PANAMA: Country back on EU grey list after 4 years.

By added on 10/07/2019

As published on, Tuesday 9th July, 2019.


Panama has said that the decision by the Financial Action Task Force (FAFT) to put the country back on the grey list did not take into consideration  the efforts and results that have been achieved.

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.

The business sector rejects the new inclusion made to Panama in the list of nations that need to be supervised in the process of implementing measures to prevent money laundering and financing of terrorism, arguing that "private and government sectors have worked hard to strengthen their legal, regulatory and institutional framework with the adoption of norms aligned with international standards."

Panama's incoming government is signaling a redoubled commitment to the nation's anti-money laundering and terror finance (AML/TF) efforts. President-elect Laurentino Cortizo took office on July 1 amid embarrassment that Panama has been once again been placed on the grey list of tax havens has vowed to change this.

For more than a year the country has been debating the importance of this law to prevent Panama from falling back on the list of FATF.

In January 2019, Panama, strengthened penalties against tax evaders. Project 591, criminalizes tax evasion in the Criminal Code and is considered a crime resulting from money laundering.

"The project establishes in article 288 G that anyone who, for personal benefit or the benefit of a third party and with the intention of committing tax fraud against the National Treasury, affects the correct tax determination to stop paying all or part of those taxes, shall be punished with a prison sentence of two to four years."

The ministry of economy and finance explained in a statement that "This law punishes the great evader who harms the Treasury by intentionally defrauding for more than 300,000 balboas, this being a taxpayer with taxable income of more than 1.25 million balboas per year."

Earlier this year the European Union Commission established on the basis of an analysis of 54 priority jurisdictions the EU had constant investigations on placed Panama on a grey list.

The Central American nation was first added to the list following an IMF evaluation 2012 that found shortcomings in anti-money laundering practices. It was taken off the list in 2016 after FATF determined that Panama had made significant progress in improving its AML/CFT regime.