Panama Struggles to Tackle Financial Sector Fraud Amid International Pressure

A Protracted Stint on the Grey List

PANAMA CITY - Panama’s anti-money laundering and combating the financing of terrorism (AML/CFT) regime has been found wanting by international standards, resulting in a prolonged stint on the grey list of the Financial Action Task Force (FATF).

AML/CFT Regime Found Wanting

The FATF, which sets global anti-money laundering standards, last assessed Panama’s AML/CFT regime in 2017. At that time, it identified strategic deficiencies, including weaknesses in preventing the misuse of legal persons and arrangements for money laundering purposes.

Consequences of Failure to Meet Action Plan Deadlines

As a result, Panama was placed on the FATF grey list in June 2019, where it remained until October 2023. The country’s failure to meet its action plan deadlines in January 2021 only added to the pressure from the international community.

Recent Developments: Exit from the Grey List

However, following an onsite visit by the FATF in September 2023, Panama was finally able to demonstrate that it had completed all items on its action plan. This move paved the way for the country’s exit from the grey list at the FATF October 2023 Plenary.

Economic Implications and Challenges Ahead

The prolonged stint on the grey list has had significant economic implications for Panama, with the country facing increased scrutiny and potential reputational damage. The move highlights the ongoing challenges faced by Panama in bringing its financial sector in line with international standards.

Experts’ Views

Experts say that addressing these weaknesses will be crucial to maintaining stability and credibility within the global financial system. “Panama’s efforts to strengthen its AML/CFT regime are a step in the right direction,” said one expert. “However, there is still much work to be done to ensure that the country’s financial sector is robust enough to withstand international scrutiny.”

Future Assessments and Compliance

The FATF has been monitoring Panama’s progress closely and will continue to assess the country’s compliance with its action plan. With the grey list exit a welcome development for Panama, the focus now shifts to ensuring that the country’s AML/CFT regime remains on track to meet international standards.