IS ARGENTINA WASHING DIRTY MONEY ? / THE WALL STREET JOURNAL OP EDITORIAL ( HIGHLY RECOMMENDED READING )

THE AMERICAS

DECEMBER 6, 2010.

Is Argentina Washing Dirty Money?


WikiLeaked cable 1257 suggests that it is.

By MARY ANASTASIA O'GRADY

Need more evidence of the futility of the war on drugs? Look no further than a WikiLeaked cable from the U.S. Embassy in Argentina released last week. It turns out that for all the happy talk about international cooperation to combat money laundering, the embassy believes some politicians may not really be interested.


I refer to WikiLeaked cable 1257 from Buenos Aires, dated Dec. 1, 2009, and signed by Ambassador Vilma Martinez. This dispatch includes serious allegations that a key Argentine anti-money-laundering unit has been protecting the first couple from scrutiny and investigation in the area of dirty money.


This matters because combating money laundering on a global basis is supposed to be a crucial weapon in the war on drugs.


When the U.S. government first gave itself the job of halting recreational drug consumption, it went after users. But demand was strong and the prospect of locking up so many from every socioeconomic class was impractical. So it switched to a war on supply. This too has failed, as evidenced by the steady flow of drugs to American consumers that continues today, even while the drug warriors make spurious claims to "success" in, for example, Colombia.


Some admit privately that they are not winning their war, which, this year, will claim thousands of innocent Mexican lives. But they're not giving up. Plan C is a greater effort to stop drug-related money laundering.


For a peek at how that's going, I recommend cable 1257, presented by WikiLeaks as a report from the U.S. Embassy in Buenos Aires on the work of the Financial Action Task Force's "two week peer review" of Argentina's "anti money-laundering and counter terror-finance regime." (The Paris-based FAFT is an intergovernmental body with a mission to hunt down those who use the financial system to wash dirty money.) For the record, the State Department says it does not comment on classified documents and Argentina has called the WikiLeaked cables "nonsense" and refused to comment further.

The cable leads with a summary that states "the FATF operational team leader is skeptical of the [government's] intentions" to deal with these problems. "Some embassy contacts argue that the current [government] leadership, including the president, stands to lose from honest and vigorous pursuit of money laundering."

More worrying is where the embassy believes this could lead. "The near complete absence of enforcement coupled with a culture of impunity and corruption make Argentina ripe for exploitation by narco-traffickers and terrorist cells," the cable says. "For the most part, [embassy contacts] insist that terror financing is seldom, if ever transacted in Argentina. Most maintain, however, that narcotics-trafficking is becoming a real problem and that, increasingly, the dirty money sloshing through the financial system originates in the drug trade."


One notable opinion in the report allegedly comes from "Fabio Contini, the Italian national who heads the [FATF's] operational review team [and] has spent over a year in Argentina as the Economic and Financial attaché at the Italian embassy." Mr. Contini, the report claims, "has a sober view of the [government's money-laundering/counter-terrorism financing] efforts, which he deems little more than a fig-leaf." According to the cable, he maintains that Argentina's actions "are calculated for minimal compliance with international standards and evince little real enthusiasm for cleaning up the financial system."


Argentina is a poor country and the cable notes that the resources for policing the financial system are lacking. But the implication in much of what the embassy said it learned from its contacts is that the government might be more than simply an innocent bystander too weak to stop a crime.


"Numerous embassy contacts and press reports have fingered the [financial information unit or UIF] as the main agent" of those "failures," the cable says. What's wrong with the UIF? The embassy wrote that according to an adviser from the IMF, it is "an inept and politically compromised institution." That same official, according to the cable, told the embassy's economics office that the head of the UIF "is personally holding back [suspicious transaction reports or STRs] on the Kirchner circle and has refused to respond to requests for STRs on the Kirchners themselves from Switzerland, Lichtenstein and Luxembourg."


In closing, the embassy noted that "it is probably unrealistic to expect that [Argentina] will funnel resources to prosecutors or make a concerted effort to pursue money launderers. The Kirchners and their circle simply have too much to gain themselves from continued lax enforcement."


In the FATF's executive summary, released in October, Argentina earned "noncompliance" or "partial compliance" in almost all categories. Yet there is no direct reference to the lack of political will as the motivating factor. Instead "enhance[d] authority," more effort to address "technical shortcomings," updated laws and "adequate resources" are recommended.


Any realistic assessment of the war on drugs would have to conclude that this is a charade. One is also left to ponder how many other governments also practice Argentina's methods.


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