Enhanced Due Diligence Procedures in Paraguay: A Regulatory Overview

Introduction

Paraguay has implemented stringent enhanced due diligence procedures to prevent money laundering and terrorist financing in its financial sector. The country’s anti-money laundering (AML) regime is governed by the Secretaría de Prevención de Lavado de Dinero (SEPRELAD), which oversees the implementation of AML laws and regulations.

Key Requirements

Financial institutions are required to conduct enhanced due diligence on customers who engage in transactions above the USD10,000 threshold.
The regulator requires financial institutions to verify the identity of customers retroactively in certain circumstances.
Minimum transaction thresholds apply, with due diligence procedures not required on transactions below USD10,000.

Customer Identification Information

Financial institutions must collect customer identification information for both individuals and corporate entities. This includes:

Individual Customers

Birth date
Nationality
National ID number or passport number
Taxpayers Identification Number (RUC)
Marital status and spouse’s name (if applicable)
Home and business address
Telephone number
Profession
Occupation

Corporate Customers

Entity name
Activity
Business address
Telephone number
Shareholders list
Executives list
Commercial references
Entity constitutive documents

Beneficial Ownership

Financial institutions must collect additional information about beneficial ownership in certain circumstances, including:

When the customer informs the institution that the final beneficiary is another person or entity
When the financial institution has doubts about the final beneficiary
When the customer engages in commercial, financial or industrial transactions

Risk-Based Approach

Paraguay’s AML regime employs a risk-based approach to regulate financial institutions. This involves assessing and managing risks associated with money laundering and terrorist financing.

Automated Suspicious Transaction Monitoring

Financial institutions are required to use automated suspicious transaction monitoring technology to identify and report suspicious transactions.

Reporting Requirements

Financial institutions must report suspicious transactions, fund transfer operations to and from other countries, as well as physical remittance of money. There is a de minimis threshold below which transactions do not need to be reported.

Penalties for Non-Compliance

Non-compliance with reporting requirements can result in penalties, including fines and even criminal prosecution.

External Audits

Financial institutions are required to undergo external audits of their AML systems and controls on a yearly basis. The audit is performed by the external auditor to ensure compliance with the regulations and identify any weaknesses or areas for improvement.

Data Protection Laws

Paraguay has data protection laws in place to protect personal and sensitive data, however these do not extend to corporate entities.