* Argentina told to do more to tackle terrorist funding
* FATF gives country October deadline to make progress
* Argentina placed on list including Nigeria, Pakistan (Adds statement from banking association)
BUENOS AIRES, June 27 (Reuters) - Argentina has been put on a list of countries that are not doing enough to fight money laundering and terror financing despite passing a law to tighten its legislation earlier this month.
The Financial Action Task Force (FATF), an international organization of governments and regional groups, recognized Argentine efforts on Monday, but said it was "seriously concerned" about progress in cracking down on terrorist financing.
"Substantial progress to improve the criminalization of terrorist financing has not yet taken place" in Argentina, the task force said in a statement. "The FATF remains seriously concerned about the risks that such deficiencies may pose."
The FATF, which ranks countries that fail to comply with standards against money laundering and terrorism financing, said it would review the South American country's progress at its next meeting in October.
"The FATF expects Argentina to ... present to the FATF a draft law criminalizing terrorist financing in accordance with international standards," the statement said.
HIGHER PENALTIES UNDER NEW LAW
Under pressure to meet global standards, the Argentine Senate passed a law earlier this month to increase the penalties for money laundering and close loopholes in existing legislation. For details, see [ID:nN01177592]
Government officials have denied local newspaper reports this week that said Argentina, Latin America's No. 3 economy, had been sanctioned or added to a so-called "gray list."
Justice Minister Julio Alak said the FATF's recommendations "would be taken into account to keep improving the system," the state news agency Telam said on Sunday.
Further criticism of the country's progress on meeting the FATF's standards could be damaging to center-left President Cristina Fernandez as she prepares to run for a second four-year term in office in an Oct. 23 election.
Other countries on the list being reviewed by the FATF for compliance include Nigeria, Pakistan, Indonesia, Angola, Bangladesh, Ecuador, Honduras and Nicaragua.
Financial analysts say being included on the list could complicate the overseas operations of Argentine banks because their transactions would face closer scrutiny by foreign regulators. For details, see [ID:nN14146674]
Argentina's ABA banking association said it "supported and welcomed" congressional efforts to make progress on the issue.
"Besides working to be once again considered favorably by the FATF in October, government officials should also work to ensure the FATF understands our country's problematic (situation) -- which is similar to other developing countries -- with regards to the informal economy when seeking to implement international standards," ABA President Claudio Cesario said. (Reporting by Luis Andres Henao and Guido Nejamkis; Editing by Helen Popper and Jan Paschal) (firstname.lastname@example.org; +54 11 4318 0655; Reuters Messaging: email@example.com))