities, using the Minimum Vital and Mobile Salary (MVMS) as a parameter.
4.10. FIU Resolution No. 99/2023. (Applicable to the Mutual and Cooperative Sector).
Published in June 2023, this resolution updated, after 11 years, the guidelines for AML/CFT prevention policies based on a Risk-Based Approach, for mutual associations and cooperatives, including the obligation to conduct risk self-assessments and the engagement of independent external reviewers (EIR).
The resolution, effective from August 1, 2023, repealed the previous FIU Resolution No. 11/2012. Through this resolution, obligations such as the conduct of external audits through Independent External Reviewers every 2 years for small credit unions and cooperatives, risk self-assessment considering risk factors such as clients, products, channels, and geographical areas; the preparation of risk tolerance statements, and the establishment of monthly and annual reporting regimes were incorporated, among others.
4.11. FIU Resolution No. 126/2023. (Applicable to the Insurance Sector).
Published in July 2023, it introduced new requirements for AML/CFT prevention policies based on a Risk-Based Approach. The regulation applies to obligated entities such as insurance companies, local reinsurance companies, insurance brokerage companies, and insurance advisors and producers operating in the marketing of life insurance with savings or retirement insurance, in accordance with FATF recommendations.
Specifically, the resolution, effective from September 1, 2023, repealing the previous FIU Resolution No. 28/2018, by updating the AML/CFT policies, imposed obligations on these obligated entities to conduct risk self-assessments considering factors such as clients, products, channels, and geographical areas, to submit Technical Risk Self-Assessment Reports, Risk Self-Assessment Methodologies, and risk tolerance declarations annually and to engage Independent External Reviewers annually.
4.12. FIU Resolution No. 127/2023. (Organizational Structure of the FIU).
Also published in July 2023, it modified the structure of the FIU to enhance its functioning, nullifying the organizational structure previously established through FIU Resolution No. 152/2016.
4.13. FIU Resolution No. 169/2023. (Applicable to Capitalization and Savings Operators).
Through this resolution, published in July 2023, measures for AML/CFT prevention policies were established and updated, after 10 years, based on a Risk-Based Approach, for capitalization and savings operators, including risk self-assessments and the engagement of independent external reviewers (EIR). The new resolution came into effect on November 1, 2023, repealing the previous UIF Resolution No. 50/2013.
4.14. FIU Resolution No. 194/2023. (Applicable to the Gambling Sector).
Published in September 2023, it updated, after 12 years, AML/CFT prevention policies based on a Risk-Based Approach, to be applied by the gambling sector, including risk self-assessments and reporting. It came into effect on December 1, 2023, nullifying the previous FIU Resolution No. 199/2011.
4.15. FIU Resolution No. 242/2023. (Exclusively Applicable to Notaries).
The resolution, published in October 2023, updated, after 12 years, the policies and provisions that notaries must carry out regarding AML/CFT prevention, outlined based on a Risk-Based Approach, including risk self-assessments and the engagement of independent external reviewers (EIR). It only came into effect on March 1, 2024, nullifying the previous FIU Resolution No. 21/2011.
4.16. Decree 8/2023. (Scope of Action of the UIF).
The Decree of Necessity and Urgency, issued in December 2023, relocated the Financial Information Unit, previously under the jurisdiction of the Ministry of Economy, to the Ministry of Justice, as provided for in Article 5 of Law No. 25,246. Although the autonomy and financial autonomy of the UIF were maintained, this structural change was subsequently ratified by Decree of partial promulgation No. 254/2024.
In its Article 13, the Decree replaces Article 5 of Law No. 25,246 with the following: "ARTICLE 5.- The FINANCIAL INFORMATION UNIT (FIU) is hereby created, which shall operate with autonomy and financial autonomy within the jurisdiction of the MINISTRY OF JUSTICE, and shall be governed by the provisions of this law."
4.17. Decree 142/2024. (Appointment of New Authorities in the UIF).
Published on February 16, 2024, through this decree, Dr. Ignacio Martín YACOBUCCI was appointed as President and Dr. Manuel Facundo TESSIO as Vice President of the FIU.
4.18. New Law 27,793 (Comprehensive Reform of the Prevention System).
Published in the Official Gazette on March 15, 2024, it introduces a comprehensive reform to the Argentine anti-money laundering system, detailed in item 5 of this article, focusing on five main axes or key aspects, including:
i.) Amendments to the Penal Code,
ii.) reform to Law 25,246,
iii.) the creation of a Central Registry of Ultimate Beneficiaries,
iv.) the Establishment of Parliamentary Oversight, and
v.) the creation of a Registry of Providers of Virtual Asset Services (VASP), key aspects to fulfill the technical component of the aforementioned FATF evaluation.
