Panama Seeks Removal from Financial Action Task Force (FATF) Grey List

The Financial Action Task Force (FATF) has been a point of contention for Panama in recent years. The country’s lax regulations and lack of transparency in the shipping industry have made it a hub for money laundering and tax evasion.

Panama’s Shipping Industry: A Hub for Money Laundering and Tax Evasion

• Open registry: Panama’s shipping registry is open to any country in the world, allowing foreign-owned ships to register under the Panamanian flag without being inspected or paying taxes.
• Lost revenue: This has led to an estimated $383 million in lost revenue from 2003 to 2012 due to import and export under-invoicing.

Panama’s Efforts to Get Off the Grey List

• New law: Panama has implemented a law that strengthens oversight of current and future shareholders and requires them to hand over their shares for safekeeping.
• Stricter regulations: The law also includes stricter regulations for foreign shareholders and establishes an Anti-Money Laundering and Financing of Terrorism Strategic Unit.

FATF’s Criticisms

The FATF has identified seven deficiencies that Panama still needs to address, including its legal framework for dealing with money laundering. Panama only fully complies with one of the 40 recommendations issued by the FATF in 2012.

Uncertain Progress

Panama’s progress is uncertain and may be hindered by several factors, including:

• Lucrative contracts: The country’s awarding lucrative contracts to scandal-plagued companies.
• Real estate developers linked to money laundering activities: The continued operation of real estate developers linked to money laundering activities.

The FATF grey list is a group of countries that have failed to comply with anti-money laundering regulations. Panama’s efforts to get off the list are ongoing, but its progress is uncertain due to various factors.