Paraguay Imposes Record Fine on Brazilian Bank for Money Laundering Violations

A Historic Move in the Fight Against Financial Crimes

In a landmark decision, Paraguay’s Central Bank has imposed a staggering $9.64 million fine on Banco Itaú, a Brazilian bank, for violating anti-money laundering regulations last August 2020.

The Incident and the Fine

According to reports, Banco Itaú failed to report suspicious transactions to the Secretariat for the Prevention of Money or Property Laundering (SEPRELED), breaching Article 19 of Paraguay’s Law No. 1015 concerning money laundering. This is not only a serious offense but also marks the largest fine related to money laundering in Paraguayan history.

Banco Itaú’s Response

The bank has responded by stating that the fine was due to a specific incident on August 21, which they had already reported themselves. Banco Itaú claims to have a strict and rigorous money laundering prevention policy, as per news website RDN. However, this is not the first time the bank has faced regulatory issues.

A History of Regulatory Issues

• 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.
• In June 2019, the bank agreed to return $13.1 million to its 4.7 million customers it over-charged from 2008 to 2018, as well as paying a penalty of nearly $2 million.

A Shift in Paraguay’s Stance on Money Laundering

The fine imposed on Banco Itaú may signal a shift in Paraguay’s stance on money laundering and financial crimes. In 2019, Paraguay was named as the country with the second-highest risk of money laundering in Latin America. However, recent efforts to combat the problem have shown promise.

Steps Forward in Addressing Money Laundering

• The creation of an anti-money laundering unit within the Attorney General’s Office in 2015 has been cited as a step forward in addressing the issue.
• The fining of Banco Itaú highlights Paraguay’s growing ability to investigate and prosecute financial crimes within international banks.

A Challenge to Impunity for Big Banks

This case may also be seen as a challenge to impunity for big banks in Latin America that have wilfully ignored anti-money laundering controls while profiting from illicit flows. The $9.64 million fine is a significant step towards holding these institutions accountable for their actions.