4.19. FIU Resolution No. 42/2024. (Specifically Applicable to Public Accountants).
This resolution, issued on March 18, 2024, updated the regulatory framework on AML/CFT prevention (PLAFT) for Certified Public Accountants (CPA) in Argentina. This regulation introduces the Risk-Based Approach (RBA) to client monitoring, requires the submission of technical reports on Risk Self-Assessment every 2 years, and establishes the conduct of Independent External Reviews every 2 years.
It also imposes the submission of Annual and Monthly Systematic Reports, as well as policies and indicative alerts to strengthen PLAFT systems. The resolution entered into force on the day following its publication, repealing FIU Resolution No. 65/2011.
4.20. FIU Resolution No. 43/2024. (Applicable to the Real Estate Intermediation Sector).
Published on March 18, 2024, it establishes new minimum requirements for AML/CFT prevention in the real estate intermediation sector in Argentina.
This regulation updates these requirements after 12 years and introduces the Risk-Based Approach (RBA) to client monitoring, requiring technical reports on Risk Self-Assessment and Independent External Reviews every 2 years. It also establishes the submission of Annual and Monthly Systematic Reports, along with policies, procedures, and controls to strengthen PLAFT systems.
The resolution came into effect on the day following its publication, indicating deadlines for the submission of reports. It repeals and renders ineffective UIF Resolution No. 16/2012.
4.21. FIU Resolution No. 47/2024: (Amends Res. FIU 50/11 regarding Registration with FIU).
Published in the Official Gazette on March 18, 2024, this resolution entered into force, and from March 19, 2024, it amended the old FIU Resolution No. 50/2011, implementing new requirements for the registration or deregistration of obligated subjects with the FIU.
For registration procedures, it introduces the obligation to submit criminal background certificates and declarations of Politically Exposed Persons (PEP) for individuals; and for legal entities, of the members of their management bodies (including the Compliance Officer) and ultimate beneficiaries.
It also introduces the obligation to report the cessation of the obligated subject status, accompanied by supporting documentation justifying the reasons.
Finally, it establishes that all documentation submissions in PDF format, for both registration and deregistration procedures, must be made exclusively to: obligatedsubjects@uif.gob.ar.
4.22. FIU Resolution No. 48/2024. (Specifically Applicable to Corporate Lawyers).
This resolution, issued on March 25, 2024, established, for the first time, the regulatory framework for AML/CFT prevention applicable to lawyers in Argentina. This, considering that they, in accordance with the new art. 20 subparagraph 17 of Law 25,246 (amended by Law 27,739), became obligated subjects to report to the FIU, in accordance with FATF Recommendation 22.
This regulation does not apply to all lawyers but only to those who, on behalf and/or on behalf of their Clients, prepare or perform: i) Real estate transactions exceeding 700 Minimum Vital and Mobile Wages (SMVM); ii) administration of assets and/or assets exceeding 150 SMVM; iii) administration of bank accounts, savings, and/or securities exceeding 50 SMVM; iv) organization of contributions to create, operate, or manage legal entities or other legal structures; v) creation, operation, or management of legal entities or other legal structures, and the sale of legal transactions and/or stakes in legal entities or other legal structures.
In general, it establishes minimum requirements for the identification, evaluation, monitoring, and mitigation of ML and TF risks, based on a Risk-Based Approach, in accordance with FATF Recommendation 22, including:
(a) The obligation to have an AML/CFT system, which includes, among others, an AML/CFT Manual, training, documentation retention policies, customer due diligence (KYC) policies based on RBA, and monitoring according to their risk level, in accordance with FATF Recommendation 1;
(b) The obligation to submit technical reports on Risk Self-Assessment (every 2 years) and the evaluation methodology (every 4 years);
(c) The obligation to conduct an evaluation of their system through Independent External Reviews (every 2 years);
(d) The obligation to file reports on Suspicious Money Laundering and Terrorism Financing Operations (SARs), unless the relevant information is obtained under circumstances where attorney-client privilege applies (according to the Interpretative Note to FATF Recommendation 23);
(e) The burden of making Annual Systematic Reports (ASRs) and Monthly Systematic Reports (MSRs). Additionally, it Establishes Policies and indicative alerts as a guide to strengthen PLAFT systems.
