Panama is leaving the FATF gray list

Panama left the gray list Financial Action Task Force (FATF). The information was confirmed by the President of the Republic, Laurentino Cortizo.

“I am announcing to the nation that Panama has been officially removed from the Financial Action Task Force’s gray list, following compliance with the country’s action plan and following an on-site visit (FATF), another important obligation for the development of the country has been fulfilled”, said Cortizo.

This announcement came during the FATF Plenary Meeting, held in Paris, France, which found that Panama has strengthened its system to prevent money laundering and terrorist financing and has implemented significant standards and actions that have enabled it to take important steps towards international transparency.

The decision is supported by countries in the region of Latin America, Asia and the European Unionas well as international organizations and the Latin American Financial Action Group (GAFILAT), of which Panama has been a part since 2010.

The work done in this situation, inherited, began in June 2019, when Panama retained 15 actions that were found not to be fulfilled. After various technical meetings with FATF’s group of expert assessors, in June 2023 the actions were considered largely complete.

Advantages
According to the MEF, removing Panama from the FATF gray list will have a positive effect on multiple aspects of the Panamanian economy and the international financial community:

Improves international image: By excluding Panama from the gray list, the image of that country at the international level is strengthened, as well as its commitment to transparency, not only national but also international, which will facilitate international economic and financial relations.

Advantages of increasing foreign investment and job creation: With the recognition of progress in the prevention of money laundering and financing of terrorism carried out by the state, an increase in foreign investment is expected, which will stimulate tourism, trade and the creation of new and more jobs, as well as opportunities in the country.

Promotes more affordable credit lines: Reducing costs and expanding credit lines, which will benefit individuals and companies seeking financing.

cAgencies for banking and improved international relations: This will lead to a significant improvement in the relationship between local banks in Panama and their international correspondents. The basic links necessary for financial operations will be strengthened.

Actions developed

Compliance with these actions included updating Chapters V. National risk assessments, in relation to the financing of terrorism (FT), which has been approved and distributed, covering relevant country threats, vulnerabilities and TF mitigation measures; personnel increase, both in the Financial Analysis Unit (UAF) and in the state ministry responsible for analyzes and investigations of terrorist financing.

Other measures included the development of a guide on identified risks and possible means of mitigating them for the non-financial sector; increasing the development of risk-based supervision, which include FT analysis as part of surveillance; adoption of the risk-based supervision plan for non-financial reporting entities (SONF), which shows significant progress in its implementation; completion and implementation of the Supervisory Board of Non-Financial Entities (SSNF) manual, among other aspects.

In addition, the prevention rule has been modified money laundering and financing of terrorism (AML/CFT), increasing sanctions for non-compliance up to $5 million (Act 254 of 2021), considering factors of proportionality and deterrence in the application of sanctions, as well as elements related to the seriousness of the offense, the degree of recidivism, the extent of damage and the size of the case; imposition of sanctions by the Supervisory Board of Panamanian Banks (SBP), the Supervisory Board of Insurance and Reinsurance (SSR), the Supervisory Board of the Securities Market (SMV) and the SSNF, with regard to non-compliance with regulations regarding the prevention of money laundering and the financing of terrorism.

Also, Law 129 from 2020 adopted the Unified Register of End Users (RUBF), which currently has a progress of 82% of the information population, and the verification of the corresponding information is also carried out. Likewise, the country issued a Guide for end users, in order to strengthen the knowledge and awareness of taxpayers in order to improve the identification and transparency of end users; and the lawyer contract was strengthened, thereby strengthening the supervisory capacity of the SSNF.

Additionally, UAF technical assistance has been increased; and it has been shown that the country can provide information through international requests related to tax crimes involving amounts of less than 300 thousand dollars, which proves that the threshold for internal tax evasion does not adversely affect the ability of the Republic of Panama to cooperate.

On the other hand, it was adopted“Guide to Investigating Tax Crime in Panama”; The number of money laundering investigations related to predicate offenses other than drug trafficking, including foreign predicate offenses, has increased; and was developed from the Tax Fraud Investigation Guide.