Panama Country Summary

FATF Status

Panama is no longer on the FATF List of Countries that have been identified as having strategic AML deficiencies

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.

Panama faces significant challenges related to corruption and crime, with pervasive issues affecting both public and private sectors. High-profile procurement irregularities and a lack of transparency in government processes have fostered public skepticism, while the judicial system struggles with corruption and inefficiency, leading to a general perception that anti-corruption laws are inadequately enforced.

The country is also a major hub for various criminal activities, including drug trafficking, human smuggling, and environmental crimes, exacerbated by its strategic geographic location. Despite some efforts to improve governance and transparency, such as the implementation of new public procurement laws, public trust in state institutions remains low, and the resilience of civil society against organized crime is hampered by intimidation and censorship of journalists.

Panama's economy and investment climate are characterized by a generally favorable environment for foreign direct investment (FDI), bolstered by its strategic location and the Panama Canal, yet it faces significant challenges. The country has recently experienced a downgrade in its credit rating to non-investment grade, alongside fiscal pressures and social unrest, which have created uncertainty for investors. Despite these issues, Panama continues to attract substantial FDI, particularly in logistics and clean energy sectors, while also grappling with high unemployment rates and income inequality that complicate its economic landscape.