Panama Fails to Meet International Anti-Money Laundering Standards, But Makes Progress

Introduction

Panama has been working to prevent financial crime, but its efforts have been met with criticism from global watchdogs. The country’s anti-money laundering and combating the financing of terrorism (AML/CFT) regime has faced challenges in meeting international standards.

Background

• Panama was placed on the grey list by the Financial Action Task Force (FATF), a global body responsible for setting AML/CFT standards, due to concerns over the misuse of legal persons and arrangements for money laundering purposes.
• In 2017, Panama’s mutual evaluation identified strategic deficiencies in its AML/CFT regime, prompting the FATF to place the country on its grey list in June 2019.

Progress Made

• Despite failing to meet its action plan commitments by January 2021, Panama made significant progress and was able to demonstrate completion of all items on its action plan during an onsite visit in September 2023.
• The country’s efforts were enough to persuade the FATF to remove it from the grey list at its October 2023 Plenary.

Challenges Ahead

• While Panama has taken steps to strengthen its AML/CFT regime, including implementing new regulations and increasing transparency around corporate ownership, there is still much work to be done to ensure that its AML/CFT regime is robust and effective.
• The country will need to continue working to meet global AML/CFT standards and avoid being placed back on the grey list in the future.

Future Outlook

• The FATF will continue to monitor Panama’s progress and provide guidance as needed to help the country meet its AML/CFT obligations.
• Panama’s efforts will be closely watched by global watchdogs, who will be looking for continued improvement and transparency around its AML/CFT practices.