Paraguay’s Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) Measures: Key Findings and Recommendations

Gaps in AML/CFT Framework

• Low awareness of money laundering/terrorist financing risks in both public and private sectors
• Major transit point for narcotics trafficking, smuggling, and counterfeit goods destined for other South American countries, facilitating money laundering

Challenges in Combating Money Laundering

• Limited convictions for money laundering (15 since 1997)
• Corruption at all levels in the public sector hinders combating money laundering and predicate offenses
• Allegations of proceeds from various forms of offenses being diverted to finance terrorist activities in the Middle East

UAF’s Inadequate Legal Framework and Governance Structure

• Unit for Anti-Money Laundering (UAF) lacks sufficient resources and has an inadequate legal framework, hindering operational independence
• Regime of preventive measures imposed on financial institutions is weak, with deficiencies in areas such as customer due diligence, reporting of suspicious transactions, wire transfers, internal control systems, regulation, supervision, training, and resources

Money Laundering Offense Not Aligned with International Conventions

• Paraguay’s money laundering offense under Article 196 of the Criminal Code does not align with the UN Vienna Convention and the Palermo Convention
• Limited clarity on prior conviction requirement presents an additional obstacle to effective prosecution of money laundering offenses

Recommendations for Improvement

Paraguay needs to address these gaps and challenges in its AML/CFT measures to better prevent and combat money laundering and terrorist financing.