Panama Fails to Address Financial Crime and Corruption
A High-Risk Jurisdiction
A recent assessment by the global anti-money laundering watchdog, the Financial Action Task Force (FATF), has revealed that Panama remains a high-risk jurisdiction for financial crime and corruption. The country’s Mutual Evaluation 2018 report card highlights several areas where Panama falls short in implementing key recommendations to combat money laundering, terrorist financing, and other financial crimes.
Key Findings
- Assessing Risk and Applying a Risk-Based Approach: Panama is deemed “partially compliant” in this area. The country’s financial institutions are not effectively identifying and mitigating high-risk transactions, leaving them vulnerable to exploitation by criminals.
- National Cooperation and Coordination Mechanisms: Panama is also partially compliant in implementing national cooperation and coordination mechanisms to combat financial crime. There is a lack of effective communication and coordination between different agencies and institutions responsible for tackling financial crimes.
- Legislative Framework: The country’s laws do not adequately address key aspects of anti-money laundering, including the confiscation of proceeds of crime and the freezing of assets suspected to be linked to illicit activities.
- Financial Institution Secrecy Laws: Panama’s financial institution secrecy laws are deemed “non-compliant” with international standards. This makes it difficult for authorities to access information about suspicious transactions and individuals involved in financial crimes.
Recommendations
To address these weaknesses, Panama’s authorities are urged to:
- Strengthen Legislative Framework: Effectively combat financial crime and corruption by strengthening the country’s legislative framework.
- Improve Cooperation: Enhance cooperation between different agencies and institutions responsible for tackling financial crimes.
- Enhance Transparency: Increase transparency and beneficial ownership of legal persons and arrangements.
- Combat Correspondent Banking: Implement effective measures to combat the use of correspondent banking for money laundering.
By addressing these weaknesses, Panama can demonstrate its commitment to combating financial crime and corruption, and restore its reputation as a trustworthy jurisdiction.