Paraguay Audits Local Crypto Industry to Adopt FATF-Style Regulations

Paraguay Audits Local Crypto Industry to Adopt FATF-Style Regulations

A nationwide crypto survey, announced by the Latin American anti-money-laundering chief on Dec. 20, directed every one of Paraguay’s virtual asset service providers (VASPs) to open their books to the government for the first time and the direction is going to roll out in the first half of 2020. It is thought that the mass audit will help the government of Paraguay to understand its internal crypto industry and it will also facilitate the country’s first crypto-specific regulations.

The audit is supposed to alleviate the risk of misuse and the government can measure the degree of adoption, sophistication and size of the virtual asset market in Paraguay. The central bank of Paraguay warned that only the guarani currency is legal currency last June. Here bitcoin regulation was a financial afterthought as informal employment represents more than half of Paraguay’s total jobs. The latest regulatory guidance, Recommendation 15, of FATF enhanced pressure for Paraguay to develop crypto standards and the guidance also expanded AML benchmarks for the inclusion of technologies such as virtual assets.

Paraguay has been directed to comply with the Recommendation 15 and the government should implement baseline oversight on the customers’ doings with counter-financing of terrorism (CFT) protocols and AML safeguards.

Eventual Inclusion

The audit by SEPRELAD, the Secretary for Preventing Money and Property Laundering, is leading VASPs to the way of eventual inclusion in Paraguay’s formal financial landscape as it seems. The banking sector of the country has the excuse to deny business-facing bitcoiners baseline financial tools. The banks said to VASPs that it is not being controlled by SEPRELAD so it is on risk. Reportedly, VASPs then store a huge amount of cash in private vaults. Through they are not required to go under law, industry members already engage in self-governance. Actually banks don’t want to work with that guidance and law so users in Paraguay auto-regulate themselves.

Will it be accepted?

With an eye to finding a common ground, a conference was held between SEPRELAD and Congressman Sebastian Garcia. Then SEPRELAD determined the sector is ‘’predisposed’’ to working with it on FATF compliance. But government oversight was not accepted by everyone in the community. Some other people was angry about SEPRELAD oversight in the hearing. It is expected that some businesses and groups will hold out it even it is risky indeed.

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