Identifier
Created
Classification
Origin
06ASUNCION274
2006-03-13 20:02:00
UNCLASSIFIED
Embassy Asuncion
Cable title:  

PARAGUAY: TREASURY A/S O'BRIEN'S VISIT CREATES NEW

Tags:  PGOV KCRM KMCA PA 
pdf how-to read a cable
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DE RUEHAC #0274/01 0722002
ZNR UUUUU ZZH
P 132002Z MAR 06
FM AMEMBASSY ASUNCION
TO RUEHC/SECSTATE WASHDC PRIORITY 3936
INFO RUCNMER/MERCOSUR COLLECTIVE
RUEHNR/AMEMBASSY NAIROBI 0171
RUEAWJB/DEPT OF JUSTICE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RHEHNSC/WHITE HOUSE NSC WASHDC
RUMIAAA/USCINCSO MIAMI FL//SCJ3/SCJ33/SCJ34/SOCSO LNO//
UNCLAS ASUNCION 000274 

SIPDIS

SIPDIS

FOR WHA/BSC AND EB/IFD/OIA
NAIROBI FOR MICHAEL FITZPATRICK
SOUTHCOM FOR POLAD BARBARA MOORE
NSC FOR SUE CRONIN
TREASURY FOR OTA, TFI
TREASURY FOR A/S O'BRIEN
TREASURY FOR OTA WARFIELD, VAN KOCH, MILLAR
STATE PASS TO USAID FOR LAC/AA AND LUIS CORONADO PCC/AA

E.O. 12958: N/A
TAGS: PGOV KCRM KMCA PA
SUBJECT: PARAGUAY: TREASURY A/S O'BRIEN'S VISIT CREATES NEW
MOMENTUM ON AML LAW

REF: ASUNCION 231

UNCLAS ASUNCION 000274

SIPDIS

SIPDIS

FOR WHA/BSC AND EB/IFD/OIA
NAIROBI FOR MICHAEL FITZPATRICK
SOUTHCOM FOR POLAD BARBARA MOORE
NSC FOR SUE CRONIN
TREASURY FOR OTA, TFI
TREASURY FOR A/S O'BRIEN
TREASURY FOR OTA WARFIELD, VAN KOCH, MILLAR
STATE PASS TO USAID FOR LAC/AA AND LUIS CORONADO PCC/AA

E.O. 12958: N/A
TAGS: PGOV KCRM KMCA PA
SUBJECT: PARAGUAY: TREASURY A/S O'BRIEN'S VISIT CREATES NEW
MOMENTUM ON AML LAW

REF: ASUNCION 231


1. Summary. Treasury A/S Patrick O'Brien's visit to
Paraguay on 3/8 offered an excellent opportunity to reinforce
with key GOP officials, legislators, and business community
leaders the importance the U.S. attaches to rapid adoption of
a strong anti-money laundering law. All interlocutors
stressed their commitment to moving ahead on this bill,
noting modifications were likely. Already, two of three
initiatives discussed to push for more progress are moving
ahead. The key remains President Duarte's pressing his
Colorado Senators to support the bill; he has committed
himself to doing this, making prospects for adoption in the
coming months stronger than ever. Post supports OTA's
participation in the MCA Threshold Program as the best way to
strengthen the GOP efforts to combat corruption and impunity
and strengthen formality. End Summary.

VP and Walde Convey GOP Commitment on Law
--------------


2. Vice President Castiglioni and Presidential Economic
Advisor Carlos Walde assured O/Brien of the GOP's commitment
to adopt a strong AML law to meet its international
commitments and strengthen conditions for greater investment
in Paraguay. Both described the law as emblematic of the
GOP's determination to combat corruption and transnational
crime. Castiglioni assured us that both he and President
Duarte were working with legislators, pressing them to move
ahead on the law and that he was confident of success. He
urged prudence on our part, concerned that if the U.S. were
too far out in front, opponents of the law could play the
nationalist card. While he recognized Paraguayan efforts
were primary in turning the page on corruption, he considered
U.S. support in the form of the MCA TP and ultimately an MCA
Compact as critical.

Senators Signal Support for Law with Modifications
-------------- --------------


3. O'Brien's visit with ANR Senators Pedrozo and Rachid,
respectively the Presidents of the Finance and Legislation

Commissions charged with reviewing the bill, prompted a frank
exchange. Pedrozo recounted that he had meet recently with
U.S. Senator Coleman and State Department officials who
stressed the need for movement on the law. A businessman
himself, Pedrozo assured O'Brien he appreciated the need for
Paraguay to "formalize" its economy. The law would
necessarily undergo modifications but he was convinced it
would be adopted. Rachid remarked that he desired closure
first on penal and procedural code reform before moving to
adopt the money laundering law but that he too recognized the
need to move on the latter. Rachid maintained that concerns
about funds flowing from the Arab community to terrorist
groups were overplayed; he recommended greater focus on
individual families, something Post already does.

