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 related to corruption, with impunity undermining the enforcement of laws against corrupt practices across all levels of government. Despite efforts to enhance transparency and accountability, including the establishment of an open data portal and a new National Strategy to Combat Corruption, issues such as judicial corruption and ineffective oversight persist. While there have been improvements in government transparency and international cooperation, the overall investment climate remains hindered by bureaucratic inefficiencies and a lack of accountability.

Paraguay has a small but growing open economy, averaging 2.8 percent GDP growth per year over the past decade, with agriculture, energy, retail, and construction as key sectors driving this growth. The government actively encourages foreign investment through tax breaks and guarantees, although challenges such as corruption and judicial insecurity persist, impacting the overall investment climate.

Paraguay's investment climate is characterized by a government that actively encourages foreign investment through favorable laws that offer tax breaks, full repatriation of capital and profits, and guarantees national treatment for foreign investors. However, challenges such as corruption, judicial insecurity, and bureaucratic inefficiencies hinder the overall investment experience, particularly for U.S. companies facing difficulties with government contracts and procurement processes. Despite these issues, Paraguay has seen improvements in its credit ratings, reflecting a commitment to prudent macroeconomic policies.