Resolution FIU 48/2024 entered into force from the day following its publication (that is, from March 26 2023), although it establishes specific staggered deadlines for submitting the first Risk Self-Assessment report (until 30/04/26), the first EIR Report (until 31/08/26), the first MSR (between 02/01/25 and 15/02/25), and the first ASR (between 02/01/25 and 15/03/25).
4.23. Resolutions on Virtual Asset Service Providers (VASPs).
In accordance with the provisions of the new art. 20 subparagraph 17 of Law 25,246 (amended by Law 27,739), VASPs became obligated subjects to report to the FIU on AML/CFT matters, in accordance with FATF Recommendation 15 and its interpretative note.
Likewise, Law 27,739, in addition to incorporating VASPs into the list of obligated entities to report, created within the jurisdiction of the Security and Exchange National Commission (CNV) the Registry of Virtual Asset Providers, so that they register in it as a condition to operate in the country.
4.23.1. CNV Resolution No. 994/2024 (Regulates VASP Registry).
Through the aforementioned Resolution, dated Friday, March 22, 2024, the CNV, marking a milestone by regulating the first VASP Registry, created days ago by Law No. 27,739.
Among the salient aspects of this regulation, it established:
(1) The mandatory registration in the Registry before commencing operations for natural and legal persons residing or established in Argentina, as well as foreigners carrying out activities related to Virtual Assets (VA) in the country;
(2) The exemption from the registration obligation in the Registry for those VASPs whose operations do not exceed an amount equivalent to 35,000 UVA (measure unit) per month;
(3) The prohibition of operating in the country without registration, in any of the activities included in the VASP definition of the law and this regulation;
(4) The registration obligation also applies to foreign persons carrying out VASP activities in Argentina, such as using ".ar" domains, receiving funds from Argentine residents, having commercial agreements with local third parties, directing advertising to Argentine residents, or having a significant volume of operations in the country;
(5) The registration requirements, including the submission of information on identity, domicile, activity, VASP websites, among others, as a sworn statement;
(6) The criterion that persons domiciled, established, or residing in jurisdictions considered non-cooperative or high-risk by the FATF may not register in the Registry; and
(7) That registered VASPs must include a disclaimer on their websites and social networks indicating that their registration in the Registry does not imply a license or supervision by the CNV over their activity.
4.23.2. FIU Resolution No. 49/2024. (Specifically applicable to VASP).
The aforementioned resolution, issued on March 25, 2024, established, for the first time, the regulatory framework for the prevention of money laundering and the financing of terrorism (AML/CFT) applicable to Virtual Asset Service Providers in Argentina.
This resolution, together with the creation of the VASP Registry within the scope of the CNV and the regulation of said Registry by CNV Resolution 994/2024 on Friday, March 22, 2024, and the new FIU regulations published on Monday, March 25, 2024, seeks to comply with Recommendation 15 of the FATF and its interpretative note, in order to obtain a good technical rating for Argentina in the Fourth Round of Mutual Evaluations that the FATF is conducting in the country.
The new FIU Resolution establishes minimum requirements for the identification, assessment, monitoring, and mitigation of ML and FT risks, based on a Risk-Based Approach for VASP.
In general terms, the new provision sets out the minimum guidelines for the identification, assessment, monitoring, and mitigation of ML and FT risks by VASP, based on a Risk-Based Approach, in line with FATF Recommendation 15, with its main points including the obligation to have an AML/CFT system, including an AML/CFT Manual, training, documentation retention policies, customer due diligence (KYC) policies based on a RBA, and monitoring according to their risk level.
In addition to the obligations to submit technical Risk Self-Assessment reports and their assessment methodology, conduct an assessment of their preventive system through Independent External Reviewers (REI), make reports of Suspicious Money Laundering and Terrorist Financing Operations, Annual Systematic Reports (RSA), and Monthly Systematic Reports on "Operations Carried Out with Virtual Assets" and "Client Additions and Deletions," as well as Establish Policies and indicative alerts as a guide to reinforce AML/CFT systems.
FIU Resolution No. 49/2024 entered into force the day after its publication (i.e., from 03/26/2023), although it establishes specific staggered deadlines for submitting the first Risk Self-Assessment report (by 04/30/26), the first REI Report (by 08/31/26), the first RSA (between 01/02/25 and 03/15/25), and the first RSM (between 01/02/25 and 02/15/25).
