HomeNewsBriefArgentina Ex-JP Morgan Executive Describes Money Laundering Scheme
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Argentina Ex-JP Morgan Executive Describes Money Laundering Scheme

ARGENTINA / 15 JUL 2013 BY ELYSSA PACHICO EN

A former JP Morgan executive testified on how he helped wealthy Argentine clients evade billions of dollars worth of taxes, in a case that raises questions over the extent to which Argentine financial and banking authorities have turned a blind eye to money laundering.

Hernan Arbizu —  a private banker who has confessed to stealing millions from his clients — provided eight hours of testimony before an Argentine court on July 11, as newspaper Tiempo Argentino reports.

Arbizu said that he helped Argentine clients move billions of dollars into offshore accounts, in order to evade paying taxes. Among those implicated are accounts belonging to energy company Petrobras Argentina, media conglomerate Grupo Clarin, and the country’s largest distributor of electricity, Edenor, among others. 

“It’s a fraud that hurts all of Argentine society,” he told media before testifying. “I helped the major economic groups launder money.”

During his testimony, he described how he helped clients move funds to offshore accounts, using little-known legal loopholes. He stated that Argentina has some $70 billion worth of funds outside of the country, as part of the massive tax evasion scheme. 

InSight Crime Analysis

Arbizu, who has been under investigation since 2008 and has been indicted for banking fraud in the US, has his own reasons for speaking so freely about the extent of Argentina’s tax evasion schemes. By fully cooperating with Argentine authorities in investigating suspicious banking activities, he is making himself so vital to investigators that there is less incentive to extradite him to the US. 

Meanwhile, Argentine authorities are under pressure — both at home and abroad — to show progress in the fight against money laundering, making Arbizu’s willingness to testify all the more important. Inter-governmental body the Financial Action Task Force has asserted that Argentina is only partially compliant in properly fighting money laundering, while the country’s main financial investigations unit has been accused of failing to fully investigate cases.

As Arbizu continues to detail the extent of his illicit activites while at JP Morgan, more questions will likely emerge over the extent to which private banks allow Argentina’s wealthiest to hide their assets. The national financial investigations unit has already announced plans to formally accuse JP Morgan of money laundering.

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