Published: February 24 2011 19:42 | Last updated: February 24 2011 19:42

http://www.ft.com/cms/s/0/817b7bd4-4045-11e0-9140-00144feabdc0.html#axzz1EvI459Ej

Argentina’s efforts to sharpen up its fight against money laundering and terrorist financing “seem to be going in the right direction”, according to the global body monitoring the issue.

But the Financial Action Task Force, a 36-nation group, said it would still check on the country’s progress at its next meeting in June. The group had been mulling putting Argentina on a so-called “grey list” of countries failing to combat the problem effectively after finding last year that it failed to comply with 47 of its 49 recommendations, but rowed back from the threat at a meeting this week in Paris.

Though the verdict still contained a caveat, it was greeted with delight in Argentina. Julio Alak, the justice minister who travelled to Paris for the meeting as a show of the government’s political will, said a slew of new rules and measures introduced recently to beef up the fight against money laundering and terrorist financing proved the country’s “strong commitment to this issue”.

The consequences for Argentina of being put on the grey list could have been disastrous as it seeks to rebuild its international reputation a decade after the world’s worst sovereign default. But Luis Urrutia, FATF president, said: “Argentina seems to be going in the right direction and the countries present here offer support and collaboration.”

Things could hardly have gone better for Argentina, which “started out under a cloud and ended up on the beach”, said Carlos González, a lawyer at Diaz Reus & Targ in Miami and anti-money laundering expert. But he faulted the FATF for being too soft on a country it last year had found major faults with.

He said time would tell if Argentina’s stricter controls bore fruit. But what also had to flourish, he said, was a culture – from government down to the person in the street – of fighting the problem. Argentina has a high cash economy, a tradition of capital flight in times of political turmoil and a history of tax evasion, making the fight against money laundering hard to inculcate.

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