Financial Crime World

Panama’s Fight Against Terrorist Financing: A Mixed Bag

A recent report from the Financial Action Task Force (FATF) has evaluated Panama’s efforts to combat terrorist financing, revealing both commendable progress and areas that require improvement. The report issued a mixed bag of ratings, with some aspects deemed “compliant” while others were considered “largely compliant”.

Strengths

  • Risk Assessment: Panama was praised for its assessment of risk and application of a risk-based approach (R.1).
  • National Cooperation: The country received high marks for its national cooperation and coordination (R.2).

Weaknesses

  • Laws and Regulations:
    • Money laundering laws were deemed “non-compliant” (R.3).
    • Confiscation and provisional measures were only “largely compliant” (R.4).
    • Specific terrorist financing offenses are missing (R.5).
    • Targeted financial sanctions related to terrorism and terrorist financing are lacking (R.6).
  • Financial Institution Secrecy: Panama’s financial institution secrecy laws were deemed “non-compliant” (R.9).
  • Customer Due Diligence: The country’s customer due diligence measures received mixed ratings (R.10).
  • Record Keeping: Record keeping measures also received mixed ratings (R.11).

Areas for Improvement

  • Regulation and Supervision: Panama needs to improve its regulation and supervision of financial institutions (R.26).
  • Powers of Supervisors: The country’s powers of supervisors require strengthening (R.27).
  • Mutual Legal Assistance: Mutual legal assistance mechanisms need improvement (R.38).
  • Terrorist Financing Laws: Panama lacks specific laws related to terrorist financing and proliferation financing (R.7).

Progress and Commitment

Despite these shortcomings, the report noted that Panama has made significant progress in recent years, particularly in its efforts to prevent the misuse of shell companies and other corporate structures for terrorist financing.

In response to the report, Panama has committed to addressing the identified weaknesses and strengthening its anti-money laundering and counter-terrorism financing regime. The country is already taking steps to improve its regulatory framework and enhance cooperation with international partners.

Global Implications

As a major financial center, Panama plays a critical role in preventing the flow of funds to terrorist organizations. The FATF’s findings have implications for international cooperation and the global fight against terrorist financing.

In conclusion, it is essential that countries like Panama prioritize the fight against terrorist financing and work towards a more robust and effective system for preventing the misuse of financial systems.