San José, Costa Rica, since 1956
Panama

Panama takes step to improve its image as money-laundering haven

The Panamanian legislature passed stiff regulations against money laundering last week, constituting a major step in the country’s efforts to improve its image with international monetary authorities.

Panama is working to get itself off the Financial Action Task Force’s (FATF) “grey list” of countries with deficiencies in anti-money laundering standards. The new law was drafted as part of the country’s commitment to FATF to address legal deficiencies.

The law creates two new institutions: a commission against money laundering, terrorism funding, and the proliferation of weapons of mass destruction; and a financial analysis unit that will collect and analyze reports of suspicious operations.

The law also expands the number and type of entities to be supervised to include accountants, auditors and notaries, casinos, enterprises operating in the Colón Free Zone, money exchange firms, pawnshops and real estate agents, among others. The new law replaces Panama’s current anti-money laundering law, which has been in force for 15 years.

The law, which now must be signed by Panamanian President Juan Carlos Varela, could be presented as early as next month to FATF. The Paris-based intergovernmental body will then decide, likely during its October meeting, whether to remove Panama from the grey list.

FAFT was created in 1989 at a summit meeting of the Group of Seven (G-7) in Paris. Initially mandated to draw up and implement anti-money laundering measures, the FAFT expanded its field of action in October 2001 to include efforts to combat terrorism funding and other threats to the international financial system.

In its February report, the task force noted that Panama had taken positive steps but still had more to do in terms of “adequately criminalizing money laundering and terrorist financing (and) establishing and implementing an adequate legal framework for freezing terrorist assets.”

FAFT said the country also needed to enhance its due diligence protocol for financial customers, improve its financial intelligence capabilities, establish requirements for suspicious transaction reporting for all financial institutions, and improve international cooperation on money laundering.

The task force is scheduled to verify next year how effectively Panama’s legal framework is able to counter money laundering. But Panama wants to postpone the review for one year to allow the new legislation to prove its efficacy.

 

 

 

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