ABA ROLI Trains Both Public and Private Entities to Implement Targeted Financial Sanctions, Enabling Successful Practical Outcomes that Froze Suspicious Accounts in Less than 24 Hours

Paraguay recently underwent a mutual evaluation by the Financial Action Task Force for Latin America (GAFILAT), a regionally based intergovernmental organization. Among the areas identified for improvement was the need to strengthen measures and mechanisms for enforcing targeted financial sanctions related to the financing of terrorism. To address this, the American Bar Association Rule of Law Initiative (ABA ROLI), through its Countering the Financing of Terrorism (CFT) program, conducted a training workshop on “Receiving, Processing, and Applying Targeted Financial Sanctions," followed by a simulation exercise to apply the acquired knowledge.

In South America, the Tri-Border Area (TBA) of Argentina, Brazil, Paraguay is commonly known as a hub for criminal activities for terrorist financing networks. Their broad range of large-scale criminal schemes in the region include money laundering, smuggling, fraud, and counterfeiting, to which residents of Argentina, Brazil, and Paraguay may unwittingly contribute via their everyday activities. In response to this, ABA ROLI began implementing the CFT program in 2022, in partnership with the International Governance and Risk Institute (GovRisk) & K2 Integrity. The program provides technical support to the governments, financial sector, and civil society of the TBA to combat the financing of terrorism, thereby reducing the capacity of terrorist organizations to move assets and to conduct terrorist attacks. It is funded from the U.S. Department of State Bureau of Counterterrorism.

The training was held from June 5 to 6 in collaboration with the National Secretariat for the Prevention of Money Laundering or Asset Forfeiture (SEPRELAD) at their headquarters. The event was attended by all members of Paraguay's intelligence committee, with virtual participation from compliance officers of private entities, such as the Itaú bank, GNB bank, and others responsible for applying these sanctions.

Paraguay’s legislation governing these processes is relatively new, having come into effect in 2019. Therefore, the workshop aimed to educate members of the public and private sectors on the proper course of action in the event of a cooperation request from a third-party country requiring the application of targeted financial sanctions.

The training was delivered by Mariano Federici, former member of the Financial Action Group for Latin America, as well as former president of the Argentine Financial Intelligence Unit. It provided insight into the new regulations and procedures that allow for the immediate freezing of assets without hesitation when a request from another country raises a higher risk of terrorist links.

The former Vice Minister of SEPRELAD, Carmen Pereira, expressed, "The procedure allowed us to understand the step-by-step process, identify our gaps, and ensure that this sanction can be applied for immediate cooperation, preventing the mobilization of funds for terrorist purposes."

The simulation exercise took place on June 7, where Argentina ‘issued’ a request for targeted financial sanctions—prompting all participating public and private sector organizations to act and fulfill their responsibilities. Vice Minister Pereira highlighted that nearly 70% of top authorities participated in the exercise, prioritizing its significance over their daily duties.

Finally, on June 8, the training workshop concluded with a feedback session from the exercise identifying strengths and areas for improvement in the procedures. Individual feedback was also provided to each participant to maximize their learning experience.

Within a week of the training workshop and simulation, one of the participating compliance officers discovered through a news report that an individual who operated within their institution might have connections to terrorism based on an Argentine domestic list. Consequently, the officer reported this to SEPRELAD and sent an inquiry to Argentine authorities to decide whether asset freezing should be pursued.

“In less than 24 hours, Paraguay sent the inquiry, and Argentina responded with the asset freeze request. We were very satisfied to see that everyone was ready for action. The entire process started on a Friday, and the asset and value freezing were completed by Monday.”

Vice Minister Carmen Pereira commending the process.

The legal process is ongoing in the country, but thanks to the swift response of the entire Paraguayan intelligence committee and the compliance officers of various private entities, assets totaling more than two million dollars were frozen. This achievement underscores the significant importance of ongoing training activities.

In her concluding remarks, Vice Minister Pereira emphasized, "Compliance officers have told us that these training sessions and exercises need to be conducted regularly so that we are well-prepared for any situation that may arise. Today, we can confidently say that Paraguay has a mechanism to cooperate with countries facing targeted financial sanctions situations, and we guarantee that this mechanism can be activated promptly, effectively, and efficiently when needed."