Panama's Endeavors in Combatting Money Laundering, Terrorism Financing & the Financing of Proliferation

Thursday, March 23, 2017 - 09:46

- A brief explanation of the international institutions that lead these efforts and Panama's own endeavors in the matter -

by AmCham's Trade Specialist - Radu Serrano

The misuse of financial systems by persons laundering money from criminal activities, ranging from illicit commerce and drug trade to terrorism and proliferation of weapons of mass destruction, is a serious threat to all nations. In order to combat this menace, through the multiple and increasingly different national frameworks and administrations, some international standards have been established, with the hope that all jurisdictions will adapt and model their legal structures after them. This article explores the international organizations that spearhead these efforts and Panama's endeavors regarding these issues.  


The Financial Action Task Force (FATF) is an inter-governmental body established in 1989 by the Ministers of its Member jurisdictions. It establishes standards, develops and promotes policies to prevent and combat money laundering, terrorist financing and other related threats to the integrity of the international financial system. Also, while collaborating with national institutions, the FAFT tries to identify vulnerabilities at the national level. 

The FATF currently comprises 35 member jurisdictions and 2 regional organizations, representing most major financial centers in all parts of the globe.

The FATF has developed a series of Recommendations that are recognized as the international standard for combating of money laundering and the financing of terrorism and proliferation of weapons of mass destruction.  Since all countries have vastly different frameworks and diverse financial systems, the recommendations should be implemented through measures adapted to each particular national circumstance.

The FATF standards include 40 Recommendations and their interpretative notes. They are divided as follows:

  • AML/CFT Policies and Coordination
  • Money Laundering and Confiscation
  • Terrorist Financing and Financing of Proliferation
  • Preventive Measures
  • Transparency and Beneficial Ownership of Legal Persons and Arrangements
  • Powers and Responsibilities of Competent Authorities and Other Institutional Measures
  • International Cooperation


The Latin American Financial Action Task Force (GAFILAT by its Spanish acronym) is a regional-based intergovernmental organization that brings together 16 countries from South America, Central America and North America to combat money laundering and terrorist financing, through a commitment to improve National policies against both issues and the deepening of the different mechanisms of cooperation among member countries. Panama adhered to the GAFILAT in 2010.

GAFILAT is a regional group belonging to the international network of agencies dedicated to the prevention and combat of money laundering and financing of terrorism. The core of this network is the FATF with its headquarters within the OECD in Paris.

GAFILAT was created along the lines of the International FATF by adhering to the their 40 Recommendations as the most recognized international standard against money laundering and terrorist financing, and the development of own recommendations for improving national policies for combatting these crimes.



Law 23 of 2015

Law 23 of April 27th 2015 is entitled “Which adopts measures to prevent money laundering, the financing of terrorism and the financing of the proliferation of weapons of mass destruction, and established other provisions”.  As it states in its first article, this law is the regulatory framework so that the different supervisory bodies, as well as the entities, natural and legal persons subject to this supervision, establish:

  • The measures to identify, assess and understand the risks and consequences of money laundering, terrorist financing and the financing of the proliferation of weapons of mass destruction
  • The appropriate controls for its mitigation, in order to protect the integrity of the country's financial system and other sectors of the economy
  • The measures to facilitate international cooperation

It´s fifth article establishes the formation of the national coordination system which is comprised of:

  • The National Commission against Money Laundering, the Financing of Terrorism and the Financing of the Proliferation of Weapons of Mass Destruction
  • The Financial Analysis Unit (UAF by its Spanish acronym) for the Prevention of the Crime of Money Laundering and Financing of Terrorism
  • The Supervisory Institutions

Financial Analysis Unit 

The Financial Analysis Unit (UAF by its Spanish acronym) is the national center for the collection and analysis of financial information related to money laundering, terrorist financing and financing of the proliferation of weapons of mass destruction, as well as for the communication of the results of that analysis to the country´s investigative authorities.

Some of its functions are:

  • To centralize, at the national level, the reports of suspicious, cash and quasi-cash operations generated or issued by the obligated parties;
  • To receive from the obligated parties all information related to suspicious transactions that could be linked to money laundering, financing of terrorism and financing of the proliferation of weapons of mass destruction;
  • To analyze the information obtained, in order to communicate the results to the Public Ministry;
  • To exchange financial intelligence for analysis with its counterparts in other countries;
  • To provide the Public Prosecutor's Office, supervisory agencies, the National Customs Authority and the various intelligence and security organs of the State, with any technical assistance required to assist in criminal or administrative investigations of acts and offenses related to money laundering, financing terrorism and financing the proliferation of weapons of mass destruction.

Supervisory Institutions

Law 23 establishes the following supervisory institutions, which in turn will regulate the obligated entities mentioned below:

Superintendency of Banks of Panama  
  • Banks and Banking Groups
  • Fiduciary Companies
  • Financial Companies
  • Financial Leasing Companies
  • Factoring Companies
  • Issuers or Processors of debit, credit and prepaid cards (whether they are natural or legal persons) including those who issue and operate their own cards.
  • Issuers of means of payment and e-money
Superintendency of Insurance and Reinsurance of Panama  
  • Insurance and Reinsurance Companies
  • Insurance Brokers (natural or legal persons)
  • Reinsurance Brokers (natural or legal persons)
  • Insurance adjusters or Inspectors
  • Insurance Agents (natural or legal persons)
  • Account or Insurance Sales executives
  • Managers of Insurance Companies
  • Captive Insurers
  • Managers of Captive Insurers
  • Insurance Brokerage Managers
Superintendency of the Securities Market of Panama  
  • Self-regulated Organizations
  • Securities Firms
  • Investment Managers
  • Pension Fund Administrators
  • Disability Fund Managers
  • Investment companies
  • Self-managed investment companies
  • Investment advisors
  • Providers of administrative services related to the securities market 
Intendency for the Supervision and Regulation of Non-Financial Subjects  
  • Companies of the Colon Free Zone
  • Companies of the Panama - Pacific Agency
  • Companies of the Baru Free Zone
  • Companies of the Panama Diamond Exchange
  • Free Zones Companies
  • Money remittance companies (whether or not it is their main activity)
  • Casinos, games of chance and betting organizations, and other physical or telematics facilities that develop these businesses through the Internet.
  • Promoters, real estate agents and brokers (when they engage in transactions for their clients concerning the purchase and sale of real estate)
  • Pawnshops
  • Construction companies (general contractors and specialized contractors)
  • Securities Transport Companies
  • Companies engaged in the trade of precious metals and precious stones (in any form)
  • National Charity Lottery (Lotería Nacional de Beneficencia)
  • National Post and Telegraph Office of Panama (Correos y Telégrafos Nacionales de Panamá)
  • Housing Savings and Loans Corporations
  • Forex Houses (in any form, whether or not it is their main activity)
  • Companies dedicated to the purchase and sale of new and used cars
  • Agricultural Development Bank (Banco de Desarrollo Agropecuario)
  • National Mortgage Bank (Banco Hipotecario Nacional)
  • Activities carried out by professionals described in article 24 of Law 23 of April 27th, 2015
Panamanian Autonomous Cooperative Institute  
  • Credit Unions
  • Mulitple or Integral Services Cooperative that are involved in saving or credit activities
  • Other cooperative organizations conducting financial intermediation

Sources: FATF, GAFILAT, UAF and Law 23 of April 27th, 2015.