Likewise, it establishes the obligation for VASP operating in Argentina to register, within 30 calendar days from the entry into force of this regulation, in the UIF's SRO system, in accordance with UIF Resolution No. 50/2011 (whose requirements were modified by UIF Resolution No. 47/2024).
Prior to the issuance of this FIU Resolution No. 48/2024, the FIU had 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 subject to digital trade and whose functions are to constitute a means of exchange, and/or a unit of account, and/or a store of value, but which is not legal tender, nor is it issued or guaranteed by any country or jurisdiction"), it established the obligation of Obligated Entities to: (i) Pay special attention to the emerging risk of operations carried out 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 Communication on Operations with Virtual Assets dated 05/20/2020, through which the UIF: (i) Suggested that the increase in operations with Virtual Assets could be linked to Money Laundering and Terrorism Financing activities; (ii) Reiterated the obligations of Obligated Subjects to make reports and establish reinforced monitoring according to UIF Resolution No. 300/2014; and (iii) Indicated its intention to adapt Argentina's Anti-Money Laundering system to what is provided by the FATF in its Recommendation 15.
4.24. Future resolutions of other obligated subjects.
To date, there are still aspects to be updated in the AML/CFT policies of several existing obligated subjects before the reform of Art. 20 of Law 25.246 introduced by Law 23.379, and of other new obligated subjects (beyond the lawyers and VASP mentioned above) that are included in said list.
In this regard, given the marked regulatory trend of recent times, it is expected that over the coming months the FIU will also advance the issuance of new resolutions through which it will set new guidelines for the prevention policies to be applied by these, in accordance with the guidelines established by the FATF.
5. Modifications introduced to the prevention system by Law 27.739.
The new Law No. 27,739 arises as a result of a bill sent to the Argentine National Congress by the government of President Alberto Fernández on May 31, 2022, which was duly promoted by the Financial Information Unit and worked on in collaboration with other actors of the Argentine Prevention System (Federal Administration of Public Revenues - AFIP-, Argentine Central Bank ?BCRA-, National Securities Commission -CNV-, National Institute of Associativism and Social Economy -INAES-, National Insurance Superintendence -SSN-, National Coordination for the Fight against Money Laundering and the Financing of Terrorism, Public Prosecutor's Office, Supreme Court of Justice of the Nation, and Ministries of Economy, Justice and Human Rights, and Foreign Affairs, International Trade and Worship at that time).
The initiative aimed to fulfill the latest understanding signed by Argentina with the International Monetary Fund (IMF) and included suggestions for improvements made by the Financial Action Task Force (FATF) - which are surely being evaluated by said international organization within the framework of the Fourth Round of Mutual Evaluations that is currently taking place in our country.
The processing of the aforementioned reform project was extended beyond what was initially intended, as it was approved by the Chamber of Deputies in April 2023 and sent to the National Senate on July 11 of that year, only to be considered by said body on March 14, 2024, when it was unanimously approved.
In this way, the current government of President Milei managed to approve the comprehensive reform that Argentina needed before the on-site visit of FATF officials to the country within the framework of the aforementioned Fourth Round of Mutual Evaluations, a visit that was planned to take place from March 6 to 26, 2024.
This was done with the purpose of preventing Argentina from receiving a poor rating in this evaluation, which would consequently make it liable to be included in the "gray" or "black" list of said organization.
In that sense, the already promulgated and published Law No. 27,739 introduces a profound reform to the Argentine anti-money laundering prevention system, focusing, as previously mentioned, on five major axes or key aspects.
5.1. Establishment of Parliamentary Oversight.
Among the responsibilities of the Permanent Bicameral Commission for the Oversight of Intelligence Agencies and Activities is the monitoring of the activities carried out by the Financial Information Unit.
5.2. Registry of Virtual Asset Providers.
The Registry of Virtual Asset Service Providers is established within the natural regulatory scope of the Security and Exchange National Commission (CNV), an organization which then proceeded almost immediately to regulate said Registry through CNV Resolution No. 994/2024 dated March 22, 2024.
5.3. Creation of a centralized Beneficial Ownership Register.
This registry is established within the scope of the Federal Administration of Public Revenues (AFIP), to contain adequate, accurate, and up-to-date information on the beneficial owners of persons and legal structures, ensuring full access to competent authorities in the matter.
Until now, various public bodies have had information regarding beneficial owners, but there has not been a centralized register accessible to competent authorities quickly and efficiently.
