Financial Crime World

Paraguay’s Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) Measures: A Report

Overview

This report provides an assessment of Paraguay’s anti-money laundering (AML) and combating the financing of terrorism (CFT) measures against the Financial Action Task Force (FATF) Recommendations. The report highlights key areas where Paraguay needs to improve its framework to effectively combat money laundering and terrorism financing.

Gaps in AML/CFT Framework

  • Low awareness of ML/TF risks: Awareness of money laundering and terrorism financing (ML/TF) risks is low in both public and private sectors.
  • Significant gaps in AML/CFT framework: Paraguay has significant gaps in its AML/CFT framework.

Substantial Contraband Trade

  • Facilitates money laundering: Paraguay’s borders with Argentina and Brazil facilitate substantial contraband trade, which facilitates money laundering.

Convictions for ML

  • Low number of convictions: Although the number of convictions obtained is respectable relative to other countries in the region, the number remains low considering the perceived level of criminal conduct.

Corruption Obstacle

  • Corruption at all levels: Corruption at all levels in the public sector is a serious obstacle to combating ML and predicate offenses.

Lack of FT Provisions

  • No specific provisions for freezing terrorist funds: Paraguay does not have specific provisions that would allow freezing terrorist funds or other assets of persons and legal entities designated pursuant to UN Security Council Resolution No. 1267 (1999) or of persons and legal entities designated in the context of UNSCR 1373 (2001).

Inadequate UAF

  • UAF lacks operational independence: The Unidad de Análisis Financiero (UAF) has an inadequate legal framework and governance structure, which hinders its operational independence.

Weak Preventive Measures Regime

  • Deficiencies in customer due diligence: The mission identified a number of deficiencies within the regime, notably in the areas of customer due diligence on beneficial owners, reporting of suspicious transactions, wire transfers, internal control systems, regulation and supervision by competent authorities, training, and resources.

Conclusion

Paraguay has not been evaluated as compliant with the FATF recommendations. Addressing these gaps is crucial for effectively combating money laundering and terrorism financing in Paraguay.