Panama’s banks could be affected by the European Union's decision to include this country in a list of 23 nations with insufficient/weak controls against money laundering and terrorist financing. However, the Panamanian government has tried to appeal to the international financial system by approving Act No. 70 of January 31, 2019, which reformed the Penal Code by introducing the crime against the national Treasury for tax evasion.
According to the European Union, Panama's financial and banking entities will have to strengthen their control on the transactions they carry out with their customers, in order to better identify possible suspicious transactions.
According to Moody's Investors Service, the black list presented before the European Parliament will have a negative impact on the offshore banks operating in Panama's international Banking Centre (CBI). Until November 2018, 30 foreign banks holding a general license, 24 banks holding an international license and 12 banks holding a Panamanian private license operated in the CBI. Foreign deposits in the CBI have reached nearly 30 billion million.
For Moody's, 25 banks doing business in Panama with non-residents and who are mainly financed by foreign investors are more vulnerable to the EU blacklist than other banks financed with Panamanian Customer Capital.
The Panama Banking Association immediately rejected the European Union's decision, believing that the country had taken several steps to demonstrate its effectiveness in combating money laundering and terrorist financing.
Moody's is one of the organizations that recognizes that Panama has implemented a strategy to strengthen the legal framework and operational transparency of its financial system. In addition, the Financial Action Task Force (FATF) stated that Panama was not part of the grey list of countries with strategic deficiencies in compliance with the prevention of money laundering and terrorism financing. Panama has undergone an evaluation of the FATF in recent months and has achieved good results, starting with the transformation of the Penal Code in which tax evasion was classified as a crime.
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