5.4. Amendment of the argentine Criminal Code.
In addition to incorporating new offenses into Article 303 to be considered as predicate offenses for money laundering, such as environmental offenses, among others, and considering that the protected legal interest of this offense is the economic and financial order (as indicated in Title XIII of the Criminal Code), since it seeks to preserve a supra-individual or collective legal interest, whose affectation operates to the detriment of the stability, security, and formally instituted economic-financial development, there has been a significant increase in the amount established for the punishment of the offense of money laundering, going from the devalued amount of 300,000 argentine pesos - probably very representative at the time of its inclusion in the code - to a determinable amount of 150 Minimum Vital and Mobile Wages.
With regard to the offense of terrorism, the old Article 41 quinquies established that the offense of terrorism was configured when certain offenses provided for in the Criminal Code were committed with the aim of terrorizing. With the reform introduced, the said article adds to the typical figure not only the commission of some of the offenses provided for in the said Code but also those provided for "in special laws and in laws that incorporate criminal types provided for in international conventions in force in Argentina."
Regarding the offense of financing terrorism, the reform maintains the typical figure of Article 306 of the Penal Code, but in this case, the offense is not only constituted by the financing of terrorist organizations, with the collection or provision, directly or indirectly, of funds or assets, from legal or illegal sources, with the intention that they be used or knowing that they will be used to finance the commission of a terrorist act, by a terrorist organization or individual who commits or attempts to commit a terrorist act (as indicated before this reform), but also - it is added - the purpose of using those funds to finance, for oneself or for third parties, the travel or logistics of individuals and/or things to a State other than their residence or nationality, or within the same national territory, with the purpose of perpetrating, planning, preparing, or participating in terrorist acts; and to finance, for oneself or for third parties, the provision or receipt of training for the commission of terrorist acts. This, in accordance with the requirements of the FATF Recommendations and the way in which said organization defines such acts.
5.5. Amendment of Law No. 25,246.
Among the most salient particular aspects of the reform to the law are:
a.) Strengthening of the Administrative Sanctioning Regime.
This strengthening aims to provide greater deterrence to the Argentine AML/CFT System and make it more effective (one of the elements to be evaluated by the FATF). In this sense, the proposed modifications to the Sanctioning Regime imply:
a.i New sanctions.
Sanctions such as warnings, warnings with publication of the administrative act imposing the sanction, disqualification from holding the position of compliance officer, and the possibility for the FIU to suggest to the specific supervisory bodies of the non-compliant obligated subject the revocation of the authorization to operate of the obligated subject and/or disqualification of the enabling title are incorporated.
a.ii. Fines:
Creation of a Measurement Unit: A measurement unit (Modules) is incorporated for qualitative sanctions, allowing its periodic updating by the FIU without the need to modify the law. The initial measurement unit of the bill approved in the Chamber of Deputies is $40,000 ?argentine peso currency-.
a.iii. Substantial increase in the value of fines:
A substantial increase in the amounts of fines for each non-compliance with the AML/CFT system (with the exception of fines applicable for unreported or late reported transactions) was imposed, raising the minimum currently in force before the entry into force of Law 27,739 from $10,000 to $600,000 and the maximum from $100,000 to $100,000,000. (The new article 24 of Law 25,246 speaks of fines of 15 to 2,500 Modules.
Fines for unreported or late reported suspicious transactions are still established at a value of between 1 to 10 times the value of the unreported or late reported suspicious transaction.
a.iv. Fiscal execution procedure:
It is established that fines will be collected through the fiscal execution procedure, simplifying its recovery process.
b.) Powers for the UIF.
In order to align the law with international standards, Law 27,739 incorporated into Law 25,246, regarding the FIU, among other aspects:
(i) its functional, administrative, and economic autonomy, in addition to financial autonomy;
(ii) the use of the risk-based approach, both for the supervisions of the AML/CFT system that it carries out and for the directives and instructions (regulations) that it issues;
(iii) the power of the FIU to impose targeted financial sanctions, that is, the administrative freezing of funds or other assets, by reasoned resolution and with immediate communication to the Public Prosecutor's Office and/or the competent judge, linked to suspicious operations of terrorist financing and financing of the proliferation of weapons of mass destruction;
(iv) the power of the FIU to establish specific risk mitigation measures (countermeasures) for commercial relationships and transactions with natural and legal persons, and financial institutions, from high-risk jurisdictions.
