THE CONGRESS OF THE PARAGUAYAN NATION ENACTS THE FOLLOWING
WITH FORCE OF LAW:
The present Law:
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Regulates the obligations, measures and procedures to prevent
and forestall the use of the financial system and other sectors of
economic activity for the commission of acts to launder money or
property derived directly or indirectly from the criminal
activities covered by this Law, such acts being hereinafter
described as offences of money or property laundering;
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Establishes and penalizes the offence of money or property
laundering; and
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Shall apply without prejudice to other acts or omissions
established and penalized under criminal law.
For the purposes of this Law:
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Proceeds" means property obtained or derived directly or
indirectly from the commission of an offence established under this
Law;
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Property" means assets of any kind, whether corporeal or
incorporeal, movable or immovable, tangible or intangible, and the
legal instruments or documents evidencing title to or interest in
such assets;
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Crime" means any offence for which the mid-range penalty
of imprisonment is more than two years;
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Criminal gang" means a structured or organized
association of three or more persons formed for the purpose of
committing punishable acts or achieving its aims by the use of
arms, and any persons who assist them economically or provide them
with logistic support; and
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Terrorist group" means a structured or organized
association of three or more persons that uses violence, including
the commission of offences, to achieve its political or ideological
aims, including its moral mentors.
An offence of money or property laundering shall be committed by
anyone who fraudulently or wrongfully:
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Conceals any proceeds derived from a crime, or from an offence
perpetrated by a criminal gang or terrorist group, or from an
offence established under Law No. 1.340/88[ 1 ] suppressing the
illicit traffic in narcotic and dangerous drugs, or under any
amendments thereto;
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Disguises the origin of such proceeds, frustrates or endangers
the discovery of its source or location thereof, or the
disposition, seizure, confiscation, distraint or provisional
attachment thereof; and
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Obtains, acquires, converts, transfers, keeps or uses, for
himself or another, proceeds as referred to in subparagraph (a)
above. Assessment of knowledge or negligence shall be based on the
circumstances and physical elements of the specific case
concerned.
The offence of money or property laundering shall be punished by
a penalty of imprisonment of between two and ten years.
The judge may refrain from applying the penalty to an accomplice
or accessory if that person voluntarily and effectively cooperates
with the authorities in uncovering the unlawful criminal act
established under the present Law, in identifying the main
perpetrators or in locating the property, interests or assets
forming the subject of the offence.
The property or instrumentality used in the preparation or
commission of the offence of money or property laundering shall be
confiscated.
Should the perpetrator of the offence of money or property
laundering obtain any income therefrom, for himself or for a third
party, such income shall be confiscated.
Should special confiscation not be possible, the payment of a
sum of money equivalent to the value of the income obtained shall
be ordered in place thereof.
In the event of confiscation or special confiscation, ownership
of the confiscated item or interest shall pass to the State at the
time when the sentence becomes enforceable.
Confiscated property shall be disposed of in the manner set out
in this Law.
The penalties and measures set out in this Law shall apply
without prejudice to the rights of bona fide third parties.
All persons who may have a legitimate interest in judicial
proceedings initiated pursuant to this Law shall be summoned by
means of public notices to be published over ten consecutive days
in two newspapers having a wide circulation.
Incitement, complicity or concealment, as well as attempted and
frustrated offences shall also be punishable, in accordance with
the provisions of this Law.
An incitor shall be liable to the same penalty as that imposed
on the actual offender; complicity shall incur one half of the
penalty applicable to the actual offender, and concealment one
fifth of the penalty applicable to the actual offender.
An attempted offence shall be punished by one half of the
penalty applicable to the consummated offence and a frustrated
offence by two thirds of the penalty applicable to the consummated
offence, in accordance with the relevant provisions of the Penal
Code.
The fact that employees, officers, managers, owners or other
authorized representatives of the obligors, acting as such,
participate in the offence of money or property laundering shall
constitute an aggravating circumstance.
The penalties referred to in the preceding articles shall be
doubled if the accused was a public official at the time when the
offence was committed.
The obligations set out in this chapter shall apply to:
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All transactions in excess of ten thousand US dollars or the
equivalent thereof in other currencies, subject to the exceptions
provided for in this Law; and
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Any transactions for less than the amount indicated in the
preceding subparagraph if it may be inferred from such transactions
that they were divided into several operations for the purpose of
evading the identification, recording and reporting
obligations.
