Argentina’s AML System in Crisis as Government Strips Key Safeguards, Ignites Global Concern

In a move that has reverberated across the international compliance landscape, Argentina has begun dismantling the foundational pillars of its anti-money laundering (AML) system, raising alarms over the country's vulnerability to financial crime. The government's sweeping deregulation, including the removal of suspicious transaction report (STR) obligations and a sharp increase in the threshold for disclosing the origin of funds to USD 100,000, is being viewed as a direct affront to the Financial Action Task Force’s (FATF) longstanding AML/CFT guidelines.

Argentina’s AML architecture is now under siege, as recent decisions signal a departure from global norms just months after the FATF and GAFILAT released the Mutual Evaluation Report on December 18, 2024. That report warned that “there are some important shortcomings in both ML and TF risk understanding, including the lack of in-depth understanding of ML risks stemming from informality and corruption.” Although Argentina had shown incremental progress over the past decade, the FATF still identified glaring deficiencies in its capabilities to prevent money laundering and terrorist financing. The watchdog urged Argentina to adopt a risk-based approach to financial oversight, enhance STR requirements, and strengthen its sanctions framework.

Yet, rather than bolstering these controls, the Milei administration has taken steps that appear to unravel them. On May 22, 2025, the government led by President Javier Milei, alongside Economy Minister Luis Caputo and Central Bank President Santiago Bausili, issued Decree 351/2025. The measure raises the reporting threshold for fund origins to USD 100,000 and eliminates STR filing obligations for transactions involving high-value credit card purchases, real estate deals, vehicle sales, notarial activities, and banking operations. Officials argue that the move is meant to encourage endogenous dollarization, but critics say it blatantly ignores the advice of major international bodies tasked with monitoring financial flows linked to crime.

These changes strike at the heart of the mechanisms designed to combat financial crime. By erasing STR requirements and weakening monitoring protocols, Argentina opens the door to increased money laundering through channels often used by traffickers, tax evaders, corrupt officials, and human traffickers. The FATF has previously stated that “the low or inexistent STR reporting from high-risk sectors (real estate, securities, VASPs and lawyers), significant quality issues in STRs … are significant gaps.” With these latest deregulations, the country effectively strips its Financial Intelligence Unit (FIU) of its most essential tool for developing leads—financial transaction data that today accounts for half of the federal financial crimes investigations initiated by PROCELAC, the specialized anti-money laundering prosecutor’s office.

Without compulsory STRs, Argentina’s law enforcement agencies will be left blind to red flags in key sectors long targeted by organized crime. Real estate deals, luxury vehicle purchases, and large cash deposits have consistently served as favored methods for integrating illicit funds. By undermining these protections, Argentina directly violates FATF Recommendation 20, which mandates that financial institutions and designated non-financial businesses and professions (DNFBPs) must report suspicious transactions without delay.

Decree 351/2025 effectively rewrites Law 25 246, the cornerstone of Argentina’s anti-money laundering legal framework established in 2000 and amended in 2013. This law previously required customer due diligence (CDD) and meticulous record-keeping by obligated institutions. However, the new regulations exempt significant transaction categories from scrutiny, thereby hollowing out the legal regime's integrity.

Traditionally, the Central Bank of Argentina (BCRA) and the Federal Administration of Public Revenues (AFIP) have provided oversight over financial institutions, DNFBPs, and brokers under a risk-based model. FATF had recommended that Argentina “strengthen the implementation of its risk-based anti-money laundering and counter-terrorist financing supervision by … allocating additional resources to FIU registration and supervision teams; implementing prompt and effective risk-based supervision of value-added service providers and lawyers; implementing effective, dissuasive and proportionate sanctions; and developing and delivering country- and sector-specific guidelines.” These suggestions are now being disregarded entirely as the government rolls back its capacity to monitor transactions.

The danger is not confined within national borders. Argentina’s long-standing challenges—including porous borders and an enormous informal economy comprising around one-third of its GDP—make it especially vulnerable. Criminals often exploit regional loopholes in areas like the Tri-Border Area shared with Brazil and Paraguay to funnel illicit proceeds. The FATF has warned that Argentina must “develop risk-based policies and action plans to suppress or formalize informal money service providers and prevent their potential abuse for money laundering and terrorist financing.”

This reversal in regulatory posture has not gone unnoticed internationally. Global financial institutions are likely to respond with enhanced due diligence procedures for Argentine clients and counterparties. This would increase transaction costs, tighten compliance requirements, and possibly curtail correspondent banking relationships. As the World Bank has cautioned, such “de-risking” trends may drive financial activity underground, further marginalizing Argentina’s legitimate financial sector and deepening economic exclusion.

The Milei administration's policy, aimed at encouraging the return of offshore US dollars held by Argentine citizens, is centered around economic self-determination and endogenous dollarization. However, the FATF framework prioritizes robust, targeted financial intelligence and enforcement against high-risk entities and behaviors. By misaligning its policy priorities with international standards, Argentina risks being placed on the FATF’s grey list—or worse. The grey list is reserved for countries subject to enhanced monitoring due to strategic deficiencies in their AML/CFT regimes. Inclusion on this list would hurt Argentina’s international reputation, dissuade foreign direct investment, and raise borrowing costs on the international market.

To avoid this outcome, Argentina must act decisively. That means reinstating STR obligations, restoring transaction monitoring, and investing in the quality and enforcement capacity of its AML regime. Effective financial crime prevention relies on actionable intelligence, sector-specific oversight, and international cooperation. As it stands, Argentina’s deviation from FATF standards is not only a domestic threat—it poses a systemic risk with far-reaching global implications.

By fLEXI tEAM