Saturday, April 4, 2015


Panama's President, Juan Carlos Varela, who came into office on July 1, 2015, elected largely on the basis of promises of reform, has not delivered on campaign pledges to clean up money laundering & terrorist financing. While his administration has focused on charging the members of the former government, that of Ricardo Martinelli, with corruption, there has been zero movement on suppressing the rampant money laundering that threatens to drop Panama onto the more onerous portions of the FATF Blacklist, and US banks could expand their unofficial restrictions.

Here's the situation;

(1) During the Martinelli government, not one local Panamanian financial institution was charged with money laundering, notwithstanding that the country's banks became a principal depository for dirty Venezuelan money, Colombian drug profits, and illicit Latin American profits, earned by terrorist organizations in the region. The country's utter failure to abolish its bearer share corporate laws made it a magnet for illegal money.

(2) Since taking office, the Varela government has ignored the systemic money laundering, unless it is directly connected to the massive corruption scandals that have exploded upon the scene. Where are the criminal money laundering investigations that are so necessary, to demonstrate to the global regulatory community that Panama is serious about anti-money laundering and counter-terrorist financing ?

(3) The reason that no meaningful action has been taken against the banks for money laundering is probably the power wielded, behind the scenes, by Panama's well-entrenched organized crime syndicate, whose profitable ownership of local banks would be threatened by anti-money laundering enforcement actions.

(4) Additionally, some observers believe that President Varela is himself guilty of corruption, and the money laundering activities that follow the receipt of bribes and kickbacks, and that any broad-based investigation would expose his guilt.

Should Panama be classified as a totally uncooperative jurisdiction, for AML/CFT purposes ? Unless the Panamanian banks that make most of their lucrative profits by laundering dirty money are finally called to account, and charged with criminal activity, expect it to happen in 2015.  Such an action will then result in a major increase in Panama's FATF, and Country Risk, status, because nobody in Panamanian government is lifting a finger to attack the cash cow that is bank money laundering in Panama City.

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