Panama Faces Pressure from FATF on Money Laundering Concerns
Panama has been placed on the grey list by the Financial Action Task Force (FATF) due to its lax regulations and failure to comply with international standards. The country is facing pressure to address concerns regarding money laundering, financial gain, and its shipping industry.
Issues Raised by FATF
The following are some of the key issues raised by the FATF:
Lax Regulations Over Shipping Industry
- Panama’s open shipping registry makes it easy for foreign-owned ships to register under the Panamanian flag, which can be used for money laundering and tax evasion.
- This lack of oversight allows ships to operate with near impunity, making it difficult to track their activities.
Anonymity in Ship Ownership
- It is challenging to determine a ship’s actual owner or owners, allowing them to engage in unlawful acts with ease.
- This anonymity makes it difficult for authorities to hold individuals accountable for any wrongdoing.
Illicit Financial Flows (IFFs)
- Importers and exporters manipulate trade invoices to avoid paying customs duties, valued-added taxes (VAT), or income taxes on their goods.
- This manipulation of financial flows can lead to significant losses in revenue for governments.
Panama’s Efforts to Address Concerns
In an effort to address these concerns, Panama has implemented several laws and measures, including:
Law 47
- Strengthens oversight of current and future shareholders
- Requires them to hand over their shares for safekeeping to an authorized custodian
- Lays out stricter regulations for foreign shareholders
Anti-Money Laundering and Financing of Terrorism Strategic Unit
- Established to coordinate efforts against money laundering and terrorism financing
- Develops a risk analysis plan to identify potential areas of vulnerability
Despite these efforts, the FATF has identified seven deficiencies that Panama still needs to address. The country’s reputation as a hub for money laundering continues to be a concern, with authorities awarding contracts to companies with scandalous reputations and law firms linked to controversial figures.
Future Directions
To fully comply with international standards, Panama must continue to work on addressing the remaining deficiencies identified by the FATF. This includes strengthening its legal framework for dealing with money laundering and improving oversight of its shipping industry. By taking these steps, Panama can demonstrate its commitment to combating financial crime and improve its reputation as a responsible member of the global community.