PARAGUAY: ANTI-MONEY LAUNDERING LAW UPDATE

C O N F I D E N T I A L SECTION 01 OF 02 ASUNCION 001425

SIPDIS

WHA FOR CT SPECIAL ADVISOR MCCARTHY; S/CT FOR NICK NOYES;
INL FOR ABBY SMITH

E.O. 12958: DECL: 08/19/2015
TAGS: PGOV PREL PTER KCRM PA
SUBJECT: PARAGUAY: ANTI-MONEY LAUNDERING LAW UPDATE

REF: ASUNCION 1137

Classified By: A/DCM James P. Merz for reasons 1. (b) and (d).


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

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Summary
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2. (C) On 10/27, the Senate Finance Commission finally took
one step to move anti-money laundering (AML) legislation
languishing since 2004. A Senate comment period could end in
March followed by possible movement toward passage. An
Embassy sponsored public relations campaign on money
laundering will begin in January. Opponents may seek to gut
or stall, again, the law. Post suggests Department consider
asking UN CTC to visit Paraguay to increase international
pressure. End Summary.

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AML Bill Before Full Senate Under Special Motion
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3. (U) On 10/27, the Senate passed a motion submitted by
Senate Finance Commission President Sen. Pedrozo (ANR) for
the full Senate to consider the anti-money laundering bill
under special procedures. This motion gives Senators sixty
days to offer modifications of this bill. (Note: Since
Congress is scheduled to go into its summer recess on 12/20
through the end of February, this period will extend until
3/7 of next year. The period may be extended as the Senate
will be focused on the budget until year's end and will have
only been in session for a week in March when the period
ends. End Note.)


4. (U) Several Senators have expressed concern that the
bill gives Paraguay's Secretariat for the Prevention of Money
Laundering (SEPRELAD) authority that it could abuse by
targeting political figures for political ends. We expect a
select few Senators will request certain articles be modified
to address this and other concerns about the law. (Note:
Those articles spared comment are considered acceptable to
the Senate and cannot later become subject to debate. End
Note.) It will then fall to the Finance Commission to make
appropriate changes to the bill with a view to issuing a
recommendation to the full Senate to adopt the modified
version of the text. If the Senate decides to adopt the
bill, it would then pass to the House of Deputies for
consideration within 90 days. In the coming weeks and months
we will be approaching key Senators to urge they support this
bill.

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The MIST Campaign
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5. (C) In the coming weeks, informational flyers on money
laundering will be going out to financial institutions for
public circulation. In January, we will launch a series of
radio/TV ads on money laundering. These media products are
produced by MIST (Military Information Support Teams) that
work out of the Embassy's Office of Defense Cooperation.
(Note: The USG does not/not take public credit for these
products. Rather, a number of Paraguayan institutions,
including SEPRELAD, claim public responsibility for their
creation and circulation. End Note.) These products draw
attention to the economic and political damage wrought by
money laundering. We hope this campaign will produce some
public pressure on the Congress to move ahead with the money
laundering legislation.


6. (C) Comment. After seeing the anti-money laundering
bill languor in the Senate Finance Commission since May 2004,
we are pleased the bill has been brought to the full Senate
for consideration. Timely Senate adoption of a strong text
that meets international standards, however, is far from
assured. Several senators have signaled their intention to
seek modifications that could water down some of the more
critical provisions. Sen. Pedrozo offered to vet suggested
modifications to the bill with U.S. and Paraguayan AML
experts. We intend to take him up on that offer.


7. (C) When a team of CTC, UNODC, and CICTE experts visited
Paraguay in November 2004, GOP officials promised to move
ahead with adoption of AML and CT legislation in late 2004,
early 2005. It has taken until now for the Senate to take
this first step on the AML bill. The CT bill has yet to be
submitted to Congress pending Senate adoption of the AML bill
to create some distance between the two. Post would consider
it opportune for the Danish Chair of the UN CTC Ellen
Margrethe Loj to visit Paraguay -- preferably in March when
the Senate will be more focused on this bill -- for the
ostensible purpose of assessing progress since last year's
visit, but more importantly, putting pressure on the GOP and
legislators to move ahead with adoption of a strong text that
meets international standards. End Comment.


8. (C) Action Request: Post requests Department approach
the Chair of the UN CTC about visiting Paraguay in March to
press GOP authorities (including VP and Senate leaders) for
adoption of the AML, and eventually, the CT bill.
JOHNSON