Fine time

Central Bank sanctions Itaú in Paraguay.

In August this year, the Central Bank of Paraguay (BCP) imposed a USD 9.6 million fine on Brazil’s Banco Itaú for failing to report suspicious money laundering operations.

The fine was only made public in October and immediately received widespread media attention as the largest fine of its type imposed on a banking institution in Paraguay.

The BCP deemed that Banco Itaú had failed to carry out ‘Know-Your-Customer’ and ‘Ultimate Beneficial Owner’ checks in relation to a specific transaction. In addition, the bank did not report the suspicious transfers to the Anti-Money Laundering secretary (SEPRELAD), which is part of the Ministry of the Interior of Paraguay.

Furthermore, Banco Itaú’s appeal against the decision was dismissed by Paraguayan authorities which confirmed the historic fine.

A former senior executive at SEPRELAD, who now works at the Paraguayan Association of Compliance (“APAC”), told us, “[Banco] Itaú’s sanction is remarkable because of the unprecedented amount and also because it has been imposed on a foreign banking institution. It is noteworthy that SEPRELAD has handed out more fines last year [than usual], but none of them received the same international attention.”

SEPRELAD has handed out more fines last year [than usual].” 

A former senior executive, SEPRELAD, Paraguay. 

Our source continued, “Some financial institutions did not directly report potential red flags to SEPRELAD. Of course, they would report flagrant cases, but they used to turn their head when treading on thin ice. This will warn banks operating in Paraguay to be more alert and not take SEPRELAD for granted.”

“This will warn banks operating in Paraguay to be more alert and not take SEPRELAD for granted. 

A former senior executive, SEPRELAD, Paraguay. 

As a result, “There is an increasing willingness from the authorities to end Paraguay’s reputation for lax AML procedures. The government has given more power to regulators who feel more at ease when they need to do their job [than they did with previous administrations].”

In this context, the government of Paraguay has been closely collaborating with the Financial Action Group for Latin America (GAFILAT) to improve its best practices in the fight against financial crime in the country. A welcome step forward!

Important Notice
While the information in this article has been prepared in good faith, no representation, warranty, assurance or undertaking (express or implied) is or will be made, and no responsibility or liability is or will be accepted by Deheza Limited or by its officers, employees or agents in relation to the adequacy, accuracy, completeness or reasonableness of this article, or of any other information (whether written or oral), notice or document supplied or otherwise made available in connection with this article. All and any such responsibility and liability is expressly disclaimed.
This article has been delivered to interested parties for information only. Deheza Limited gives no undertaking to provide the recipient with access to any additional information or to update this article or any additional information, or to correct any inaccuracies in it which may become apparent.

Most recent in Financials

Building Bridges

The Bridgetown Initiative deserves financial support.

Bolivia’s wallet is feeling light

Dollar shortages and policy reversals. 

Banking on it

Nubank is disrupting banking in Brazil and beyond.

Shallow Pockets

Cuba’s economic challenges (and there are plenty).

I wouldn’t bank on it 

Peru's economic landscape amidst interest rate cuts and uncertainties. 

Bolivia’s economic challenges 

Navigating political turmoil and market uncertainty. 

SoftBank’s Latin America investment strategy

Opportunities and challenges as investors divert their attention to LatAm.

From Global-isation to Local-isation

Nearshoring in Mexico and Central America.

Glimpses of hope

Argentina toils through economic turmoil with light at the end of the tunnel.

Desperate for dollars

Bolivia seeks to sell off remaining gold reserves to alleviate economic crisis.