Caribbean & Central America - June 2023

In early May, a Panamanian government delegation led by Economy & Finance (MEF) Minister Héctor Alexander held meetings with directors and officials from Belgium, the European Commission, and Germany as part of efforts to reiterate Panama’s commitment to transparency in the fight against money laundering. It is the latest sign of efforts by the government led by President Laurentino Cortizo to remove Panama from the grey list of countries that are not doing enough to combat money laundering, drawn up by the Financial Action Task Force (FATF) of the Organisation for Economic Cooperation and Development (OECD). However, the shelving of a proposed asset forfeiture bill by Panama’s legislature on 27 April raises questions about the authorities’ commitment to tackling corruption.

According to a 3 May MEF press release, the Panamanian delegation met with a string of officials including Belgium’s finance minister, Vincent Van Peteghem, and the director general of the European investment bank (BEI) Kim Jørgensen, among others. Panama has come under considerable pressure in recent years to address transparency in its financial system, particularly in the aftermath of the April 2016 ‘Panama Papers’ scandal – when over 11m confidential documents were leaked from the offices of the now defunct Panama-based offshore law firm Mossack Fonseca. Specifically, the Cortizo government is feeling the heat from the FATF which, in February this year, urged Panama to fully address outstanding issues in its action plan, pointing out all timelines had expired in January 2021. With strategic deficiencies identified as the need to ensure “adequate verification of up-to-date beneficial ownership information by obliged entities and timely access by competent authorities”, the FATF was clear that if the action plan was not completed by June 2023, Panama faces enhanced due diligence of transactions.

With Cortizo recently underlining efforts to remove Panama from the FATF’s ‘grey list’, the fight against corruption was dealt a blow in late April after Panama’s legislature ended up shelving an asset forfeiture bill, due to insufficient quorum. The latest initiative had been presented to congress in April 2021 and would create legal mechanisms to confiscate assets obtained through illegal activities, such as drug trafficking, corruption, and organised crime – all considered key to fighting corruption. Previous versions of the bill had been submitted in 2014 by former attorney general Ana Belfón (2012-2014), and in 2015 by Belfón’s successor Kenia Porcell (2014-2020).

Government efforts

In an interview published on 16 April, Cortizo told the UK’s Financial Times (FT) that Panama expects to be removed soon from the FATF’s ‘grey list’. He said that Panama was completing work on a beneficial registry of company ownership, one of the last outstanding tasks assigned by the FATF and an “enormous effort” had been made.