Wednesday, June 29, 2011

Argentina: Argentina Receives Harsh Censure from Financial Action Task Force (FATF) after Failing to Achieve Progress in Anti-Corruption Efforts

SOURCE American Task Force Argentina

The Financial Action Task Force (FATF) has announced that Argentina will be placed on its notorious, official "Grey List" of nations that have failed to comply with international efforts to stem money laundering and financing of terrorism. The FATF was established by the G-7 nations in 1989 and remains the leading international institution combating corruption in global markets. This decision by the FATF is a stiff rebuke to Argentina, which over the course of an extended evaluative process was deemed to have failed to comply with 47 of 49 FATF security criteria. Argentina is the first G-20 nation to be placed on the Grey List since the FATF's founding. Several member governments – including the U.S. – argued that Argentina should receive the most severe sanction for its recalcitrance and be placed on the "Black List" along with Iran and North Korea.

"The expected decision by the FATF to put Argentina on the 'Grey List' shows a new resolve by the international community and the U.S. government to get tough with Argentina," said Robert Raben, Executive Director of American Task Force Argentina. "Many nations are no longer willing to give Argentina a pass for egregious behavior that is simply unbefitting a G-20 partner. Its defiant disregard for foreign investors, disdain for the U.S. judicial system, unwillingness to clean up criminality in its financial sector and refusal to stop activity that may lead it to become a center of terrorist finance activity, and now its membership on the 'Grey List,' all threaten to establish it as an outlaw nation."

"We know from experience that without intense pressure and scrutiny from the international community, Argentina will continue to act irresponsibly. After years of promising that it would clean up its judicial system and enforce the rule of law, the FATF censure demonstrates that Argentina's claims of reform are little more than platitudes," said Raben. "ATFA has repeatedly warned that money laundering continues to be rife in Argentina and that the country poses a serious risk of becoming a hub for the financing of narco-trafficking and terrorism in the Western Hemisphere, threatening the security of the United States and the international community. Unfortunately, these warnings were validated today."

In October, FATF issued a mutual evaluation highly critical of Argentina's anti-money laundering and terrorist financing systems -- the most damning evaluation of a member country since the FATF was established in 1989. In November, the FATF issued an interim assessment, indicating that Argentina remained dangerously short of implementing systemic reforms. In December, an international delegation of inspectors visited Argentina to conduct an extensive cross-agency review.

"Argentina demonstrated the same lack of seriousness in negotiations this year with the Paris Club," said Raben. "After public avowals that it would satisfy its $9 billion in debts to the Club, Argentina refused to honestly broker an agreement, first refusing to submit to a required IMF review, then demanding a protracted payment period and finally bringing the process to a grinding halt. To be taken seriously as a country, Argentina must function within the established norms of international finance. Empty promises, window dressing reforms and haphazard responses are simply unacceptable."