Reform of the law on the Prevention of Money Laundering and Financing of Terrorism in the Argentine Republic

22 Apr, 2024 | Noticias-en, Opinions

Law 27,739 sanctioned by the Congress of the Argentine Republic has come into force, which introduces important modifications in the current legislation on the prevention and repression of Money Laundering (ML), Financing of Terrorism (FT) and Financing of the Proliferation of Weapons. Mass Destruction (FP).

These reforms, motivated by Argentina’s Fourth Mutual Evaluation Round, are aligned with international standards established by the Financial Action Task Force (FATF) and are based on the risks identified in the corresponding national evaluations.

Some of the main points on which the modification deals are:

1.- Risk-Based Approach : The new legislation also establishes the application of a Risk-Based Approach for all regulations related to Regulated Entities. This means that preventive and control measures will be adapted according to the level of risk of each entity or activity, allowing greater effectiveness in preventing money laundering.

2.- Expansion of the list of Obligated Subjects . New actors have been included such as issuers, operators and collection and payment service providers, non-financial credit providers and virtual asset service providers. In addition, a section is added on non-profit organizations, which, although they are no longer obliged to the FIU, must undergo a risk analysis to avoid the financing of terrorism. This implies establishing proportional measures to mitigate the identified risks.

Also highlighted are the categories of lawyers, who will be obligated subjects when they operate on behalf and by order of a third party in: a- purchase and sale of real estate; b- administration of goods and assets; c- management of bank, savings and securities accounts, d- organization of contributions for legal entities; e- creation, management and commercial transactions of legal entities. Public accountants and public notaries remain on the list of previously established subjects.

3.- Registration of final beneficiaries . The reform creates the Public Registry of Final Beneficiaries under the jurisdiction of the AFIP. This centralized registry will collect complete and up-to-date information on the country’s beneficial owners, providing a crucial tool to combat financial opacity and improve transparency in economic activities. In addition, the regulations introduce key definitions, such as “final beneficiary,” and expand the criminal types related to money laundering, covering environmental crimes and financing of weapons of mass destruction. Different levels of access to information are also established for public and private entities, eliminating fiscal secrecy in relation to registry data. These measures, together with the inclusion of independent professionals in the obligation to report suspicious transactions, strengthen the legal framework and promote financial integrity in Argentina.

4.- Registry of Virtual Asset Service Providers : A registry of Virtual Asset Service Providers (PSAV) is created by the National Securities Commission (CNV), with clear definitions on virtual assets and suspicious operations.

5.- New Crimes : Argentina has integrated the crime of Financing the Proliferation of Weapons of Mass Destruction into its Penal Code. This measure is added to the regulations of the Financial Information Unit and obliges Obligated Subjects to include it in their prevention programs. In addition, the scope of article 306 has been expanded, including “property or other assets” in the crime of financing terrorism.

6.- Modification of the crime of money laundering . Article 303 of the Penal Code has undergone significant changes, with the threshold of punishment being raised to 150 minimum vital and mobile salaries (no longer a fixed amount of $300,000), also incorporating the verb “acquire” as a typical action. In addition, the prison sentence in the attenuated criminal type has been replaced by a financial fine. On the other hand, article 41 quinquies has been modified to include terrorism crimes in accordance with international conventions ratified by the country. These modifications impact the measurement of punishment, integrating crimes such as financing the proliferation of weapons of mass destruction. Despite these changes, fortunately article 305 maintains its effectiveness, allowing the definitive confiscation of assets in cases of money laundering, even in situations of extinction due to prescription.

7.- Updated Sanctions : The list of sanctions to be applied by the FIU to Obligated Subjects in case of regulatory non-compliance is updated, along with adjustments to the level of penalties. The legislation now reflects recent provisions of the FIU, allowing corrective actions prior to the opening of administrative proceedings for detected irregularities. In addition, the amounts of possible fines have been increased and the option of disqualifying the Compliance Officer as a sanction has been introduced.

8.- Expansion of Powers of the FIU : Its powers are expanded to strengthen the fight against ML/TF. Now, the subjects reached will not be able to oppose banking or professional secrecy in certain cases. A risk-based internal control system will be implemented and a registry of Independent External Reviewers will be established. In addition, key information will be provided through guides and seminars to improve the detection and reporting of suspicious operations. The supervision procedures may conclude in corrective actions or administrative summaries depending on the severity of the deficiencies detected.

9.- Parliamentary Control: A new control is implemented through the Bicameral Commission for Oversight and Intelligence Activities Agencies, establishing the obligation for the FIU to appear before this commission, providing reports, opinions and advice as required.

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By Diego García Austt, lawyer specializing in Economic Crimes | Compliance Latam collaborator.


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