Paraguay’s Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) System

A recent Mutual Evaluation Report on Paraguay’s AML/CFT system highlights both progress and areas for improvement in the country’s efforts to combat money laundering and terrorist financing. The report assesses various aspects of Paraguay’s AML/CFT system, including risk assessment, coordination, financial intelligence, and sectoral assessments.

Risk Assessment, Coordination, and Establishment of Policies

• Paraguay has made significant efforts to identify and understand its ML/TF risks through a national strategic plan coordinated by the SEPRELAD (Financial Intelligence Unit) and the Central Bank of Paraguay.
• The report recommends that Paraguay continue working on updating its National Risk Assessment (NRA) to cover issues not addressed in previous exercises.

Effectiveness and Technical Compliance

• Paraguay’s AML/CFT system has improved significantly since its last evaluation, with a more robust legal and institutional framework.
• Major improvements are needed in all areas except for ML investigation, prosecution, and convictions, where fundamental improvements are necessary.

Financial Intelligence, Money Laundering, and Confiscation

• The FIU-SEPRELAD is a robust agency responsible for receiving and analyzing suspicious transaction reports.
• It produces financial intelligence reports that contribute to the investigation of emblematic cases by the Attorney General’s Office.

Sectoral Assessments and Terrorist Financing (TF) Risk

• The real estate sector and dealers in motor vehicles are considered high-risk due to the possibility of using cash in large transactions and the percentage of informality in the economy.
• While potential cases have been detected, the risk of TF appears relatively low from an external perspective. However, there is a concern about terrorist activities related to organized crime that are funded by their own criminal activities.

Confiscation

• The legal concept of confiscation is largely institutionalized in Paraguay, but challenges remain in certain cases such as the confiscation of falsely declared, undeclared, or unreported assets.

The report highlights both progress and areas for improvement in Paraguay’s AML/CFT system. Addressing these challenges is crucial to ensure that the country effectively combats money laundering and terrorist financing.