Argentinian Money Regulator Mandates Reporting on Bitcoin Activity

Argentina's Financial Information Unit (FIU) cites the risk of money laundering as it mandates bitcoin reporting by financial companies.

AccessTimeIconJul 10, 2014 at 10:10 p.m. UTC
Updated Sep 11, 2021 at 10:58 a.m. UTC

Argentina's Unidad de Información Financiera (UIF) has ordered financial services companies within the country to report all transactions involving digital currency.

The UIF document, which outlines amendments to previous regulations, cites the threat of money laundering and criminal financing. It suggests that the UIF will act as a conduit for information enabling greater oversight of bitcoin and other "virtual coins". The UIF is Argentina's chief anti-money laundering agency.

The announcement, dated 4th July, comes more than a month after Argentina's central bank issued a warning to businesses seeking to use digital currencies. In that release, the BCRA cautioned that "there is no consensus on the nature of these assets". Other financial regulators in Latin America have adopted similar stances.

A translation of the UIF resolution reads:

"Virtual currencies are often traded remotely online. The movement of assets, and that entities from different countries can participate in the same jurisdictions that do not have controls to prevent money laundering and financing of terrorism, make it difficult for regulated entities to detect suspicious transactions."

Financial institutions in Argentina are required to file monthly digital currency reports with the UIF. The purpose, the agency said, is to prevent criminal funds from moving outside of the country's regulatory framework.

Digital currency vs electric money

As outlined in the document, the UIF draws a distinction between digital currency and electric money. The latter, the document reads, is meant to represent fiat currencies in an online format whereas bitcoin and other digital currencies fall outside of that definition.

Whereas electric monies are considered well-regulated, Argentina's money regulators suggest that digital currencies risk promoting financial fraud or criminal funding. The amendments serve to push companies in the Argentine financial system to track and catalog transactions made using digital currencies.

"The regulated entities...must pay particular attention to the risk involving transactions with virtual currencies and establish enhanced monitoring on these operations."

The rules take effect in August, according to the document.

Sign of regulatory tightening

At least one member of Argentina's bitcoin communiy sees the UIF action as bad sign for bitcoin.

Carlos Guberman, a researcher at the Universidad Argentina de la Empresa who specializes in digital currencies, told CoinDesk that the move reflects the continued restrictive nature of national money regulators in regards to digital currency.

He said:

"I think the decision of Argentinean authorities regarding virtual currency reports as suspicious of money laundering are a bad thing. It is somehow weird that at the very same time that there is in place a law for exteriorizing dollar holding of Argentinians, the UIF comes out with a measure like this that is clearly penalizing virtual currencies."

Guberman added that he believes many bitcoin transactions currently take place in dark pools and off-the-grid markets. As a result, he doesn't foresee these regulations having an impact on those activities in the near future.

Tough environment for bitcoin

The UIF oversight order is yet another development from a Latin American financial or monetary regulator that cites the threat of money laundering, criminal activity and terrorist financing in relation to digital currency.

In June, Bolivia's central bank, El Banco Central de Bolivia, announced that it was instituting a ban on bitcoin. At the time, it cited risks to investors and consumers when it deemed the use of the digital currency illegal.

Colombia's central bank said in April that bitcoin is not a legal currency, adding that it was conducting research into the kinds of dangers cited by the UIF and other government agencies around the globe. However, Colombia has stopped short of declaring bitcoin illegal.

Despite these regulatory challenges, bitcoin businesses in Latin America continue to grow and develop.

Earlier this month, Uruguay-headquartered bitcoin startup Moneero opened its debut wallet service to beta testers after operating under the radar. As well, the region's first Ripple gateway opened in June, bringing the payment network to seven local markets including Argentina, Brazil, Chile and Mexico.

Tanaya Macheel contributed reporting

Image via Shutterstock


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