ParaguayParaguay was very cooperative in counterterrorism and law enforcement efforts, but its judicial system was hampered by a lack of strong anti-money laundering and counterterrorism legislation. On December 20, Paraguay's Congress passed improved anti-money laundering legislation as part of a major overhaul of the penal code; this statute will improve Paraguay's ability to effectively obstruct and prosecute money laundering and terrorist financing, particularly in Ciudad del Este. Counterterrorism legislation, introduced but not passed, will be critical to keep Paraguay current with its international obligations. The Congress Legal Reform Commission was also working on a criminal procedural code reform bill that would facilitate prosecution of money laundering and terrorism and modernize Paraguay's criminal justice system. Paraguay did not exercise effective immigration or customs controls at its borders. Efforts to address illicit activity occurring in the Tri-Border Area were uneven due to a lack of resources and, more principally, corruption within customs, the police, and the judicial sector. Despite expanded cooperation with other government entities and significant USG assistance over the past several years, Paraguay's Secretariat for the Prevention of Money Laundering (SEPRELAD) did not demonstrate the ability to monitor and detect money laundering in the first half of the year. However, with a change in leadership in August, SEPRELAD made significant progress. In November it secured approval of important insurance and credit union regulations, and paid a portion of its past dues to the Financial Action Task Force of Latin America (GAFISUD), preserving its membership in that organization. Paraguay still lacked terrorist finance legislation, however, and without it, the Egmont Group, which facilitates information exchange among Financial Intelligence Units, will likely suspend Paraguay. Despite pending constitutional appeals, the tax evasion case against Kassem Hijazi, a suspected Hizballah money launderer connected to 113 businesses, is at the trial stage. In a judicially suspect move, Hijazi's case was separated from related charges against forty-three defendants. The court excluded key evidence and summarily absolved all forty-three defendants in August. An appellate court reduced the 2006 sentence of suspected terrorist fundraiser Hatim Ahmad Barakat from six to three years. The United States assisted Paraguay with training for judges, prosecutors, and police in bulk cash smuggling, document fraud, terrorist financing; and investigating, preventing, and prosecuting individuals involved in money laundering. Under the Millennium Challenge Account Threshold Program3, the U.S. assisted Paraguay with training for judges, prosecutors, and police in investigation techniques that are critical to money laundering and terrorist finance cases. In December, Paraguay was invited to submit a proposal for a second phase Threshold program. Tri-Border Area (Argentina, Brazil, and Paraguay)The Governments of the Tri-Border Area (TBA), Argentina, Brazil, and Paraguay, have long been concerned with arms and drugs smuggling, document fraud, money laundering, and the manufacture and movement of contraband goods through this region. In the early 1990s, they established a mechanism to address these illicit activities. In 2002, at their invitation, the United States joined them in what became the "3+1 Group on Tri-Border Area Security" to improve the capabilities of the three to address cross-border crime and thwart money laundering and potential terrorist financing activities. The United States remained concerned that Hizballah and HAMAS sympathizers were raising funds in the TBA by participating in illicit activities and soliciting donations from sympathizers within the sizable Muslim communities in the region. There was no corroborated information, however, that these or other Islamic extremist groups had an operational presence in the TBA. Complete Report |
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