US embassy cable - 05ASUNCION1425

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