Countries/Jurisdictions of Primary Concern - Uruguay

Bureau of International Narcotics and Law Enforcement Affairs
Report

Although the Government of Uruguay took affirmative steps 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 75 percent of deposits and 50 percent of credits are denominated in U.S. dollars. Officials from the Uruguayan police and judiciary assess that Colombian criminal organizations are operating in Uruguay and Mexican criminal organizations are also likely present. There is continued concern about transnational organized crime originating in Brazil. In 2013, there were four high-profile cases related to the alleged laundering of funds from 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. 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 likely occur, and there is no indication of ties to terrorism financing.

Given the longstanding free mobility of capital in Uruguay, the informal financial sector is practically non-existent. 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 13 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 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: http://www.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.: NO

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 non-banking professionals that carry out financial transactions or manage commercial companies on behalf of third parties

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 218: January – October 2013

Number of CTRs received and time frame: 7.6 million: January – October 2013

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 transactions or administer corporations on behalf of third parties

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: 40: January – July 2013

Convictions: 2: January – July 2013

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 South America (GAFISUD), a FATF-style regional body. Its most recent mutual evaluation can be found at: http://www.gafisud.info/pdf/InformeEMUruguay09.pdf

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

Uruguay continued making AML/CFT progress in 2013. Main developments include moving forward with implementing the 2012-2015 National Strategy against money laundering by compiling all AML/CFT laws and regulations into a single compendium and signing two tax information exchange agreements. In 2013, Uruguay increased the technical staff of the AML Secretariat and granted the body the authority to require all obligated entities to provide requested information. The judiciary created a working group to coordinate actions among judges, prosecutors, and the AML Secretariat, and the government continued analyzing the inclusion of tax evasion as a predicate crime for money laundering.

Although securities intermediaries and wire transferors/remitters are required to file STRs, over 96 percent of reports are still submitted by the financial sector. In 2012, the FIU designed a set of early warning indicators to use its comprehensive database more effectively.

Uruguay does not maintain annual public records on prosecutions, convictions, or amount of seized assets related exclusively to AML/CFT cases. In 2013, Uruguay participated in its first asset sharing case and the number of AML prosecutions increased. Money laundering prosecutions can take several years, and most end with a conviction. From 2005 until mid-2013, 283 individuals were prosecuted for laundering money. In the first half of 2013, 40 individuals were prosecuted compared with 47 individuals prosecuted in 2012. Most of the prosecutions were connected to human trafficking as a predicate crime.

In the first half of 2013, Uruguay seized approximately $77,000 worth of vehicles and auctioned off $67,000 worth of vehicles seized in previous years. Since 2007, the FIU froze funds on six occasions for a total of $1.7 million; the FIU did not freeze any assets in 2013.

Uruguay should amend its legislation to provide for criminal liability for legal persons. It also should continue improving its statistics related to money laundering and should work with non-financial obligated entities, such as notaries or real estate brokers, to improve suspicious transaction reporting.