The following entities shall be subject to the obligations set
out in this chapter:
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Banks;
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Financial institutions;
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Insurance companies;
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Bureaux de change;
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Stockbroking companies and securities dealers (stock
exchanges);
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Investment companies;
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Trust companies;
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Administrators of mutual investment and pension funds;
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Credit and consumer cooperatives;
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Gambling establishments;
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Real estate agencies;
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Non-governmental organizations and foundations;
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Pawn shops; and
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Any other natural person or legal entity regularly engaged in
financial broking, trading in precious metals, stones and
jewellery, works of art or antiques, or investing in stamps or
coins.
The obligors shall record and check, by reliable means, the
identity of their clients, whether regular or occasional, upon
entering into business relations with them, as well as of all
persons intending to carry out transactions.
Identification shall consist of establishing the actual
identity, party stated as being represented, domicile and
occupation or corporate purpose in the case of a legal entity.
If there is reason to assume or certain knowledge that clients
are not acting on their own behalf, the obligors shall obtain
precise information in order to ascertain the identity of the
persons on whose behalf they are acting.
The obligors shall identify and record clearly and precisely any
transactions conducted by their clients.
The obligors shall keep for a minimum period of five years any
documents, files and correspondence establishing or identifying the
transactions. The five-year period shall be computed from
completion of the transaction or from the time when the account was
closed.
The obligors shall report any act or operation, regardless of
the sums involved, if there is an indication or a suspicion that
such act or operation is connected with an offence of money or
property laundering.
The following in particular shall be considered suspicious
transactions:
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Operations which are complex, unusual or large, or do not follow
the pattern of habitual transactions;
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Operations which, although not large, occur periodically and
with no reasonable legal or economic basis;
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Operations which by their nature or volume are not consistent
with the credit or debit operations conducted by the clients in the
light of their activities or previous business practice; and
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Operations which, with no justifiable cause, involve cash
payments by a large number of persons.
Obligors shall not reveal, either to the client or to third
parties, any steps taken or communications effected by them in
compliance with the obligations set out in this Law and the
regulations issued hereunder.
Obligors, whether or not legal entities, shall establish
appropriate procedures for the internal auditing of information in
order to discover, forestall and prevent the execution of any
operations for the purpose of money or property laundering. The
obligors shall notify their directors, managers, and employees and
impose on them the duty to comply with the provisions of this Law,
and with the internal procedures and regulations, for the purposes
indicated in this article.
Obligors shall provide all information relating to the matters
covered by this Law that may be required by the enforcement
authority hereby established, in which case provisions concerning
bank secrecy shall not apply. None the less, the duty of bank
secrecy shall be observed by the enforcement authorities; unless
the criminal court judge requests such information, and then only
in relation to a specific pre-trial investigation or lawsuit.
Obligors who operate gambling establishments, particularly
casinos, shall comply with the provisions of article 19 if
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Payments are made to clients by cheque in exchange for gambling
tokens;
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The transfer of funds to a bank account or any other payment
procedure not involving cash is authorized or ordered; and
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Certificates are issued of the client's winnings.
Failure to comply with the obligations set out in this chapter
and in the regulations shall be punished by:
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A caution;
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A public reprimand;
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A fine of between 50 (fifty) and 100 (one hundred) per cent of
the amount of the transaction in the course of which the offence
was committed; and
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Temporary suspension for between thirty and one hundred and
eighty days.
The penalties applicable in respect of the commission of
offences set out in the preceding article shall be graduated taking
account of the following circumstances:
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The degree of responsibility or wilfulness in the commission of
the acts;
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The prior conduct of the obligor with regard to the requirements
set out in this Law;
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The income derived from the offences;
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Voluntary efforts to mitigate the effects of the offence;
and
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The seriousness of the committed offence, under the terms of
this Law.
A secretariat for the prevention of money and property
laundering, to be attached to the Office of the President of the
Republic, shall be established as the authority responsible for
enforcing the present Law.
The Secretariat for the Prevention of Money and Property
Laundering shall be made up of:
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The Minister of Industry and Trade, who shall preside over the
Secretariat;
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A member of the board of directors of the Central Bank of
Paraguay, nominated by the board, who shall deputize for the
president if the latter is absent or indisposed;
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A member of the National Securities Commission, nominated by the
Commission;
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The Executive Secretary of the National Drug Control Secretariat
(SENAD);
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The Superintendent of Banks; and
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The Commander of the National Police Force.