Likewise, the reform of Law 25,246, approved by Law 27,739, incorporated into the former an article regulating the correct use of information from similar foreign bodies, and the modification of article 27 in order to address the ambiguities, deficiencies, and omissions presented by the legislation, through the proposal of clear mechanisms for the distribution and administration of assets subject to seizure.
c.) New Obligated Entities.
With the reform to Article 20 of Law No. 25,246, Law 27,739:
· Modified the text of the first paragraph 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 included in the current text of said paragraph - all entities to which the Central Bank of the Argentine Republic extends its application, in the exercise of its powers.
· Maintained within the list of obligated subjects the companies dedicated to the transportation of valuables - previously mentioned in paragraph 10 of Article 20 of Law No. 25,246 - and expressly incorporated as new obligated subjects all companies that provide custody or safeguarding services of funds or assets.
· Removed from the list of obligated subjects listed in Article 20 of the law, legal entities that receive donations or contributions from third parties, relegating them to a special treatment - according to international standards - in a specific chapter that was incorporated into the law called "Non-Profit Organizations".
In this sense, these organizations must be subject to an analysis of the risk of abuse for terrorism financing and, consequently, must establish appropriate and proportionate measures to the identified risks.
· Modified the text of the previous paragraph 23 of Article 20 of the law (which named legal entities that perform functions of organization and regulation of professional sports as obligated entities) by expressly incorporating associations and/or affiliated entities.
To date, of the universe of obligated entities that arise from the Law related to any professional sport, the FIU has limited itself to regulate and consider as obligated entities in this area only those persons linked exclusively to professional soccer: i) the Argentine Football Association (AFA) and (ii) the Clubs whose teams participate in the First Division and National B Tournaments organized by the AFA.
Beyond that, and considering the broad concept of obligated entities used in the corresponding paragraph of article 20 of the law (where it is mentioned in the plural and in a generic way "professional sports"), the FIU could, if it so considers, regulate and consider obligated entities persons who organize, regulate or are affiliated to the practice of any other professional sport besides soccer (e.g. basketball), without the need to reform the law.
· Incorporates as obligated entities, following the guidelines of paragraph (d) of FATF Recommendation 22, any professional (other than Accountants, Notaries, and Lawyers expressly indicated therein) who, on behalf and/or on behalf of their clients, prepare or actually carry out any of the following transactions: a) Purchase and/or sale of real estate; b) Administration of money, securities and/or other assets; c) Administration of bank accounts, savings and/or securities; d) Organization of contributions or contributions for the creation, operation or administration of legal entities or other legal structures; and e) Creation, operation or administration of legal entities or other legal structures, and the purchase and sale of legal business and/or interests in legal entities or other legal structures.
Given the generic nature of the term "other Professionals" used in the text of paragraph 17 of Article 20 of Law No. 25,246, it will remain to analyze the scope that the FIU gives to it when defining the term of Obligated Entities in the specific resolution that it issues to regulate the obligations in AML/CFT matters applicable to the subjects indicated in the modified paragraph 17 of Article 20 of the law.
FATF Recommendation 22 on designated non-financial activities and professions establishes: "22. DNFBP: Due Diligence on the Customer *. Due diligence requirements and record keeping ... apply to Designated Non-Financial Activities and Professions (DNFBP) in the following situations: ...(d) Lawyers, notaries, other independent legal professionals and accountants - when they are arranged to carry out transactions or perform transactions for their clients on the following activities: purchase and sale of real estate; administration of money, securities or other assets of the client; 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 business entities."
· Issuers, operators and providers of collection and/or payment services, and non-financial providers of credit, are considered obligated entities.
· Expands the scope of obligated entities in the field of gambling, not only to those natural and/or legal persons, or other structures with or without legal personality, which - as a habitual activity - exploit 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 collection.
· Modifies the real estate broker regime, where real estate agents or brokers registered and companies of any type that have as their object real estate brokerage, integrated and/or managed exclusively by registered real estate agents, were considered obligated subjects.
The new text proposes to consider as obligated entities "natural and/or legal persons, or other structures with or without legal personality, who carry out real estate brokerage", that is, who mediate, in a normal, habitual, and onerous way, between the supply and demand in third-party real estate businesses, management, or disposal, participating in them by carrying out acts or acts aimed at achieving their materialization.
· Maintains as obligated entities insurance companies and incorporates in this category reinsurers authorized by the National Insurance Superintendence (SSN).
