Smuggling report fuels Paraguay corruption concerns

Significance

The response from Tabesa and the finance ministry was disproportionately hostile. That may be linked to a much-delayed in-country review of illicit activities that is being conducted by Gafilat, the regional affiliate of the international Financial Action Task Force (FATF).

Impacts

• The contraband cigarette trade is expanding the influence of Brazilian crime gangs in Paraguay.
• Reports of tax evasion and money-laundering in the sector will draw renewed scrutiny of high-level corruption.
• Failure to implement transparency measures will deter legitimate inward investment.