Bankers Want to be Allies
--------------


4. O'Brien meet with Roberto Hattier, Executive Director of
the Bankers Association, calling on the group to take a
public stand in support of the law. Hattier noted that the
BA had narrowed its list of objections to the law to a mere
handful that they were committed to resolving. He maintained
that the group recognized the need for the law and planned to
join others from the business community in communicating this
message publicly.

Movement on Next Steps
--------------


5. Coming out of the O'Brien visit, post identified three
bars for progress in the coming weeks:

-- Negotiation of an agreed text of the law with the Bankers'
Association;

-- Wider publicity on the law, including educating the public
on common perceptions and the most important benefits of the
law;
-- Negotiation of the AML law with key Senators.

Post notes progress on the first two and is exploring options
for the third.

-- In the wake of O'Brien's visit, Banking Association
leaders stressed to Minister of Industry and Commerce, Raul
Vera, their commitment to coming to agreement on text. AML
law experts plan to meet with the lawyers from the BA on 3/16
and are optimistic about prospects for closing on an agreed
text. BA leaders have signaled readiness to join a host of
other business organizations in announcing publicly its
support for the law.

-- Post's Resident Legal Advisor (RLA) and Carlos Yegros, the
Director of SEPRELAD, are working together to develop a list
of the key misperceptions and benefits of the law. We plan
to work with Carlos Jorge Biedermann, President of the
Paraguayan Chamber of Advertisers to ensure it gets
appropriate public circulation. Separately, post's Military
Information Support Team (MIST) plans to release in coming
weeks a series of radio and television spots on money
laundering that will keep the issue in the public. We have
seen more positive press on an AML law in the last month than
we have in the prior two years.

-- Upon forging closure with the Banking Association, GOP
allies are looking at scheduling a series of meetings with
key Senators to pursue agreement on articles about which they
have registered concerns. An agreement with the Banking
Association on a draft text will resound significantly in the
Senate, as many Senators key off the position of the banks.

-- March 7 VP Castiglioni told DCM that President Duarte will
privately convoke ANR Senators within 2 weeks telling them to
pass the law.

OTA Participation in MCA Threshold Program Key
-------------- -


6. Post appreciates and shares Treasury's concern about
delays in the adoption of an AML law. U.S. pressure brought
to bear, including the visit of A/S O'Brien, has reinforced
for the GOP the importance we place on adoption of this law,
and has created momentum towards its adoption. President
Duarte and VP Castiglioni have conveyed their commitment to
adoption of this law and we intend to hold them to this
commitment.


7. The MCA Threshold Program is centered around addressing
GOP shortcomings in the areas of impunity and formality.
Strengthening investigation units as reflected in component 8
of this program is a key initiative. Under President Duarte,
Paraguay has taken some important steps to create a legal and
institutional framework to combat corruption, gaining
adoption of key legislation, including an unprecedented
personal income tax law and a new customs code, and creating
three investigative units in 2005 that will focus on the
predicate offenses of money laundering and terrorist
financing. These units operate in the Ministry of Finance
investigating criminal tax violations, the Customs
Directorate investigating criminal customs violations, and
the Finance Ministry itself conducing internal investigations
of corruption and waste, fraud and abuse. These three units
together with investigative units in the Anti-drug
secretariat (SENAD) assigned to investigate financial crimes

SIPDIS
related to drug trafficking and the Ministry of Industry and
Commerce assigned to investigate violations of intellectual
property rights, received basic criminal investigator
training provided by post in September and October 2005. The
GOP's FIU is already assisting investigators and prosecutors
in the analysis of financial intelligence relating to
undercover major criminal organizations, and plans to
implement a pilot project that would allow it to gather

financial information electronically from banks and other
obligated entities.


8. Post recognizes that these units could better execute
their mission with a new AML law. However, we also believe
much can be done now, on the basis of the units created to
date and the laws already adopted, to tackle corruption and
counter the flow of illicit funds to criminal and terrorist
organizations. Through Treasury's OTA program, post has made
an important contribution to standing up and training
Paraguay's new investigation units. Now that the units are
up and running, continued OTA assistance, including through
the MCA TP, is critical as the units begin to focus on
specific cases and the myriad of complications that enter
into play. Post strongly supports OTA's continued leadership
of USG efforts to engage, train, mentor, and guide Paraguay's
investigation units to ensure they enjoy the full benefit of
OTA's institutional knowledge and expertise in this area.
(Note: This cable reflects the views and input of post's TDY
OTA Legal Enforcement Advisor. End Note.)


9. A/S O'Brien did not have a chance to clear on this cable
before departing post.
CASON