PARAGUAY: PRENOTIFICATION OF DOMESTIC USG

C O N F I D E N T I A L ASUNCION 001202

SIPDIS

SIPDIS

NSC FOR SUE CRONIN, S/CT FOR ARNOLD SIERRA

E.O. 12958: DECL: 10/03/2026
TAGS: EFIN KTFN PREL PTER PA
SUBJECT: PARAGUAY: PRENOTIFICATION OF DOMESTIC USG
DESIGNATION OF HIZBALLAH-RELATED INDIVIDUALS/ENTITITES IN
THE TRI-BORDER AREA

REF: STATE 192347

Classified By: PolCouns James P. Merz; Reasons 1.4(b),(d)


1. (C) Key Paraguayan interlocutors November 30 welcomed
being informed about the impending U.S. designation of nine
individuals and two entities from the TBA associated with
Hizballah and conveyed a readiness to explore what Paraguay
may be able to do to "embargo" the assets of these
individuals and entities.

-- Attorney General Ruben Candia remarked that Paraguay would
need to open criminal cases against the named individuals or
entities in question before taking any action on their
assets. He was not familiar with options but assured POL
Chief that he would consult with his advisors about available
legal mechanisms.

-- Anti-Money Laundering Secretariat (SEPRELAD) Director
Carlos Yegros conveyed his commitment to exploring with
Paraguayan financial institutions whether any of the
individuals and entities to be notified had assets registered
in Paraguay. He asserted that any motion to embargo assets
would have to come from the Attorney General's office based
on its having opened a case against the individuals or
entities but assured POL Chief he was prepared to initiate
contact with the Attorney General to explore options.

-- Ana Mireya Ayala, the Acting Director of the MFA's Office
of Special Affairs which covers Paraguay's counter terror
portfolio, was pleased the U.S. was opening a discussion of
this matter in the runup to the 3 1 meeting in Buenos Aires.
While meeting with the POL Chief, Ayala took a call from her
boss Min. Victor Hugo Pena who is the Director of the Office
of Special Affairs and will head Paraguay's delegation to the
3 1 meeting. She made a point of giving him a heads up on
the U.S. demarche promising to fax him our info soonest.
When Pena met with POL Chief earlier in the month, he
expressed an interest in receiving more specific information
on terror financing in the TBA, noting in particular the
September settlement Bank of America reached with Manhattan

district prosecutor Robert Morgenthau to pay a fine of
approximately $7 million when it acknowledged its lax
operations had allowed up to $3 billion dollars to be
laundered out of the TBA.

-- Supreme Court Judge Fretes, who has long collaborated with
Post on the prosecution of several terrorist financiers on
tax evasion charges, opined that the best way to move on the
assets of the individuals and entities named might prove
securing a Presidential decree to that effect. He told POL
Chief he would explore options given legal constraints in
Paraguay to embargo assets absent strong legal grounds.


2. (C) Ambassador took advantage of a lunch with the
Brazilian Ambassador November 29 to share with him our
information on designation. Noting our effort to prove more
responsive to the long-standing GOB request for more concrete
information on terrorist financing in the TBA, AMB noted that
the GOB was being contacted directly in Brazilia and assured
the Brazilian Ambassador we expected to revisit this issue in
greater detail at the 3 1 meeting. The Brazilian Ambassador
expressed appreciation for U.S. willingness to provide
specific information, especially prior to the 3 1 meeting,
but declined to make any substantive comment.


3. (C) COMMENT. Paraguayan law provides for "preventive
embargo" vice "freezing of assets." The Attorney General's
Office may request a judge to authorize the "preventive
embargo" of only those assets tied to the formal
investigation of an individual. Only in the event there is
either a concern an individual may flee or the expectation
the individual may ultimately be fined might a judge agree to
the embargo all of an individual's assets. SCJ Fretes'
notion of pursuing a presidential decree to embargo assets
offers an interesting way to shortcut the process if proven a
legally viable option. Even if it is, it remains to be seen
what the prospects are of securing the President's commitment
to a measure that will surely provoke domestic and regional
controversy. END COMMENT.
CASON