Financial Crime World

PARAGUAY: Politically Exposed Persons Screening Crucial for Businesses Operating in the Country

As Paraguay continues to attract foreign investment, businesses operating in the country must be aware of the risks associated with dealing with Politically Exposed Persons (PEPs). A recent crackdown on corruption and money laundering has highlighted the importance of screening PEPs in Paraguay.

Understanding Politically Exposed Persons

According to local regulations, any individual holding a government role or a close business associate of such a person is considered a potential risk. This includes:

  • Legislative Bodies: Members of Parliament
  • Executive Bodies: From the head of state down to assistant ministers
  • Diplomatic Roles: Ambassadors and chargé d’affaires
  • Judiciary Bodies: Key personnel working within supreme courts, constitutional courts or high-level judicial bodies

In addition, businesses must also screen PEPs in organizations and institutions such as:

  • Central Financial Institutions: The Court of Auditors and members on the boards of central banks
  • Armed Forces: High-ranking officers
  • International Sports Committees: Members who may be influenced to vote on major sporting events/contracts

Close Associates and Immediate Family Members

Moreover, close associates and immediate family members of PEPs are also considered potential risks. This includes:

  • Parents and children
  • Spouse or partner
  • Siblings
  • Uncles and aunts
  • Even slightly indirect family members (such as in-laws)

Compliance Requirements

Businesses must comply with local regulations when operating in Paraguay, which may have different requirements for PEP screening. Failure to do so can result in fines and reputational damage.

Implementing Effective Due Diligence Procedures

To minimize risk and ensure compliance, businesses should implement effective due diligence procedures, including regular reviews of their client lists and transaction history. This will help identify potential PEPs and prevent exposure to risks associated with dealing with them.

By taking proactive steps to screen PEPs, businesses operating in Paraguay can protect themselves from the risks associated with corruption and money laundering, while also maintaining a positive reputation in the market.