Paraguay Imposes Historic Fine on Brazilian Bank for Anti-Money Laundering Violations
A Crackdown on Financial Institutions in Latin America
As governments in the region continue to take a tough stance on financial institutions that fail to comply with anti-money laundering regulations, Paraguay’s Central Bank has imposed a record-breaking fine on Brazil’s Banco Itaú.
The Fine: A Record-Breaking $9.64 Million
According to reports from Ultima Hora, the Central Bank of Paraguay (Banco Central del Paraguay – BCP) slapped Banco Itaú with a $9.64 million fine for violating Article 19 of Paraguay’s Law No. 1015 concerning money laundering. The bank allegedly failed to report suspicious transactions to the Secretariat for the Prevention of Money or Property Laundering (Secretaría de Prevención de Lavado de Dinero o Bienes – SEPRELED) in August 2020.
A Lack of Adherence to Anti-Money Laundering Regulations
Diego Marcet, general director of SEPRELED’s legal department, noted that a lack of adherence to anti-money laundering regulations was systemic within the bank. This is not the first time Banco Itaú has faced scandals related to money laundering and corruption.
Other Scandals Involving Banco Itaú
- A $16.4 million fine related to Operation Car Wash (Lava Jato) anti-corruption probe in Brazil
- A $662 million fine from the city of São Paolo for evading state taxes
A Growing Trend: Latin American Banks Ignoring Anti-Money Laundering Controls
The case highlights the growing trend of big banks in Latin America ignoring anti-money laundering controls while profiting from illicit flows. Paraguay has been named as one of the countries with the highest risk of money laundering in the region, and its role as a major hub for marijuana and counterfeit goods means there is plenty of dirty money swirling around.
Combating Money Laundering in Paraguay
Despite these challenges, Paraguayan authorities appear to be making progress in combating money laundering. The creation of an anti-money laundering unit within the Attorney General’s Office in 2015 has led to a slight decrease in Paraguay’s vulnerability since 2017.
Investigating Money Laundering within International Banks
Investigating money laundering within an international bank is a complex matter, requiring cooperation between multiple countries and financial institutions. In this case, Brazilian authorities did not play a role in sanctioning Banco Itaú, despite the bank’s involvement in several scandals related to anti-money laundering violations.
A Significant Step Towards Accountability?
The fine imposed by Paraguay’s Central Bank may mark a significant step towards holding big banks accountable for their actions. However, hopes that it will lead to substantive change remain uncertain, as seen in the case of HSBC, which was fined $1.9 billion in the United States and $27.5 million in Mexico for negligently laundering over $881 million for Mexican and Colombian cartels.