Financial Crime World

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Panama’s Anti-Money Laundering and Combating Financing of Terrorism Efforts Under Scrutiny

A recent report has shed light on Panama’s efforts to combat money laundering (ML) and financing of terrorism (CFT). The report, which analyzed the country’s compliance with the 40 Financial Action Task Force (FATF) Recommendations, found several weaknesses in its anti-money laundering and CFT systems.

Key Findings

According to the report, Panama has identified drug trafficking, organized crime, smuggling, and other international trade-related offenses as the main risks of ML. However, it was noted that tax crimes committed abroad are a significant source of income for criminal activities, which is not currently considered in the country’s National Risk Assessment (NRA).

Weaknesses in Panama’s AML/CFT System

The report identified several weaknesses in Panama’s AML/CFT system, including:

  • Low registration of suspicious transaction reports (STRs) by reporting institutions, particularly in high-risk sectors such as real estate and construction.
  • Limited understanding of terrorism financing risks among financial institutions and designated non-financial businesses and professions (DNFBPs).
  • Inadequate detection of possible cases of TF by reporting institutions.
  • Limited understanding of ML risks among DNFBPs.

Efforts to Strengthen AML/CFT System

Despite these weaknesses, the report noted that Panama has made efforts to strengthen its AML/CFT system. For example:

  • The country is implementing a model change from a mixed inquisitive system to an accusatory system for criminal procedures.
  • There are evidence of efforts by authorities to prosecute ML cases related to drug trafficking and corruption investigations.
  • The number of reported convictions has increased, with most being linked to ML from drug trafficking.

Recommendations

The report made several recommendations to strengthen Panama’s AML/CFT system, including:

  • Improving the understanding of TF risks among financial institutions and DNFBPs.
  • Increasing the registration of STRs by reporting institutions.
  • Enhancing the detection of possible cases of TF by reporting institutions.
  • Strengthening the investigation and prosecution of ML cases.

Overall, while Panama has made efforts to combat ML and CFT, there are still significant weaknesses in its AML/CFT system that need to be addressed.