Regulatory Updates on Financial Crimes in Paraguay: Banco Itaú Fined Record $9.64 Million

A Historic Move Against Money Laundering Violations

In a landmark decision, Paraguay’s Central Bank of Paraguay (BCP) has imposed a record fine of $9.64 million on Brazilian bank Banco Itaú for violating anti-money laundering regulations in August 2020.

Background: Failure to Report Suspicious Transactions

According to Ultima Hora, the largest fine related to money laundering in Paraguayan history was levied due to Banco Itaú’s failure to report suspicious transactions to the Secretariat for the Prevention of Money or Property Laundering (SEPRELED), thereby violating Article 19 of Paraguay’s Law No. 1015 concerning money laundering.

Response from Banco Itaú

Banco Itaú responded by stating that the fine was due to a specific incident on August 21 that the bank had reported itself, and that it had a strict and rigorous money laundering prevention policy. The bank reportedly already lost its first appeal on September 9 but may do so again.

A History of Fines for Financial Crimes

This is not the first time Banco Itaú has faced fines related to financial crimes. In October 2019, Brazil’s Operation Car Wash (Lava Jato) anti-corruption probe found that Banco Itaú had enabled $16.4 million worth of illegal transactions used for the payment of bribes.

Progress in Combating Money Laundering

The fining of Banco Itaú by Paraguayan authorities may indicate that impunity is finally being challenged in the Latin American financial sector. Big banks have willfully ignored anti-money laundering controls, profiting from illicit flows, while Paraguay has struggled with police corruption, a weak judicial system, and organized crime penetration.

A Turning Point in the Fight Against Financial Crimes?

However, the case highlights tentative progress in Paraguay, with a slight decrease in vulnerability since 2017 due to important steps taken in 2015 to combat money laundering. The creation of an anti-money laundering unit within the Attorney General’s Office may have contributed to this change.

Paraguayan law enforcement are heavily dependent on Brazilian intelligence for conducting raids, making the fining of Banco Itaú particularly interesting. Investigating money laundering within an international bank is a complex matter, and Brazilian authorities appear not to have played a role in sanctioning Itaú on the same charges.

Conclusion

The fining of Banco Itaú may be a turning point in the fight against financial crimes in Paraguay and Latin America as a whole. As the region’s biggest banks face increased scrutiny, it remains to be seen whether they will continue to prioritize profits over compliance with anti-money laundering regulations.