Countries/Jurisdictions of Primary Concern - Uruguay
Although the Government of Uruguay took affirmative steps in 2014 to counter money laundering and terrorism financing activities, and continues to make progress in enforcement, Uruguay remains vulnerable to these threats. Uruguay has a highly dollarized economy, with the U.S. dollar often used as a business currency; about 80 percent of deposits and 55 percent of credits are denominated in U.S. dollars. Officials from the Uruguayan police and judiciary assess that Colombian, Mexican, and Russian criminal organizations are operating in Uruguay. There is continued concern about transnational organized crime originating in Brazil. In 2013 and 2014, there were five high-profile cases related to the alleged laundering of funds from Peru, Argentina, and Spain.
To the extent known, laundered criminal proceeds derive primarily from foreign activities related to drug trafficking organizations. Drug dealers also participate in other illicit activities like car theft and human trafficking, and violent crime is increasing significantly. Publicized money laundering cases are primarily related to narcotics and/or involve the real estate sector. Public corruption does not seem to be a significant factor behind money laundering or terrorist financing. Uruguay has porous borders with Argentina and Brazil and, despite its small size, price differentials between Uruguay and neighboring countries support a market for smuggled goods. Bulk cash smuggling and trade-based money laundering occur.
Given the longstanding free mobility of capital in Uruguay, money is likely laundered via the formal financial sector (onshore or offshore). Six offshore banks operate in Uruguay, three of which cannot initiate new operations since they are in the process of being liquidated. Offshore banks are subject to the same laws, regulations, and controls as local banks, with the government requiring licenses through a formal process that includes a background investigation of the principals. Offshore trusts are not allowed. Bearer shares may not be used in banks and institutions under the authority of the central bank, and any share transactions must be authorized by the central bank.
There are 12 free trade zones (FTZs) located throughout the country: three accommodate a variety of tenants offering a wide range of services, including financial services; two were created exclusively for the development of the pulp industry; one is dedicated to science and technology; and the rest are devoted mainly to warehousing. Some of the warehouse-style FTZs and Montevideo’s free port and airports are used as transit points for containers of counterfeit goods (generally manufactured in China) or raw materials bound for Brazil and Paraguay.
For additional information focusing on terrorist financing, please refer to the Department of State’s Country Reports on Terrorism, which can be found at: //2009-2017.state.gov/j/ct/rls/crt/
Do FINANCIAL INSTITUTIONs engage in currency transactions related to international narcotics trafficking that include significant amounts of US currency; currency derived from illegal sales in the U.S.; or illegal drug sales that otherwise significantly affect the U.S.: YES
criminalizATION OF money laundering:
“All serious crimes” approach or “list” approach to predicate crimes: List approach
Are legal persons covered: criminally: NO civilly: YES
Know-your-customer (KYC) rules:
Enhanced due diligence procedures for PEPs: Foreign: YES Domestic: YES
KYC covered entities: Banks, currency exchange houses, stockbrokers, pension funds, insurance companies, casinos, art dealers, real estate and fiduciary companies, lawyers, accountants, and other persons who carry out financial transactions or manage commercial companies on behalf of third parties
Number of STRs received and time frame: 218: January – October 2014
Number of CTRs received and time frame: 7,700,000: January – October 2014
STR covered entities: Banks; currency exchange houses; stockbrokers and pension funds; insurance companies; businesses that perform safekeeping, courier, or asset transfer services; professional trust managers; investment advisory services; casinos; real estate brokers and intermediaries; notaries; auctioneers; dealers in antiques, fine art, and precious metals or stones; FTZ operators; and other persons who carry out financial transactions or administer corporations on behalf of third parties
money laundering criminal Prosecutions/convictions:
Prosecutions: 36: January - June 2014
Convictions: 1: January - June 2014
Records exchange mechanism:
With U.S.: MLAT: YES Other mechanism: YES
With other governments/jurisdictions: YES
Uruguay is a member of the Financial Action Task Force on Money Laundering in Latin America (GAFILAT), a FATF-style regional body. Its most recent mutual evaluation can be found at: http://www.gafilat.org/UserFiles/documentos/es/evaluaciones_mutuas/Uruguay_3era_Ronda_2009.pdf
Enforcement and implementation issues and comments:
Significant AML/CFT developments in 2014 include several programs being carried out with the assistance of international donors. One program seeks to enhance the effectiveness of Uruguay’s AML investigations, improve the local statistical system, and assess Uruguay’s compliance with international standards. Donors also are assisting Uruguay in updating its money laundering risk assessment, which will guide the AML strategy of the new presidential administration that will take office in March 2015. Another project is assisting the central bank to create a strategic analysis division within UIAF, the financial intelligence unit (FIU), and deepen its capability to assess risk within the financial sector.
A financial inclusion law, No. 19.210, passed in May 2014, provides for mandatory payment of wages, pensions, and specified transactions by electronic means, thereby diminishing money laundering risks by increasing economic formalization.
In 2014, Uruguay continued its strategy of increased transparency by eliminating bearer share corporations that fail to register the owners of their shares and announcing its intention to adhere to automatic exchange of tax information. Uruguay also continued strengthening the technical staff of the FIU and the AML Secretariat, both of which have the authority to require all obligated entities to provide requested information. In 2014, the Uruguayan Customs Authority created a working group on AML, and the government continued analyzing the inclusion of tax evasion as a predicate crime for money laundering.
Uruguay is in the process of improving its collection of statistics related to prosecutions, convictions, and amount of seized assets related exclusively to AML/CFT cases. Money laundering prosecutions can take several years, and most end with a conviction. The FIU did not freeze any assets in 2014. Uruguay is considering amending its legislation to allow asset seizure without a conviction.
Uruguay should amend its legislation to provide for criminal liability for legal persons. It also should continue improving its statistics related to money laundering, continue working with covered non-financial entities, and improve the management of seized assets and funds.