US embassy cable - 05ASUNCION1137

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 &not 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