· Suppresses the status of obligated entites to certain figures acting as intermediaries in the insurance business, limiting such status to insurance intermediaries and agents authorized by the SSN acting as Insurer Agents, Companies of Insurance Advisors and Insurance Agents, whose activities are governed by Laws No. 17,418, 20,091, and 22,400, their amendments, concordant and complementary, that operate in the marketing of life insurance with savings or retirement insurance.
· Modifies, in accordance with the text of paragraph (d) of FATF Recommendation 22, the current consideration that every Public Notary is an obligated entity (Article 20 paragraph 12 previously in force), reserving that condition only with respect to those notaries who carry out the activities specifically indicated in the text of the new paragraph 17 of Article 20 of Law No. 25,246.
In this sense, the text of paragraph 17 of Article 20 only considers as obligated subjects those notaries who, on behalf and/or on behalf of their clients, prepare or actually carry out any of the following transactions: a) Purchase and/or sale of real estate; b) Administration of money, securities and/or other assets; c) Administration of bank accounts, savings and/or securities; d) Organization of contributions or contributions for the creation, operation or administration of legal entities or other legal structures; and e) Creation, operation or administration of legal entities or other legal structures, and the purchase and sale of legal business and/or interests in legal entities or other legal structures. Likewise, those who prepare limited review reports of financial statements are subject to this obligation, under the conditions established by the regulations, and the preparation of audit reports of financial statements.
· Incorporates, in accordance with the text of paragraph (e) of FATF Recommendation 22, as new obligated subjects natural and/or legal persons, or other structures with or without legal personality, who habitually prepare or actually carry out any of the following transactions, on behalf and/or on behalf of their clients: a) Act as creator agent of legal entities; b) Act on their own or facilitate the actions of others, as director, attorney-in-fact, partner, or a similar position according to the legal entity or legal structure concerned; c) Provide legal, commercial or postal domicile and/or physical space for legal entities or other legal structures; and d) Act as trustee for themselves (or facilitate the actions of others) of a non-financial trust or performing the equivalent function for another form of legal structure.
· Replaces paragraph 5 of Article 20 of the aforementioned law, which was in force since 11.05.2018, with the text of the new paragraph 8 of Article 20 of Law 25,246, in which Platforms of Collective Financing and other legal entities authorized by the National Securities and Exchange Commission (CNV) to act within the framework of collective financing systems through the use of web portals or other analogous means, with the main purpose of professionally connecting a plurality of natural and/or legal persons acting as investors with natural and/or legal persons requesting financing as collective financing entrepreneurs.
It should be noted that the text of Article 20, paragraph 5 prior to the reform of Law 27,739, considered as obligated subjects "Legal entities authorized by the National Securities and Exchange Commission to act within the framework of collective financing systems through the use of web portals or other analogous means and other legal entities registered in said agency responsible for opening the file and identifying the client's profile to invest in the capital market.?
Incorporates as obligated entities, also in accordance with the text of paragraph (d) of FATF Recommendation 22, lawyers, only when they, acting on behalf and/or on behalf of their clients, prepare or actually carry out any of the following transactions: a) Purchase and/or sale of real estate; b) Administration of money, securities and/or other assets; c) Administration of bank accounts, savings and/or securities; d) Organization of contributions or contributions for the creation, operation or administration of legal entities or other legal structures; and e) Creation, operation or administration of legal entities or other legal structures, and the purchase and sale of legal business and/or interests in legal entities or other legal structures.
These professionals are already obligated to comply with the specific resolution issued by the FIU on March 25, 2024, namely FIU Res. No. 48/2024.
Finally, following the guidelines established by the Financial Action Task Force - FATF - in its Recommendation 15 ("New Technologies") and its Interpretative Note, it incorporates Virtual Asset Service Providers (VASPs) as obligated entities.
The Law 25,246 incorporates the definition of VASPs, understanding them as any natural or legal person who, as a business, carries out one or more of the following activities or operations for or on behalf of another natural or legal person: i. Exchange between virtual assets and legal tender (fiat currencies); 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 these and v. Participation and provision of financial services related to the offer of an issuer and/or sale of a virtual asset.
Additionally, the law defines "Virtual Assets" as the digital representation of value that can be traded and/or transferred digitally and used for payments or investments.
It is added that under no circumstances shall legal tender in national territory and currencies issued by other countries or jurisdictions (fiat currency) be understood as virtual assets.
