After the country was put back on the FATF grey list, the private sector believes that investments will be driven away and economic growth will face multiple obstacles.
After the Financial Action Task Force (FATF) decided to include the country in the list of nations that need to be supervised in the process of implementing measures to prevent money laundering and the financing of terrorism, entrepreneurs from different sectors foresee that the effects will be negative for the local economy.
The Panamanian business sector assures that the efforts and results that have been achieved in such a short time have not been recognized by the FATF, which decided to put the country back on its gray list.
Although at the beginning of the year efforts were made in the country to improve controls in relation to tax evasion, as in the case of the approval by the National Assembly of the bill criminalizing tax evasion, when the amount defrauded in a fiscal period of one year is equal to or greater than $300,000, it was not enough for the country to return to the FATF grey list.
Once enacted, the newly approved law will force accountants, lawyers, realtors, and other professionals to report suspicious transactions made by their clients.
Bill 19.951 reforming the Law on Narcotic Drugs, Psychotropic Substances, Drugs of Unauthorized Use, Related Activities, Legalization of Capital and Financing of Terrorism was approved in a second debate by the Legislative Assembly.
A law passed by the Assembly requires banks to require companies to show tax returns for the last two years and close accounts suspected of money laundering and terrorist financing.
The 8204 amendment to the Law adopted by the Assembly of Costa Rica also requires banks to refuse to open accounts for companies who are not able to justify the origin of their resources.
Confirmation has been given that the country is to be removed from the list compiled by the Financial Action Task Fprce a year and a half after adjusting laws and regulations for the financial sector.
The Minister of Economy and Finance in Panama, Dulcidio De La Guardia, confirmed that the removal of Panama from the gray list was approved during the plenary session of the Financial Action Task Force (FATF) held on Thursday February 18 in Paris, France.
The business sector recognizes the need to implement the standards required to be removed from the gray list, but is calling for flexibility so that businesses are not harmed.
Without calling into question the need for the country to implement and enforce the rules on transparency, financial sector companies are insisting that authorities provide them with greater flexibility in order to minimize the impact the changes will have on their businesses.
The government says it has completed the action plan agreed with FATF and requested they visit the country to check for compliance, in order to speed up the process to leave the list of countries considered as tax havens.
From a statement issued by the Ministry of Economy and Finance:
The government of Panama has complied with the technical part of the action plan agreed with the Financial Action Task Force (FATF) through the adoption of a new legal framework for prevention of money laundering, terrorist financing and financing of proliferation of weapons of mass destruction, which includes, for the first time to the non-financial corporations sector.
Limitations on control of casinos and gambling, and the inability to legally access banking information, limit the chances of success in the fight against money laundering.
Passing laws that favor combating money laundering have stalled in Congress, impeding the implementation of effective measures against the problem. This situation affects the results of the evaluation currently being carried out by representatives from the Financial Action Task Force group (FATF).
In Panama a deadline has been bourght forward to December 31, 2015 for companies with bearer shares to turn them into registered shares or hand them in to custody.
Along with the change in the transition period is a new date for the entry into force of Act 47 of 2013, which was originally scheduled for two years after its enactment, but will now take effect ten days after it has been published.
The government will ask the FATF to postpone the review of the legal framework being implemented against money laundering in the country until 2017.
The review by the Financial Action Task Force (FATF) is initially scheduled for 2016, but the government has announced that it will be requesting an extension to complete and verify the effectiveness of the legal restructuring, which involves the adoption of new laws and amendments to other ones.
The National Assembly has passed a bill amending the Criminal Code in order to adapt it to international legal standards for the prevention of crimes of money laundering.
From a statement issued by the National Assembly of Panama:
The full Legislature approved on its third reading Bill No. 102, which amends and adds articles to the Penal Code.
The document seeks to adapt the Panamanian criminal substantive law to the global context and thereby ensure the country's commitment to assuming the highest possible international standards that enable the subsumption of a larger catalog of punishable offenses in the criminal offenses created, in order to elevate the Republic of Panama to the highest position in the prevention and suppression of crimes of money laundering and terrorist financing.
The organization is urging the Panamanian government to accelerate the measures needed to get off the gray list in order to avoid counterproductive medium-term effects on the economy.
From a press release by the International Monetary Fund (IMF):
An International Monetary Fund (IMF) mission, headed by Luca Antonio Ricci, visited Panama City during March 3-13 to conduct the country’s annual Article IV consultation, part of the IMF’s regular surveillance of all member countries. At the end of the discussions, Mr. Ricci issued the following statement:
Despite being a FATF recommendation, reforms to the law on prevention of money laundering being prepared by the government will not include the definition of tax evasion as a criminal offense.
The latest update to the standard recommendations of the Financial Action Task Force (FATF) was carried out in 2012 and considers "... Tax evasion as one of the origins of the crime of money laundering.
Banks struggling to keep their correspondents and restrictions for Panamanian companies in the external financial market, are some of the consequences of being on the FATF's gray list.
The Panamanian government expects to submit, within the next month, a bill to prevent money laundering and terrorist financing, which seeks to control the vast majority of economic activities by requiring additional controls to those which do not have increased supervision. With this measure they hope to get off the gray list and meet the deadline set by the Financial Action Group, which expires in June.
A bill which is to be submitted to the National Assembly in February establishes an obligation to report suspicious activities which are not specifically financial.
This initiative is part of the package agreed with the Financial Action Task Force (FATF) to strengthen legislation against money laundering and exit so called "greylists". It is expected that an updated legal structure will be in place by June 2015.