HomeNewsBriefBrazilian Bank Slapped With Record Money Laundering Fine in Paraguay

Brazilian Bank Slapped With Record Money Laundering Fine in Paraguay


Paraguayan authorities have announced historic sanctions against a major Brazilian bank in the latest case of Latin American governments cracking down on financial institutions that do not comply with anti-money laundering regulation.

On October 29, Paraguay’s Ultima Hora announced that the Central Bank of Paraguay (Banco Central del Paraguay - BCP) had imposed a $9.64 million fine on Brazil’s Banco Itaú for breaking anti-money laundering regulations last August 2020.

The bank had allegedly failed to report suspicious transactions to the Secretariat for the Prevention of Money or Property Laundering (Secretaría de Prevención de Lavado de Dinero o Bienes – SEPRELED), thereby violating Article 19 of Paraguay’s Law No. 1015 concerning money laundering.

SEE ALSO: Paraguay Currency Exchanges Launder Vast Amounts of Brazil Drug Money

This was the largest fine related to money laundering in Paraguayan history, Diego Marcet, general director of SEPRELED’s legal department told Radio Universo, adding that a lack of adherence to anti-money laundering regulations was systemic.

In response, Banco Itaú’s stated the fine was due to a specific incident on August 21 that the bank had reported itself and that it had a strict and rigorous money laundering prevention policy, according to news website RDN. The bank reportedly already lost its first appeal on September 9 but it may do so again.

And this is but the latest fine Banco Itaú has faced of late. In October 2019, Brazil’s Operation Car Wash (Lava Jato) anti-corruption probe found Banco Itaú had enabled $16.4 million worth of illegal transactions used for the payment of bribes. This was followed one month later by the city of São Paolo fining Itaú a gargantuan $662 million for evading state taxes. And in June 2019, the bank agreed to return $13.1 million to the 4.7 million customers it over-charged from 2008 to 2018, as well as paying a penalty of nearly $2 million.

InSight Crime Analysis

Big banks in Latin America have wilfully ignored anti-money laundering controls while profiting from illicit flows. Yet the surprising sanctioning of Banco Itaú by Paraguayan authorities may mean such impunity is finally beginning to be challenged.

In 2019, Paraguay was named in one index as the country with the second-highest risk of money laundering in Latin America. That same year, Brazilian authorities requested the extradition of former Paraguayan President Horacio Cartes (2013-2018) to face money laundering charges related to the Odebrecht scandal.

Paraguay’s role as South America’s main provider of both marijuana and counterfeit goods mean there is plenty of dirty money swirling around, while endemic police corruption, struggling judicial systems and the penetration of Brazilian organized crime mean the state lacks any meaningful enforcement capacity of even basic illegal activities, let alone more sophisticated financial crimes.

Yet this case may highlight tentative progress in Paraguay, with the aforementioned index noting a slight decrease in Paraguay’s vulnerability since 2017. This is perhaps due to a delayed effect of important steps taken in 2015 to combat the problem, such as the creation of an anti-money laundering unit within the Attorney General’s Office.

SEE ALSO: Latin America's Weak Points in Fighting Money Laundering

Paraguayan law enforcement are heavily dependent on Brazilian intelligence to conduct raids, making the fining of Banco Itaú particularly interesting. Investigating money laundering within an international bank is a complex matter yet Brazilian authorities appear not to have played a role with Itaú not having been sanctioned in Brazil on the same charges.

Brazilian banks became enmeshed in their own scandals during the “Lava Jato” investigation, which discovered that the country’s five biggest banks, including Itaú, had allowed the laundering of some $325 million used to pay bribes. Paraguayan financial institutions, particularly currency exchanges, have also laundered money for Brazilian criminal groups.

The most famous scandal related to banks laundering criminal proceeds came in 2012 when HSBC was famously fined $1.9 billion in the United States and $27.5 million in Mexico for negligently laundering over $881 million for Mexican and Colombian cartels.

But hopes the record sanctions would lead to substantive change never transpired. In September 2020, a new investigation by Connectas and Quinto Elemento Lab revealed that a former HSBC official, who had allegedly enabled corrupt clients to maintain their bank accounts in violation of the bank’s regulations, was now a senior anti-money laundering official in the Mexican government.

share icon icon icon

Was this content helpful?

We want to sustain Latin America’s largest organized crime database, but in order to do so, we need resources.


What are your thoughts? Click here to send InSight Crime your comments.

We encourage readers to copy and distribute our work for non-commercial purposes, with attribution to InSight Crime in the byline and links to the original at both the top and bottom of the article. Check the Creative Commons website for more details of how to share our work, and please send us an email if you use an article.

Was this content helpful?

We want to sustain Latin America’s largest organized crime database, but in order to do so, we need resources.


Related Content


El Salvador's government has approved the creation of a police unit to combat financial crimes, a welcome move in one…


A network of corrupt police officials allegedly involved in a major bribery scheme in Paraguay has been dismantled, further…

PARAGUAY / 19 APR 2013

On April 21 Paraguay votes for a new president and, if opinion polls are to be believed, a man thought…

About InSight Crime


InSight Crime’s Greater Focus on US-Mexico Border

20 JUL 2021

InSight Crime has decided to turn many of its investigative resources towards understanding and chronicling the criminal dynamics along the US-Mexico border.


Key Arrests and Police Budget Increases Due to InSight Crime Investigations

8 JUL 2021

With Memo Fantasma’s arrest, InSight Crime has proven that our investigations can and will uncover major criminal threats in the Americas.


Organized Crime’s Influence on Gender-Based Violence

30 JUN 2021

InSight Crime investigator Laura N. Ávila spoke on organized crime and gender-based violence at the launch of a research project by the United Nations Development Programme.


Conversation with Paraguay Judicial Operators on PCC

24 JUN 2021

InSight Crime Co-director Steven Dudley formed part of a panel attended by over 500 students, all of whom work in Paraguay's judicial system.


Combating Environmental Crime in Colombia

15 JUN 2021

InSight Crime presented findings from an investigation into the main criminal activities fueling environmental destruction in Colombia.