Panama Passes Anti-Money Laundering Laws

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Panama’s legislature has unanimously approved anti-money laundering legislation in an attempt to rid itself from the intergovernmental Financial Action Task Force’s gray list of countries that fail to combat money laundering and terrorist financing.

The approved legislation requires a range of nonfinancial sectors to begin reporting suspicious transactions. The legislation covers lawyers, real estate brokers, casinos, and construction firms, among other sectors. The legislation, which revises some 15-year-old rules, was a top priority for President Juan Carlos Varela, elected in 2014 on an anticorruption platform.

The inclusion of regulation of nonfinancial sectors in the legislation is seen by some observers as burdensome. Still, Panama’s Banking Association President Carlos Troetsch has noted, “The inclusion of nonfinancial sectors in this commitment is required for its impact on the country’s image.”

Being on the FATF gray list has brought difficulties for financial institutions and banks in Panama, making it difficult or impossible for some Panamanian financial institutions to access the international financial system. Removal from the list will not be immediate, but this legislation will help Panama prove its case that it is actively working to combat money laundering and terrorism financing.

Gray list countries are those that are in noncompliance with the FATF’s anti-money-laundering and counter-terrorist-financing standards. The FATF was formed in 1989 on the initiative of the G7 countries with the purpose of combating international money laundering and terrorist financing. It has since expanded to include 36 member countries.

Being of the FATF gray list can cause problems for countries, restricting gray country financial institutions in how they can relate with the international financial system.

Earlier this year, Nicaragua, Albania, Cambodia, Kuwait, Namibia, Pakistan, and Zimbabwe, were removed from the Financial Actions Task Force’s gray list.

Countries that remain on the FATF gray list include Afghanistan, Angola, Guyana, Laos, Panama, Sudan, Indonesia, Papua New Guinea, Syria, Uganda, Yemen, and Iraq. The FATF blacklist, on which the FATF calls on member countries to impose countermeasures, includes Iran and North Korea. Ecuador, Algeria, and Myanmar are countries on the blacklist that the FATF does not call for countermeasures against.

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