Latin America Advisor

Financial Services Advisor

A Daily Publication of The Dialogue

Why Is Panama Back on the FATF’s ‘Gray List’?

Panama, whose capital is pictured above, was returned last month to the Financial Action Task Force’s “Gray List.” // File Photo: Matthew Straubmuller via Creative Commons.

The Financial Action Task Force (FATF) on June 21 placed Panama back on its international money laundering watchlist. The Central American nation was put on the so-called “gray list” in 2014 over flaws in the country’s financial practices. It was removed in 2016 after changes to its legal and regulatory framework, but the FATF has now reversed that decision despite heavy lobbying from officials in Panama. Why has Panama been placed back on the FATF’s gray list? What are the consequences of the decision for its business sector and economy? What needs to happen for Panama to be removed from the list?

Carlos Berguido, executive president of the Panama Banking Association: “Panama exited the previous version of the FATF list in record time, because of the strong commitment of the government, regulators and the financial services sector to promote the adoption of laws and regulation aimed at improving the country’s capacity to fight money laundering. However, during the last three years, a political stalemate between the executive and legislative branches of government made it very difficult to timely adopt certain key pieces of legislation, such as the criminalization of tax fraud and making tax crime a predicative of money laundering. The National Assembly passed this very important legislation in January, and it took effect in March, making it almost impossible to show evidence of enforcement in such a short time. However, supervision of the vast regulated nonfinancial sector came under scrutiny. The newly created intendency is tasked with anti-money laundering/anti-terrorist financing supervision and law enforcement of very diverse activities, from casinos to attorneys to accountants and used car dealers. This needs some time and resources to evolve and build the necessary institutional capacity in order to develop the risk-based approach to effectively supervise and enforce the law. During the last review…”

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About the Financial Services Advisor

Covering Latin America’s banking and insurance sectors, remittances trends and data, micro lending issues, new technologies in the industry, anti-money laundering regulations, and much more, the Inter-American Dialogue’s biweekly Financial Services Advisor, a sister publication of the Latin America Advisor, gives readers fresh insight and diverse viewpoints from financial sector leaders. To subscribe or for more information, contact Erik Brand, publisher of the Advisor, at ebrand@thedialogue.org.


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Erik Brand

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Anastasia Chacón González

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