FATF status

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 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 faces significant challenges with corruption, as impunity undermines the enforcement of laws against it, despite existing criminal penalties. While previous administrations have made efforts to enhance transparency and accountability, such as creating an open data portal and a Good Governance Code, the current government's new strategies do not adequately address the pervasive impunity within the judicial and legislative branches. Corruption remains a major barrier to investment, with many investors frustrated by bureaucratic inefficiencies and a lack of contract enforcement.

Paraguay has a small but growing open economy, averaging 2.8 percent GDP growth annually over the past decade, driven primarily by agriculture, energy, retail, and construction sectors. The government actively encourages foreign investment through tax breaks and guarantees for capital repatriation, although challenges such as corruption and judicial insecurity persist, impacting the overall investment climate.

Paraguay's investment climate is characterized by government encouragement of private foreign investment, offering tax breaks and guarantees for capital repatriation. However, challenges such as corruption, judicial insecurity, and bureaucratic inefficiencies hinder foreign companies, particularly U.S. firms, from fully capitalizing on these opportunities. Despite these obstacles, recent credit rating upgrades reflect a commitment to macroeconomic stability and the potential for growth in sectors like agriculture and energy.