According to data published by The Global Findex Database 2021 survey, Paraguay had a bank account ownership rate of 54%. Furthermore, according to the latest data published by the Central Bank of Paraguay ("BCP") in August 2023, the population's bank account ownership rose to approximately three-quarters of the country's population, at 76%.
This substantial surge in account ownership in recent years can be attributed not only to the growth of traditional financial institutions in the country but also to the emergence of Fintech companies in the Paraguayan financial market.
Fintech companies have become key tools for financial inclusion. The Fintech industry has generated disruptive alternatives for financial inclusion all around the world, which governments have been regulating and adopting in their inclusion efforts.
We will provide a brief summary of the latest advances in the regulation of the current main Fintech tools in Paraguay, including aspects closely related to these tools, such as personal data and its treatment. The summary will be delivered in four sections.
In this first section, we will highlight relevant aspects of the regulation of one of the most effective financial inclusion tools offered by the Fintech industry: digital wallets or, as referred hereafter: e-wallets..
Entities that provide e-wallet services in Paraguay are known as EMPE or EMPEs. EMPEs are companies authorized and supervised by the Central Bank of Paraguay to process, manage, and, in general, provide services related to mobile money and e-wallets. Through e-wallets, users can make payments to businesses and transfer electronic money, whether to users of the same e-wallet, different e-wallets, or even to individuals who do not have accounts with any of the e-wallets operating in the country.
With approximately 2.7 million active accounts and monthly transactions of approximately $160 million, e-wallets play a significant role in the country's digital transformation and serve as a tool for financial inclusion.
1.1. Applicable Law
Regulation of e-wallets in Paraguay consists of a set of resolutions issued by BCP and the Secretariat for the Prevention of Money Asset Laundering ("SEPRELAD").
Among the BCP's resolutions are Resolution No. 6/14 and its amendment, No. 6/20, which establish the general conditions for the operation and registration of EMPEs in Paraguay. Additionally, Resolution No. 10/2019 contains provisions related to the information that EMPEs must provide annually to BCP as the regulatory authority.
In addition, SEPRELAD Resolution No. 77/20 outlines the operational framework of measures to combat money laundering and the financing of terrorism that EMPEs must implement, as well as the authorities responsible for supervising these procedures within their structure.
1.1.1. BCP Resolutions
BCP issued Resolution No. 6 in 2014 which -along with its amendment, Resolution No. 6, issued in 2020- currently serves as the national regulatory framework for EMPEs and e-wallets. Through this resolution, BCP declares that e-wallets should be considered as financial inclusion tools that aim to integrate the unbanked population into the national financial system. In this scenario, e-wallets seek to address market needs related to small-scale commercial financing.
In that sense, the documentation requirements for user registration with e-wallets are straightforward, and the registration process is entirely digital.
The Resolution mandates that EMPEs may provide e-money provisioning services and non-bank electronic transfers ("remittances") among their users and the general population through their e-wallets. It also establishes that electronic money will be accepted as a means of payment and will be convertible into cash.
It's worth noting that EMPEs are not authorized to engage in financial intermediation activities or to grant loans from their own funds to users. Also, the funds deposited by users in their accounts do not constitute bank deposits.
Instead, e-wallets function more as a platform for storing electronic money, allowing users to convert their cash into electronic money that can later be converted back into cash, usually for a commission fee charged by the EMPE.
In line with BCP's focus on small-scale activities, the limit on the amount of electronic money that users can store in their accounts is quite limited. Funds exceeding this limit are deposited in a financial institution.
A monthly limit for sending and receiving money transfers is also set for users. If this limit is exceeded, these transactions are made through accounts opened with financial institutions.
As mentioned above, e-wallet users can send money to individuals who do not have an e-wallet account. In that case, the funds can be withdrawn, or the individuals can register with the e-wallet through which the transfer was sent and use the funds from their new e-money account.
Regarding the security of e-money stored in e-wallets, the BCP's regulatory policy stipulates that all funds held by each account holder, agent and point of sale must be held in trust or deposited with the BCP. In fact, EMPEs may secure these funds using both methods, provided that the trust and BCP deposits cover all funds held by account holders, agents, and points of sale. In practice, most EMPEs in the country have chosen to establish trusts as their method of securing funds.
1.1.2. SEPRELAD Resolutions
EMPEs have their own Anti-Money Laundering (AML) and Counter-Terrorism Financing (CTF) Rules and Regulations, issued by SEPRELAD through Resolution No. 77/20. This resolution includes, among other measures, the requirement to conduct due diligence on e-wallet users.
In addition, the resolution mandates the existence of an AML and CTF Committee, which must include at least two members of the EMPE Board of Directors. This committee will be chaired by the EMPE's Compliance Officer, who must have a direct, full-time and exclusive employment relationship with the EMPE or its economic group and hold a top management position.
 This includes accounts owned at any regulated institution, such as banks, credit unions, microfinance institutions and e-wallets.
 Financial Inclusion Indicators and Data. August 2023. Central Bank of Paraguay.
 Statistical and Financial Bulletin of EMPEs. July 31, 2023. Central Bank of Paraguay.