HomeNewsBriefUruguay Anti-Money Laundering Chief Targets Churches and NGOs
BRIEF

Uruguay Anti-Money Laundering Chief Targets Churches and NGOs

MONEY LAUNDERING / 28 MAR 2014 BY MICHAEL LOHMULLER EN

Uruguay’s anti-money laundering chief has called for greater oversight of religious groups and non-governmental organizations, fearing organized crime to take advantage of current lax regulations.

During an anti-corruption conference on March 25, Carlos Diaz, director of Uruguay’s Anti-Money Laundering Secretariat, emphasized the necessity to revise financial controls over the country’s more than 15,000 social organizations — including sports clubs, political parties, and churches — saying they should be subject to the same oversight as institutions such as real estate or auctioneers, reported El Pais.

Diaz said the emergence of “a new world” of money laundering has led to a need for the adoption of fresh measures, citing concerns over the presence of groups like the Italian mafias the Cosa Nostra and ‘Ndrangheta in the area and saying Uruguay needs to avoid religious institutions — which are tax exempt — being converted into financers of “terrorist acts.”

According to El Espectador, Diaz said that despite Uruguay not being a large drug market, it still faced a threat from organized crime because of the money laundering possibilities its financial system presents. Diaz mentioned two past examples of a Sinaloa Cartel operative and the family member of a Colombian president attempting to launder money through the country.

InSight Crime Analysis

This is not the first time calls have arisen for increased oversight of Uruguay’s non-governmental organizations (NGOs), with an anti-money laundering plan adopted in 2012 including a provision for more stringent controls.

According to a US State Department report, Uruguay’s highly dollarized economy — with the US dollar often used as a business currency — makes it vulnerable to money laundering. The report cites transnational organized crime, especially that originating in Brazil, to be of concern.

SEE ALSO: Coverage of Money Laundering

Uruguay has a zero-tax policy for foreigners, which attracts a host of international bodies and NGOs to bank in the country. Over the past two decades, Uruguay’s banking sector has also been bolstered by the rollercoaster economy of neighbor Argentina, with Argentines pulling money out of their homeland during times of economic distress and investing it in Uruguay, among other countries.

The combination of zero tax, lax oversight and a strong banking sector with safe investor prospects is extremely attractive to organized criminal elements looking to launder illicit funds. 

Argentina is also another prominent venue for money laundering, with tensions breaking out between the two neighbors in September 2013 over apparent hurdles encountered by Uruguayan investigators of a money laundering case that stretched between the two nations. 

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