Laundering extension: the reasons for the extension and how many more dollars will enter the financial system

In the end, the rumor that was around the city was confirmed: this Wednesday, the Government anticipated that will postpone by decree the deadlines for the famous money laundering, or Asset Regularization Regime. Thus, there is a deadline for the manifestation of adhesion to Stage 1 to be extended by one month, until October 31, 2024 inclusive. But why did the Ministry of Economy decide this and what effects does it expect to have with the extension. There are two key reasons: delays in implementation and the need to raise more dollars.

The first thing to say is that the Government, which had said it was not going to take this measure, finally did so after repeated requests from banks, accounting firms and professional associations. At the request of numerous banks and accounting firms and due to the great interest generated by the Asset Regularization Regime, the National Government will have by Decree, and in order to facilitate the administrative tasks of the actors involved,

“I saw it as essential in the face of so much regulatory chaos generated by the Government itselfadded to the accumulation of maturities in the last two months and the difficulties that banks generated for the deposit,” tax accountant Daniel Dubin tells Ámbito. He explains that “there were many doubts and regulations were added at the last minute, which made the analysis very difficult for professionals in the sector because it arrived just a few days before the expiration date.

Adaptation and lack of time to start whitewashing, a problem

In the same sense, he thinks the economist, expert in public spending and fiscal issues, Rafael Flores when he maintains that the extension “has to do with the back and forth that there were regarding operational issues“. For example, whether or not Gross Income was charged, which was not clear until recently.

Thus, as pointed out tax lawyer Daniel Lejtman“the deadlines had been very short since the regime was finalized until September 30.” Clarifications had appeared this Monday, September 23, so there were still doubts five days before the closing of the first stage. Thus, he says that “some bottlenecks occurred in recent days due to the delays that took time to add up, operational problems of the banks and the interpretation of the rules.”

TheseIt was also seen in banking entities, where a source says that “there have been many queues in recent days due to money laundering.”“People come with suitcases to declare their dollars and they come in a hurry, they ask us to count the bills quickly.” However, although this money laundering was launched in mid-August, this trend has only been seen about two weeks ago.

The problem in the banks, a bottleneck

“There were tragicomic situations, such as clients who They came this week with guards and bags full of pesos and asked for priority attention so you can count the money for hours. You have to think about $500 million, it can take hours to count, given that there are about 500,000 $1,000 bills, which is equivalent to 5,000 bundles,” they describe in a bank.

And they explain that, for example, “in a customer service desk with four cashiers, that makes at least two unusable.” In most cases, they also fall without prior notice, sometimes five minutes before the closing hours, which is at 3 p.m., and that is what complicates the closing of the treasury, causing many people to go home. , etc.

That’s why Fernando Quiroga Lafargue, Tax Partner at KPMGindicates that “It is reasonable that it has more time to assimilate, not only of those who are going to make the decision to regularize but also of banks, treasuries and other organizations that have a leading role in the process.” He points out that the initial launch of money laundering had come out very fair, in part, in order to speed up decisions, But, as the days went by, given that the level of adhesion took time to strengthen, he affirms that “the decision was to be expected.”

The need for dollars, the key reason for the extension

However, on the other hand, analysts observe that the decision to postpone the closure of the first stage of laundering also responds to the fact that the process “was not yielding the expected resultsin part, as a consequence of the lack of regulatory clarity,” according to Dubin.

It happens that Flores affirms that “the Government big bet that money laundering means a strong influx of dollars to the official circuit”, but confidence in this money laundering began to appear towards the closure of the program, it did not catch on at first. “So, taking into account that there is an income potential of US$1,000 million a day, they decided to extend it towards closure,” says economist Federico Glustein.

He explains that “The Government has to raise dollars for the debt obligations that are going to comery strengthen the reserves of the Central Bank (BCRA) and sees the opportunity for the private sector to finance this process at zero cost to be able to meet the payment of short-term sovereign maturities.”

Thus, as pointed out Sebastián Menesacaldi, Eco Go economist“the money laundering measure was successful in capturing assets and ensures an increase in the level of activity going forward, but, Given that many people did not dare to enter until very late in the process, the Government takes advantage of these new assets that are incorporated into the economy“.

The truth is that, as Lejman states, “the measure gives oxygen to those who still want to join the money laundering and the fact that it was done ex ante helps avoid the madness that would have been experienced between this Thursday and Monday, which was the scheduled date for the end of the first stage, September 30”.

How the expectation of dollar income changes with the extension of laundering

And, on the other hand, An extension of the deadline could guarantee the entry of more dollars. “I think it will allow us to consolidate the income of the US$40,000 million (between goods and cash) that the Government expects. With the extra time we seek to reverse the initial discouragement that occurred with its change of perspective a few weeks ago, where Almost US$1,000 million per day began to enter the accounts“says Glustein. Although he clarifies that it was not very important in terms of collection, but it was in terms of the income of dollars with deposits in the banks.

“If the pace is maintained (or even improves according to what they say about banks) “It is possible that we will be between US$9,000 and US$10,000 million of funds entering the Argentine financial system,” estimated from a well-known consulting firm in the city, prior to the extension of deadlines. That’s only in cash. And they described that the majority of launderings are less than US$1 million, so they calculated that the average deposits are small, in the range of US$100,000 and US$200,000.

However, some voices consider that This extension can help exceed that amount even. And there is a consensus among analysts that the fact that The first stage being successful is key to sustaining the level of the last few days and they point out that brokers and banks will give it a great boost to the extent that they convince their clients that this money laundering will be very beneficial for those who join.