PARAGUAY: BRINGING UN CTC PRESSURE TO BEAR UPON

C O N F I D E N T I A L SECTION 01 OF 02 ASUNCION 001137

SIPDIS

DEPT OF JUSTICE FOR OPDAT
DEPT OF TREASURY FOR OTA

E.O. 12958: DECL: 08/19/2015
TAGS: PGOV PREL PTER KCRM PA
SUBJECT: PARAGUAY: BRINGING UN CTC PRESSURE TO BEAR UPON
PRESIDENT DUARTE AT UPCOMING UNGA

REF: A. ASUNCION 1066

B. ASUNCION 0875

C. 2004 ASUNCION 1525

Classified By: PolCoun James P. Merz for reasons 1.4 (b) and (d).


1. (U) Action Request. See para. 2 and 8.


2. (C) Summary. GOP adoption of key anti-money laundering
(AML) and counter terrorism (CT) legislation represents a
high USG priority given concerns about money laundering and
counter terror financing in the Tri-Border Area (TBA).
Money laundering legislation has languished in the Congress
since May 2004; counter-terror legislation may soon be
introduced to Congress but we don't expect it will receive
immediate attention. Post continues to press Paraguayan
legislators and the President to move on this legislation.
However, it is essential our quiet pressure behind the scenes
be reinforced by greater pressure from the international
community. President Duarte will travel to New York the week
of 9/12 to serve as UNGA Vice President. Post requests the
Department/USUN consider approaching the CTC President about
meeting with President Duarte to convey concerns about delays
in adopting these laws. End Summary.


3. (C) Combating money laundering and terrorist financing
emanating from the TBA represents a top MPP priority.
Paraguay's legal framework does not provide law enforcement
authorities the tools they need to adequately investigate and
prosecute these crimes. Post's Resident Legal Advisor (RLA)
(please protect) contributed substantively to the drafting of
legislation to modify the existing money laundering law,
which is grossly deficient, as well as produce a counter
terrorism law to ensure both satisfy international
obligations. A team of experts from the UNCTC, UNODC, UNCHR,
and OAS/CICTE visited Paraguay in December 2004. They
applauded the drafts of both laws and prodded Paraguay to
move quickly to adopt and implement them (ref. C).


4. (C) Post meets regularly with key politicians to
advocate adoption of the AML bill which was submitted to the
Senate Finance and Legislation Committees in May 2004. At
our prodding, key Senators will meet with experts on the AML
to address concerns they have about the bill. Post and
visiting USG officials, including most recently Acting A/S
for Enforcement from Treasury Daniel Glaser, have advocated
privately for adoption of the AML bill with key government
officials including the Ministers of Finance, Commerce and
Industry, and Justice and Labor as well as the new Attorney
General and the Director of the Anti-Drug Secretariat. They
have all conveyed privately support for the AML bill.
President Duarte has conveyed publicly his support for the
AML bill. However, despite the fact that his party (the
Colorado Party) commands a majority coalition in both houses
of Congress, we have observed no support emanating from his
party for the AML bill. To the contrary, some Embassy
contacts have advised us discreetly that key Colorado
senators oppose the AML bill out of concern it will undermine
personal financial or political interests.


5. (C) In June and August, Post participated in telephone
conference calls with representatives from a variety of
organizations, including most recently the CTC with a view to
bringing more international pressure to bear on Paraguay. In
July, we understand the CTC President met with Paraguay's UN
Permrep to discuss concerns about the failure to move on the
AML and CT bills. We are aware Paraguay's UN Permrep
recently traveled to Asuncion to discuss this matter inter
alia with the MFA and the Vice-President (ref. A).
Separately, in July, the Ambassador met with Vice President
Castiglioni calling for progress in moving the AML and CT
bills to avoid the possibility President Duarte could come up
for criticism on these matters when he travels to New York in
September as the UNGA Vice-President.


6. (C) On 8/24, Supreme Court President Antonio Fretes
told Polcouns that President Duarte planned to submit the
draft counter terrorism law to Congress so Paraguay could
argue to the UN it had made progress since last December,s
CTC visit. Post would consider this step under whelming.
The CT bill will surely prove controversial given concerns in
some quarters that it will give the government authorities
which can be used against the opposition, akin to the
Stroessner dictatorship. In the past, Fretes has argued
against submitting the CT bill until at least the Senate had
passed the AML so as to avoid any connection between the two.
We saw the logic in that approach. Now, in an effort to
demonstrate progress to the UN, Fretes has signaled GOP
readiness to submit the CT to bill to Congress even though
there has been no movement on the AML bill. To assuage our
concerns, Fretes told Polcouns ¬ to worry8 as he did not
expect the CT bill to be considered seriously in the near
future. This perspective only reinforces our concern the GOP
envisions no real movement on this bill in the near term
future. September 8th DCM urged new Attorney General Candia
to press for AML legislation within the executive and
congress.


7. (C) We do not believe Paraguay should get off the hook
for merely submitting the CT bill to Congress, particularly
in view of its failure to move the AML bill out of Senate
Committee. Rather, we think it would be useful to bring more
pressure to bear upon Duarte during his time in New York the
week of 9/12 as UNGA Vice President. Per our August telcon,
CTC official Sergey Karev conveyed willingness on the part of
the CTC to consider having the CTC President meet with Duarte
to convey concern about the lack of progress in adopting the
AML and CT bills and to propose a visit for sometime in
October for the purpose of evaluating progress. Post
believes delivery of this message to Duarte will register a
significant impact and will reinforce our efforts to prod him
to argue for the support of key politicians from his own
party. In the meantime, the Ambassador is seeking an
opportunity to raise this with the President.


8. (C) Action Request: Post requests Department/USUN
consider requesting the CTC President meet with Paraguayan
President Duarte during his visit to New York to convey
concerns about the lack of progress on the key AML and CT
bills and to seek a follow on visit to Paraguay to assess
progress. Pressure from international organizations carries
weight in Paraguay and is less likely to produce counter
productive and nationalist reactions.
KEANE