A mutual evaluation of Paraguay’s anti-money laundering (AML) regime notes that the country is largely or fully compliant with 38 of the Financial Action Task Force’s (FATF’s) 40 recommendations.
The FATF report notes that Paraguay has reflected its understanding of the country’s AML risks in its ongoing strategic plan and that “regarding the understanding of the risks and the application of preventive measures by the different reporting entities…the sectors with the greatest exposure and the most representative sectors have an acceptable knowledge of the [AML] risks.”
However, FATF evaluators observe that notaries, lawyers, other legal professionals and accountants do not comply with the customer due-diligence requirements for designated non-financial business and professions (DNFBPs) under Recommendation 22. Regulatory supervision of DNFBPs and virtual asset service providers (VASPs) has only recently been applied.
The Paraguayan legal system is appropriate for AML measures and the country has “a robust regulatory framework in terms of confiscation”, but FATF’s report finds that sanctions for certain AML breaches are limited in “proportionality and dissuasiveness”. Further, it says, there is only limited control of cross-border transportation of cash and securities, which could increase AML risks.
Although FATF commends the progress Paraguay has made in compliance with AML standards, it recommends that the country should now implement processes for monitoring AML compliance by notaries, lawyers, accounts and VASPs, as well as strengthening the monitoring of reporting entities to ensure they understand their AML obligations.
Further, sanctions for AML breaches should be strengthened and there should be a higher number of prosecutions for complex money laundering schemes.