PANAMA: Mixed messages on financial transparency

Thank you for reading LatinNews' chosen article from the Latin American Weekly Report, produced since 1967. The full report can be accessed here: Latin American Weekly Report - 04 May 2023

Panama’s 71-member unicameral assembly last week shelved a proposed asset forfeiture bill (625). The move has been condemned by Security Minister Juan Pino and raises further doubts over the ability of the Partido Revolucionario Democrático (PRD) government led by President Laurentino Cortizo to make good its longstanding promise to tackle corruption – a pledge which has yet to be fulfilled. It comes soon after Cortizo asserted his government had been making “an enormous effort” to remove Panama from the grey list of countries that are not doing enough to combat money laundering, drawn up by the Financial Action Task Force (FATF) of the?Organisation for Economic Cooperation and Development (OECD).

On 27 April the president of the national assembly, the PRD’s Crispiano Adames, confirmed that the bill would be shelved due to insufficient quorum in the house for a second debate. First presented before congress in April 2021 following earlier versions unveiled in 2015 by former attorney general Kenia Porcell (2014-2020), and in 2014 by her predecessor Ana Belfón (2012-2014), the bill would establish legal tools to confiscate assets obtained through illegal activities, such as drug trafficking, corruption, and organised crime, and is widely considered key to tackling corruption.

The defeat for the government comes less than two weeks after President Cortizo told the UK’s?Financial Times (FT)?that Panama expects to be removed soon from the FATF’s ‘grey list’. In an interview published on 16 April, Cortizo said that Panama was completing work on a beneficial registry of company ownership, one of the last outstanding tasks assigned by the FATF. “We are expecting to leave FATF [’s grey list] soon, we are expecting it this year…We have made an enormous effort. I have been personally following the team working on the issue,” Cortizo said. The?FT?cited a senior US embassy official as confirming that there was a “really good possibility” that Panama would leave the FATF grey list and it could happen before the end of 2023 if enough progress was made on uploading companies to the registry of beneficial ownership.

Panama has faced major pressure in recent years to tackle transparency in its financial system following the April 2016 ‘Panama Papers’ scandal, when over 11m confidential documents were leaked from the offices of the now defunct Panama-based offshore law firm Mossack Fonseca [WR-16-13]. More immediately this pressure has come from the FATF which in February 2023 urged Panama to fully address remaining measures in its action plan as all timelines had expired in January 2021. Citing as strategic deficiencies the need to ensure “adequate verification, of up-to-date beneficial ownership information by obliged entities and timely access by competent authorities”, the FATF warns that if its action plan has not been completed by June 2023, Panama faces enhanced due diligence of transactions.

No improvement in CPI score. The latest Corruption Perceptions Index (CPI) drawn up by NGO?Transparency International (TI),?released on 31 January, notes that Panama’s 2022 score of 36 out of 100, which was unchanging on its 2021 score, is a decline of two points on the CPI since 2012. TI highlights that Panama’s inability to improve its score from 2021 reflects “poor institutional conditions to fight corruption and end impunity, particularly in cases of grand corruption”. It also noted the wave of protests which rocked the country between July and August 2022, sparked by the rise in living costs, which the NGO describes as “an organic response to public institutional corruption and unjustified growth of the government payroll”.

Thank you for reading LatinNews' chosen article from the Latin American Weekly Report, produced since 1967. The full report can be accessed here: Latin American Weekly Report - 04 May 2023

Articles in this issue:

• Ruling Colorados sweep to total victory in Paraguay
• COLOMBIA: Petro puts supporters on standby to pressure congress
• VENEZUELA: US drops protection for Citgo parent company
• TRACKING TRENDS
• ARGENTINA-BRAZIL: Fernández turns to Lula seeking respite
• BRAZIL: Six indigenous territories gain legal protection
• BRAZIL: Resistance to online regulation efforts
• TRACKING TRENDS
• MEXICO: Flurry of activity as congressional session ends
• MEXICO: The fight for CDMX
• TRACKING TRENDS
• HONDURAS: Castro loses minister over tax reform
• SURINAME: Clashes over land rights claim two lives
• PANAMA: Mixed messages on financial transparency
• TRACKING TRENDS
• Giammattei reaffirms Guatemala’s support for Taiwan
• Quotes of the week