As already indicated in this article, by UIF Resolution No. 49/2024, published on March 25, 2024, the Fiu has already regulated the specific resolution that establishes the obligations to be complied with by these subjects in AML/CFT matters.
d.) Definition of Risk-Based Approach (RBA).
Law 27,739 expressly incorporated into Law No. 25,246 the definition of the Risk-Based Approach (RBA) following the guidelines set forth by FATF in its Recommendation 1, a concept that in recent years the argentine FIU has been incorporating since 2016 in various Resolutions issued by it.
Specifically, the law currently defines RBA as the regulation and application of measures to prevent or mitigate money laundering and terrorism financing and the financing of the proliferation of weapons of mass destruction, proportionate to the identified risks, which includes processes for their identification, assessment, monitoring, management, and mitigation, in order to focus efforts and apply resources more effectively.
FATF Recommendation 1 expressly states, regarding Risk Assessment and application of a risk-based approach, that "Countries should identify, assess, and understand their money laundering/terrorist financing risks, and should take action, including the designation of an authority or mechanism to coordinate actions to assess risks, and allocate resources to ensure that risks are effectively mitigated.
Based on this assessment, countries should apply a risk-based approach (RBA) to ensure that measures to prevent or mitigate money laundering and terrorist financing are proportional to the identified risks.
This approach must constitute an essential foundation for the effective allocation of resources throughout the anti-money laundering and counter-terrorist financing (AML/CFT) regime and the implementation of risk-based measures in all FATF Recommendations.
When countries identify greater 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 FATF Recommendations under certain conditions.
e.) Rules on Customer Due Diligence and Know Your Customer (KYC) and Incorporation of obligations related to self-assessment.
Law 27,739 unified the obligations applicable to obligated subjects of Law 25,246 in the new Article 21 of said Law, in which, in addition to the impossibility for obligated entities to initiate or continue the relationship with clients regarding whom they have not been able to properly identify them or 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 of 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 adequate measures for their mitigation.
6. Conclusion.
The impact of the Financial Action Task Force (FATF) on the evolution of the Argentine system to combat AML, CFT, and AFT is undeniable.
Throughout the various stages of evolution of our internal AML/CFT/AFT system described above, the mutual evaluations and recommendations of this body have been the main driver of regulatory changes implemented in the country. The threat of being included in gray or black lists, with the consequent adverse consequences, has prompted Argentina to align its legislation with international standards.
However, beyond external influence, the steadfast political will demonstrated by successive Argentine governments in recent times to strengthen the Argentine AML/CFT/AFT system is noteworthy, as is the collaboration that has occurred in the last transitions of UIF authorities.
Each of the reforms described, from the initial typification of money laundering to the recent Law 27,739, has responded to the political decision that Argentina not be sanctioned and remain in line with FATF recommendations in this matter. This determination has led Argentina to make significant efforts in constantly updating its regulatory framework, creating specialized bodies, and adopting risk-based approaches.
Ultimately, the Argentine case illustrates how an international organization like FATF, through an effective assessment system and the application of incentives and pressures, can have a substantial impact on the internal policy of member countries, thereby improving the prevention and fight against these crimes that constitute a scourge for individual countries and the world at large.
While national sovereignty is not directly threatened, the possibility of suffering indirect sanctions has proven to be a powerful catalyst for harmonizing national legislation with global standards in the prevention of money laundering and terrorism financing.
The deepening of the fight against and prevention of money laundering, terrorist financing, and proliferation financing at the international and local levels is here to stay and, moreover, to expand and deepen over time.
Due to the course of events mentioned in this article, the Argentine AML/CFT/AFT system has gone through different stages. From its stage of birth and growth to reaching these moments, which we could consider as a time to begin a sustained stage of system maturation that implies greater awareness and compliance on the part of obligated entities and other system actors, and more effective and efficient implementation of AML/CFT/AFT policies by the Argentine state, both in its preventive, accusatory, and repressive aspects.
The challenge from now on will be to achieve the effective maintenance and execution of the entire Argentine AML/CFT system in a more conscious, fluid, and gradual manner, without the need to reach the point where the system becomes outdated again over time and due to lack of continuous action, and, as a consequence, extraordinary measures have to be taken again in a short period of time for its update, in response to the urgency of modifying it due to another future evaluation.
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Article published on April 17, 2024 by Thomson Reuters in LA LEY (legal magazine). Written and translated by Miguel Cassagne (head of CASSAGNE Consultants - in AML/CFT policies).