Panama Anticipates Removal from FATF Watch List in October, Aims to Restore Financial Hub Status

Panama expects to be removed from the watch list maintained by the Financial Action Task Force (FATF) this October, according to Deputy Finance Minister Jorge Almengor.

The Central American nation is eager to regain its status as a financial hub and hopes that other intergovernmental groups will follow suit in lifting restrictions. Being on international watch lists has prompted foreign countries to demand stricter due diligence from their companies when conducting business in Panama.

Panama first appeared on FATF's gray list, which can negatively impact investment ratings and reputation, from 2014 to 2016. After a brief period off the list, Panama was placed back on it in 2019 due to perceived lack of progress in financial transparency. In 2020, the European Union added Panama to its own list of "noncooperative" tax jurisdictions. The EU has stated that it will only remove Panama from its list if FATF does so first. Additionally, Panama is on the watch list of the Organization for Economic Co-operation and Development (OECD).

Almengor expressed confidence in Panama's planned visit by FATF officials in early September, predicting a "100% successful" outcome. This visit is expected to lead to Panama's removal from the watch list at FATF's October plenary meeting. Almengor believes that exiting the FATF list will have an immediate impact and anticipates removal from the EU list in the following months. However, removal from the OECD's list may take longer as further efforts to exchange information are required.

Panama has taken steps to address FATF's concerns by implementing an online system to collect information on companies' ultimate beneficiaries and making it accessible to authorities when necessary. As of late June, over 74% of Panama's legal entities have been included in the system. However, Almengor acknowledged the need for improvement in the speed and quality of data provision. The government plans to finalize a decree within 45 days, which will increase the information disclosure requirements for Panama-registered firms.

FATF, OECD, and the EU have not yet responded to requests for comment on the matter.

Panama hopes that its forthcoming removal from the FATF list will enable it to restore its status as a prominent financial center. The government is committed to addressing regulatory concerns and enhancing transparency to meet international standards.

By fLEXI tEAM