Paraguay Country Summary

FATF Status

Paraguay is no longer on the FATF List of Countries that have been identified as having strategic AML deficiencies

Compliance with FATF Recommendations

The last Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in Paraguay was undertaken in 2022. According to that Evaluation, Paraguay was deemed Compliant for 17 and Largely Compliant for 20 of the FATF 40 Recommendations. It was Highly Effective for 0 and Substantially Effective for 1 of the Effectiveness & Technical Compliance ratings.

Paraguay continues to grapple with significant levels of corruption and crime, undermining both governance and public trust. Despite recent legislative efforts aimed at enhancing transparency and accountability, such as the enactment of Law 7389 to combat corruption, systemic issues like impunity, political influence over the judiciary, and the dominance of corrupt practices in public institutions persist, creating a challenging environment for both citizens and investors.

The country is also a major hub for various criminal activities, including drug trafficking, arms smuggling, and human trafficking, with foreign criminal networks playing a substantial role in these markets. While there have been some improvements in governance and anti-corruption measures, the resilience of criminal enterprises and the pervasive influence of organized crime continue to pose significant challenges to law enforcement and the rule of law in Paraguay.

Paraguay's economy is characterized by steady growth, averaging 2.7% GDP growth over the past decade, driven primarily by agriculture, energy, retail, and construction sectors. The government actively promotes foreign investment through favorable laws that offer tax incentives and ensure the repatriation of profits, although challenges such as corruption, bureaucratic inefficiencies, and a lack of infrastructure persist. Recent upgrades in credit ratings from major agencies reflect improved macroeconomic policies, yet the investment climate remains hindered by judicial insecurity and ongoing issues with public procurement and contract enforcement.