FATF Status

Panama is no longer on the FATF List of Countries that have been identified as having strategic AML deficiencies

Latest FATF Statement - 27 October 2023

The FATF welcomes Panama’s significant progress in improving its AML/CFT regime. Panama strengthened the effectiveness of its AML/CFT regime to meet the commitments in its action plan regarding the strategic deficiencies that the FATF identified in June 2019 related to (1) strengthening its understanding of the national and sectoral ML/TF risk and informing findings to its national policies to mitigate the identified risks; (2) taking action to identify unlicensed money remitters, applying a risk-based approach to supervision of the DNFBP sector and applying effective, proportionate, and dissuasive sanctions against AML/CFT violations; (3) verifying updated beneficial ownership information by obliged entities, establishing mechanisms to monitor the activities of offshore entities, assessing the existing risks of misuse of legal persons and arrangements to define and implement specific measures to prevent the misuse of nominee shareholders and directors, and allowing timely access to adequate and accurate beneficial ownership information; and (4) using FIU products for ML investigations, demonstrating its ability to investigate and prosecute ML involving foreign tax crimes and providing constructive and timely international cooperation with such offence, and continuing to focus on ML investigations in relation to high-risk areas identified in the NRA and MER. Panama is therefore no longer subject to the FATF’s increased monitoring process.

Panama should continue to work with GAFILAT to sustain its improvements in its AML/CFT system.

Compliance with FATF Recommendations

The latest follow-up to the Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in Panama was undertaken in 2019. According to that Evaluation, Panama was deemed Compliant for 15 and Largely Compliant for 23 of the FATF 40 Recommendations. It was also deemed Highly Effective for 0 and Substantially Effective for 2 with regard to the 11 areas of Effectiveness of its AML/CFT Regime.

Corruption remains a significant challenge in Panama, with the country ranking 108 out of 180 in the 2023 Transparency International Corruption Perceptions Index. Allegations of corruption permeate both the public and private sectors, affecting government procurement processes and leading to public skepticism regarding transparency. Although Panama has implemented some measures to improve the business climate and has ratified anti-corruption conventions, the effectiveness of these initiatives is questioned due to a lack of rigorous enforcement and systemic accountability.

Panama's economy is characterized by a dollarized system and significant foreign direct investment (FDI), largely driven by its strategic location and the Panama Canal, which remains highly profitable. Despite impressive GDP growth rates of nearly 11% in 2022 and 7.3% in 2023, challenges such as corruption, social unrest, and a recent downgrade in credit rating to non-investment grade pose risks to its investment climate.

Panama's investment climate is generally favorable, bolstered by its strategic location and the Panama Canal, which attracts significant foreign direct investment (FDI). However, recent challenges such as a downgrade to non-investment grade by Fitch, fiscal difficulties, and social unrest have introduced uncertainties that may hinder future investments. Despite these issues, Panama continues to implement policies aimed at attracting multinational companies and enhancing its appeal as a logistics and trade hub.