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 challenges related to crime and corruption, as impunity remains a pervasive issue across all levels of government. Despite some efforts to enhance transparency and accountability, such as the establishment of an open data portal and a new National Strategy to Combat Corruption, the influence of corrupt practices within the judiciary and legislative branches undermines these initiatives and fosters a climate of mistrust among citizens and investors alike.

The country is also a major hub for various criminal activities, including human trafficking, arms trafficking, and drug production, with organized crime networks, often intertwined with state actors, exerting considerable control over illicit markets. Furthermore, the judicial system's corruption and politicization, coupled with inadequate support for crime victims and a deteriorating environment for civil society, highlight the ongoing struggle for resilience against crime and corruption in Paraguay.

Paraguay's economy is characterized by steady growth, averaging 2.8% GDP increase annually 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, full capital repatriation, and support for manufacturing operations, which have contributed to recent upgrades in credit ratings from major agencies like Fitch and S&P. However, challenges such as corruption, judicial insecurity, and a lack of infrastructure hinder the investment climate, despite ongoing government efforts to improve transparency and regulatory frameworks.