Kenneth Rijock

Kenneth Rijock

Tuesday, November 1, 2011

WILL NEW ARGENTINIAN REGS ATTRACT MONEY LAUNDERERS ?

In an effort to stem both tax evasion as well as capital flight, presently estimated at $3bn a month, the Government of Argentina this week instituted a particularly effective regulation. Argentine nationals seeking to convert their Argentinian Pesos to US Dollars, or any other foreign currency, must first pass muster with AFIP, the national tax agency.

This means that a person's national identification number, and tax number, must be fed into the AFIP database* for approval; the amount requested to be exchanged for foreign currency must match his or her declared income and wealth. otherwise, approval is declined. In a country where rampant tax evasion is the national sport, most enquiries will not be approved.

What is a problem for legitimate traders and international businessmen unfortunately has an easy solution; money launderers for narcotics trafficking organisations have large amounts of dollars, which they want to quietly convert to pesos, as a necessary precondition to investing the money in the legitimate Argentine economy. The dollars, which are earned in the US, have been bulk cash smuggled into South America. Match up the businessmen with the laundrymen, and you have the perfect storm for the money launderer.

Remember well that, in the dark profession of  money laundering, you are only limited by your imagination. What the Argentine Government has implemented as a tax evasion/capital flight solution presents itself as a target of opportunity for the money launderer working for narcotics kingpins interesting in making large placement of laundered funds in Argentina. Let's hope Argentine law enforcement can catch them in the act.

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*https://auth.afip.gov.ar/contribuyente/?action=SYSTEM&system=coc_contribuyente  

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