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 extend to both the public and private sectors, with reports of bribery and procurement irregularities undermining government transparency. Despite some measures taken under President Cortizo to improve the business climate, such as the introduction of a public-private partnership law, the effectiveness of anti-corruption mechanisms is perceived as inadequate, and the judicial system struggles to hold corrupt officials accountable.

Panama's economy has shown robust growth, with a GDP increase of nearly 11 percent in 2022 and 7.3 percent in 2023, largely driven by trade, construction, and logistics. Despite its strengths, including a dollarized economy and significant foreign direct investment, Panama faces challenges such as corruption, fiscal issues, and social unrest, which have led to a downgrade in its credit rating to non-investment grade as of March 2024.

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 uncertainty. Despite these issues, the government is actively promoting FDI through various incentives and policies aimed at enhancing its status as a logistics and services hub.