The Secretariat for the Prevention of Money and Property
Laundering shall have the following functions and duties:
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It shall, within the framework of the laws, issue administrative
regulations to be observed by the obligors with a view to
preventing, detecting and reporting operations to launder money or
property;
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It shall obtain from public institutions and the obligors all
information that may be related to money laundering;
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It shall examine information received in order to establish
suspicious transactions and operations or patternsof money or
property laundering;
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It shall keep statistical records of the movement of property
connected with money or property laundering;
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It shall order the investigation of any transactions that give
rise to a reasonable presumption of an offence of money or property
laundering;
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It shall refer to the Office of the Public Prosecutor any cases
in which circumstantial evidence arises of the commission of an
offence of money or property laundering so that the appropriate
judicial investigation may be initiated; and
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It shall report to the bodies and institutions responsible for
supervising the obligors any detected cases of administrative
infringements of the law or the regulations, for the purposes of
their investigation and punishment, as appropriate.
Administrative infringements of the law and the regulations
relating to the offence of money or property laundering may be
regulated, investigated and penalized only through the institutions
responsible for the supervision and monitoring of the obligors,
according to their nature.
The procedure shall be as established in the relevant laws
governing each obligor.
The Secretariat for the Prevention of Money and Property
Laundering shall administer a financial analysis unit, to be
composed of professional and technical staff skilled in finance and
data processing, for the purpose of evaluating and analysing the
information received by the Secretariat.
The investigation referred to in subparagraph 5 of article 28
shall be carried out by the Economic Crime Investigation Unit,
attached to SENAD.
All individuals working for the Secretariat for the Prevention
of Money or Property Laundering and anyone obtaining from it
information of a confidential nature or having knowledge of its
activities or of particulars of a similar nature shall be obliged
to maintain professional secrecy. Failure to comply with this
obligation shall give rise to liability as stipulated by law.
Pursuant to international agreements and conventions, the
Secretariat for the Prevention of Money and Property Laundering
shall assist in the exchange of information, directly or through
international agencies, with the enforcement authorities of other
States exercising similar jurisdiction, which shall also be subject
to the duty of confidentiality. The relevance of aspects relating
to sovereignty and the protection of national interests shall be
evaluated when responding to requests for information from other
States.
Information furnished to the Secretariat for the Prevention of
Money and Property Laundering in compliance with this Law and
regulations shall not constitute a breach of secrecy or
confidentiality, and obligors, their managers, directors and
officers shall be exempt from civil, criminal and administrative
liability, regardless of the outcome of the investigation, except
in the event of their complicity in the offence under
investigation.
If the offence established under the present Law was committed
on Paraguayan territory, the courts of the Republic of Paraguay
shall have jurisdiction, without prejudice to any investigations
that may be or have to be conducted under foreign jurisdiction in
connection with related offences, and whether or not the offences
that gave rise to the proceeds from laundering took place in a
different territorial jurisdiction.
The judge may, ex officio or at the request of a party,
upon the commencement or at any stage of the proceedings, order the
provisional attachment or distraint of the property or any other
precautionary measure for the purpose of safeguarding the property,
proceeds or instrumentalities connected with the offence
established in article 3 of this Law.
Property, proceeds and instrumentalities as referred to in the
preceding article which do not have to be destroyed or are
dangerous to the population, shall be transferred, once the final
judgement becomes enforceable, to organizations specializing in the
fight against illicit trafficking in and the control and prevention
of the abuse of narcotic drugs and psychotropic substances, for the
purposes of rehabilitation and social
reintegration of addicts. The judge may rule that part of the
proceeds from the property be transferred to another country that
has participated in their seizure, provided that international
agreements governing the matter exist.
Judicial cooperation
The competent judge shall cooperate with his counterparts in
other States in the processing of warrants of attachment and other
precautionary measures, as provided for in our procedural law, for
the purpose of identifying the offender and locating the property,
proceeds and instrumentalities connected with the offence
established in article 3 of this Law, to which end he shall grant
all requests made by letters rogatory received from abroad.
To be communicated to the Executive.
Done in the Chamber of Senators on the twenty-fourth day of the
month of October of the year one thousand nine hundred and
ninety-six, and in the Chamber of Deputies, the Law being enacted
on the third day of the month of December of the year one thousand
nine hundred and ninety-six.
Atilio Martínez Casado Miguel Abdón
Saguier
President President
Chamber of Deputies Chamber of Senators.
Edgar Ramirez Cabrera Victor Sánchez Villagra
Parliamentary Secretary Parliamentary Secretary
Asunción, 10 January 1997
To be regarded as a law of the Republic, published and placed in
the Official Registry.
The President of the Republic
Angel Roberto Seifart
Vice-President of the Republic,
Acting President
Luis Vera Cañisa Juan Manuel Morales
Deputy Minister Minister of the Interior
of Finance
Sebastian González Insfrán Dario Peralta
Sosa
Minister of Justice and Labour Deputy Minister of Industry and
Trade
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