Argentina’s government is implementing new deregulatory measures that will enable individuals to utilize US dollars held outside the banking system without the need to disclose the source of the funds — a form of ‘sub-blanqueo’ whitewash designed to enhance liquidity, supported by a low exchange rate that necessitates a continuous oversupply of foreign currency. In the absence of foreign financing, Economy Minister Luis Caputo has urged for savings to be extracted from concealment. However, this prompts inquiries regarding the leniency of the La Libertad Avanza administration towards funds acquired through illicit channels, alongside concerns about the resilience of the system itself.
In a recent interview, Caputo emphasized the concept of remonetisation, highlighting the notion that dollars ought to be reinvested into Argentina’s economy, particularly in the context of currency competition. Purchasing houses, cars, domestic appliances, landline or mobile phones, “whatever,” as Caputo stated in an interview. For the government, it would not matter whether the money a family or business uses to buy goods comes from an inheritance, was saved up from formal employment and bought on the parallel “blue” market, acquired through official channels, or is the product of money-laundering. “I don’t buy the story that people don’t spend their dollars.” “The truth is, they don’t because they get their balls broken,” Caputo said on Monday, adding: “For this to be a normal country, nobody should be asking you to explain how you spend your money,” in remarks made on the Tiempo Libre streaming show.
Since March, Argentines have had the ability to make direct payments in dollars using a debit card, contingent upon having the funds already deposited in a savings account — that is, within the system. However, the government is currently focused on the estimated US$271.247 billion that is held outside the formal economy, as reported by Argentina’s INDEC national statistics bureau, at the end of 2024. Another striking figure is the estimated US$4.4 billion that analysts believe has been extracted from the more than US$18 billion legalized through last year’s Régimen de Regularización de Activos (“Asset Regularisation Scheme”) blanqueo, which allowed individuals to bring up to US$100,000 into the system entirely tax-free.
“What the government is seeking is an increase in dollar deposits through a kind of permanent ‘blanqueo’ [tax whitewash]. It conveys a concerning implication, as it begins with the premise that all dollars originate from a foundation linked to tax evasion, and it implies that this is less severe than if the funds were derived from activities such as drug trafficking, terrorism, and so forth,” economist Jorge Carrera told Perfil. “It’s a rather precarious situation. “It also feels like a kind of desperation to capture those dollars one way or another,” he added.
Economist Juan Valerdi concurred, cautioning that President Javier Milei’s administration “needs liquidity in the economy, but if it prints money, it fears people will run for the dollar rather than boost economic activity.” The strategy involves executing deregulation through the Central Bank, the ARCA (formerly AFIP) tax authority, and the financial and banking sectors. “If international organisations turned a blind eye to the [last whitewash] amnesty, which was lax and dangerous, they’re unlikely to raise hell over something that involves relatively small volumes of money buried beneath the surface of the economy,” said Valerdi, who specialises in tracking offshore accounts and their links to domestic front men.
A former official from the UIF (Unidad de Información Financiera) money-laundering watchdog, speaking on the condition of anonymity, told this outlet that the measure “could encourage the arrival of all sorts of capital, which doesn’t have to be declared personally, because people can use frontmen whose money could come from anywhere.” They added: “We’re also under enhanced monitoring by the FATF [Financial Action Task Force money-laundering watchdog], which does not allow controls on the origin of funds to be lifted.” Perfil also consulted tax law experts, who noted that any deregulatory push would be complicated by existing legislation. Individuals who neglect to declare the origin of their funds during transactions continue to be subject to three laws that impose significant tax penalties. Any alterations would necessitate the endorsement of Congress.
According to Law 11.683, Article 18, subsection F, it is stipulated that “unjustified increases in wealth greater than 10 percent (10%) in income used or consumed through non-deductible expenses shall be considered net income in the year in which they are incurred, for income tax purposes.” This indicates that an undeclared transaction would incur a tax rate of 10 percent, in addition to being liable for 35 percent in income tax and 21 percent in IVA value-added taxation. The same law, in Article 46, stipulates that “any person who through false declarations or malicious concealment harms the Treasury by filing inaccurate tax returns shall be fined between TWO (2) and TEN (10) times the amount of the tax evaded.” Additionally, the Criminal Tax Law (27.430) and the Anti-Money Laundering Law (25.246) are relevant.