BUENOS AIRES (Dow Jones)–Argentina’s government said Friday it will create a financial investigation office to curb money laundering, but the news may spur speculation that it is just another way of clamping down on the currency market.
Though the office will oversee financial transactions of many types, it appears to have a special focus on currency.
Working within the federal tax agency, Afip, the office will act to «prevent currency infractions, money laundering and the financing of terrorism,» according to a description in the government’s Official Bulletin.
It will track trading in the foreign-exchange market, as well as probe the trading of stocks, bonds and other assets, and all types of credit transactions.
The office will «oversee the exit and entrance of foreign currency» and will be able to get help from security forces to carry out its duties, the bulletin said.
It is unclear how the office will differ in purpose or activity from the Financial Information Unit, the Argentine financial crimes agency, known by its Spanish acronym UIF. A UIF spokeswoman said Friday she was unfamiliar with the new office, but added that it is common for various ministries and agencies to have their own financial investigation units.
The office’s creation comes days after the government cracked down on the foreign-exchange market, making it harder for individuals and companies to buy U.S. dollars. Since Monday, the government has required Afip’s approval to buy dollars.
Economy Minister Amado Boudou said the measures are aimed at curbing money laundering, but critics say the government simply wants to limit dollar sales at a time when investors are pulling money out of the country.
Locals and foreigners withdrew $9.8 billion from Argentina in the first half of 2011, according to one measure of capital flight tracked by the Central Bank of Argentina. Capital outflows are thought to have accelerated in the third quarter with the central bank selling $2.7 billion in reserves to defend the peso, which is down more than 6% against the dollar this year.
The peso is trading for about ARS4.25 on Argentina’s MAE wholesale foreign-exchange market, but demand appears to have surged for dollars in Argentina’s underground market, where the rate is closer to ARS4.7, according to local media.
Currency traders declined to comment for this article, but some are worried the office will somehow help the government to impede trading.
Some investors fear the government may allow the peso to weaken at an even faster pace against the dollar in the months ahead, and they are eager to get dollars now.
Even in good times, Argentines see the dollar as a safe-haven investment due to their country’s traumatic history of financial crises and devaluations, and both average Argentines and investors can get nervous whenever the government fiddles with the exchange rate or tries to limit the acquisition of foreign currencies.
Money laundering has been a criminal offense in Argentina since 2000, but related laws weren’t really enforced until 2010, UIF President Jose Sbattella said earlier this year.
Argentine officials say the government has been working to fully comply with international recommendations to fight money laundering and other financial crimes.
-By Taos Turner, Dow Jones Newswires; 5411-4103-6728; taos.turner@dowjones.com
Source: online.wsj.com/