FATF AML Deficiency List
US Dept of State Money Laundering assessment
Non - Compliance with FATF MER Recommendations
Corruption Index (Transparency International & W.G.I.)
World Governance Indicators (Average Score)
Paraguay is no longer on the FATF List of Countries that have been identified as having strategic AML deficiencies
Latest FATF Statement - 21 June 2013
The FATF welcomes Paraguay’s significant progress in improving its AML/CFT regime and notes that Paraguay has largely met its commitments in its Action Plan regarding the strategic deficiencies that the FATF had identified in February 2010. Paraguay is therefore no longer subject to FATF’s monitoring process under its on-going global AML/CFT compliance process. Paraguay will work with GAFISUD as it continues to address the full range of AML/CFT issues identified in its Mutual Evaluation Report, particularly regarding further implementation of Special Recommendation VI and Special Recommendation IX.
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 by the Financial Action Task Force (FATF) in 2008. According to that Evaluation, Paraguay was deemed Compliant for 2 and Largely Compliant for 2 of the FATF 40 + 9 Recommendations. It was Partially Compliant or Non-Compliant for all 6 of the Core Recommendations.
US Department of State Money Laundering assessment (INCSR)
Paraguay is categorised by the US State Department as a Country/Jurisdiction of Primary Concern in respect of Money Laundering and Financial Crimes.
Paraguay’s economy returned to a growth trajectory after a brief economic recession early in 2019 as agricultural export revenue fell due to drought conditions and lower international commodity prices. The Tri-Border Area (TBA), comprised of the shared border areas of Paraguay, Argentina, and Brazil, is home to a multi-billion-dollar illicit goods trade, including marijuana cultivation and the trafficking of Andean cocaine and arms, which facilitates significant money laundering in Paraguay. The government has worked to reduce the criminal use of Paraguay’s financial system to launder illicit proceeds by taking steps to address corruption, eliminate bureaucratic inefficiencies, and enhance interagency coordination. President Mario Abdo Benitez’s administration has continued Paraguay’s focus on these efforts, showing results in new legislation and arrests but modest outcomes in terms of implementation and convictions.
There are no international sanctions currently in force against this country.
BRIBERY & CORRUPTION
Rating (100-Good / 0-Bad)
Transparency International Corruption Index 28
World Governance Indicator – Control of Corruption 22
Corruption represents one of the major obstacles to businesses investing in Paraguay. In most sectors corruption hinders competitiveness, and practices of favouritism are particularly widespread in public procurement, public services and the natural resources sector. The anti-corruption legal framework of Paraguay criminalises passive and active corruption, money laundering, embezzlement and other offences but does not cover abuse of office or the bribery of foreign officials. Furthermore, implementation of the existing legislation is weak, and many government officials engage in corruption with impunity. Bribery is a widespread practice in Paraguay. For further information - GAN Integrity Business Anti-Corruption Portal
Landlocked Paraguay has a market economy distinguished by a large informal sector, featuring re-export of imported consumer goods to neighbouring countries, as well as the activities of thousands of microenterprises and urban street vendors. A large percentage of the population, especially in rural areas, derives its living from agricultural activity, often on a subsistence basis. Because of the importance of the informal sector, accurate economic measures are difficult to obtain.
On a per capita basis, real income has stagnated at 1980 levels. The economy grew rapidly between 2003 and 2008 as growing world demand for commodities combined with high prices and favourable weather to support Paraguay's commodity-based export expansion. Paraguay is the sixth largest soy producer in the world. Drought hit in 2008, reducing agricultural exports and slowing the economy even before the onset of the global recession. The economy fell 3.8% in 2009, as lower world demand and commodity prices caused exports to contract. The government reacted by introducing fiscal and monetary stimulus packages. Growth resumed in 2010, and has been erratic, although positive, ever since. Severe drought and outbreaks of foot-and-mouth disease led to a drop in beef and other agricultural exports.
In addition to the agricultural challenges, political uncertainty, corruption, limited progress on structural reform, and deficient infrastructure are the main obstacles to long-term growth.
Agriculture - products:
cotton, sugarcane, soybeans, corn, wheat, tobacco, cassava (manioc, tapioca), fruits, vegetables; beef, pork, eggs, milk; timber
sugar, cement, textiles, beverages, wood products, steel, base metals, electric power
Exports - commodities:
soybeans, livestock feed, cotton, meat, edible oils, wood, leather
Exports - partners:
Brazil 31.7%, Russia 9.1%, Chile 7.1%, Argentina 7% (2015)
Imports - commodities:
road vehicles, consumer goods, tobacco, petroleum products, electrical machinery, tractors, chemicals, vehicle parts
Imports - partners:
Brazil 25.4%, China 23.7%, Argentina 14.8%, US 7.9% (2015)
Investment Climate - US State Department
Paraguay has a small but rapidly growing open economy with a strong macroeconomic position and the potential for continued growth over the next decade. Major drivers of economic growth in Paraguay are the agriculture, retail, and construction sectors. The Government of Paraguay (GOP) encourages private foreign investment. Paraguayan law grants investors tax breaks, permits full repatriation of capital and profits, supports maquila operations, and guarantees national treatment for foreign investors. Standard & Poor’s, Fitch, and Moody’s all upgraded Paraguay’s credit ratings over the past three years.
Paraguay scores at the mid-range or lower in most competitiveness indicators, judicial insecurity hinders the investment climate, and trademark infringement and counterfeiting are a major concern. The Government of Paraguay has taken measures in recent years to improve the investment climate, including the passage of laws addressing competition, public sector payroll disclosures, and access to information. The Cartes Administration also has escalated intellectual property enforcement.
Paraguay's export and investment promotion bureau, REDIEX, prepares comprehensive information about business opportunities in Paraguay.
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