|1. Legal System and Related Institutional Measures|
|Criminalization of Money Laundering (R.1 & 2)|
Amend Article 389 to criminalize all money laundering predicate offenses as required by the Vienna and Palermo Conventions.
Address the differing treatment for the conspiracy offense that depends on whether or not the offense is drug-related (treatment should be consistent).
Implement the UN Convention against Corruption following the National Assembly’s approval May 10, 2005.
|Criminalization of Terrorist Financing (SR.II)|
Expand predicate list to include financing of terrorism for the AML Law.
|Confiscation, freezing and seizing of proceeds of crime (R.3)|
Amend legislation to permit the investigating authority to freeze and seize in all criminal cases to conform to Palermo Convention.
Amend legislation to permit forfeiture of assets of criminals without necessarily showing nexus to a particular crime.
Establish/improve systems to hold and maintain seized assets pending forfeiture orders to reduce the potential for improper use or the appearance regarding maintenance of assets which have not been determined to belong to the government.
|Freezing of funds used for terrorist financing (SR.III)|
Expand predicate list to include financing of terrorism for the AML Law in order that prosecutors gain freeze and seize authority under the Unified Text on Drug Laws to this offense.
|The Financial Intelligence Unit and its functions (R.26, 30 & 32)|
Review funding arrangements for UAF. Strengthen protection of the information reported to UAF to maximize the secured electronic receipt and dissemination.
UAF undertake more outreach and awareness-raising to government agencies, UAF reporting entities, and the public.
|Law enforcement, prosecution and other competent authorities (R.27, 28, 30 & 32)|
Review staffing levels and training requirements with a view to increasing capacity for investigations and prosecutions. Consider whether special courts should be created for financial crimes. Review the dependence on a general budget allotment to ensure proper distribution of funds for enforcement purposes.
Develop training for judicial authorities, prosecutors, financial police, and UAF staff to undertake the investigation of financial crime (e.g., fraud, corruption), protection of informants, investigative skills, and use of typologies.
Develop a process for the courts to independently obtain expert forensic and accounting assistance on complicated financial matters related to financial crimes and money laundering.
Develop secure data base systems for investigative agencies and the courts.
Develop process of coordination of government statistics so that AML/CFT data can be interpreted across agencies.
Carry out more frequent coordination meetings among relevant government enforcement agencies to exchange ideas and report policy recommendations to the High Level Commission.
|Cash couriers (SR IX)|
Require the declaration in all circumstances for currency that is mailed, transported or shipped by any means of transportation.
Consider a more systematic approach for spot checking containers for smuggled currency.
Make better use of the current investigative powers of Customs, in cooperation with the UAF.
|2. Preventive Measures–Financial Institutions|
|Customer due diligence, including enhanced or reduced measures (R.5 to 8)|
SSRP and BHN should take measures to put in place and implement requirements for customer identification and due diligence in the insurance and savings and credit institution sectors.
|Third parties and introduced business (R.9)|
Supervisory authorities should issue guidance that considers customer due diligence measures performed by third parties or introducers in line with the essential elements of R.9.
|Record keeping and wire transfer rules (R.10 & SR.VII)|
Extend full record-keeping requirements to the insurance sector (including for insurance brokers and agents) and to the savings and credit institution sector.
|Monitoring of transactions and relationships (R.11 & 21)|
Amend the AML law to impose monitoring obligation on insurance and savings and credit institutions.
|Suspicious transaction reports and other reporting (R.13–14, 19, 25 & SR.IV)|
Amend the law to extend coverage to reporting transactions related or linked to terrorism and require reporting by the insurance sector, and savings and credit institutions.
Supervisory/competent authorities should provide more feedback to reporting institutions by conducting forums, periodic meetings.
Supervisory/competent authorities should provide training to ensure greater awareness of obligations including when transactions do not take place.
|Internal controls, compliance, audit and foreign branches (R.15 & 22)||The SSRP and the BHN should extend internal control requirements to insurance sector and savings and credit institutions including obligations for: (i) policies, procedures and practices to deter money laundering and financing of terrorism; (ii) customer identification and due diligence; (iii) appointment of a compliance officer; (iv) Independent audit and compliance program; (v) training programs; and (vi) codes of ethics and policies for recruitment.|
|The supervisory and oversight system -competent authorities. Role, functions, duties and powers (including sanctions) (R. 17, 23, 25, 29, 30, & 32).|
Amend Law 42–2000 to extend AML/CFT obligations and sanctions authority to the BHN.
SSRP and BHN should develop supervisory capabilities to better evaluate internal controls, risk management, board oversight and involvement, and compliance with laws and regulations.
SSRP, BHN, and MICI should develop inspection programs to ensure that higher risk institutions and activities receive timely and effective supervision.
Ensure that the SSRP and BHN introduce formal licensing requirements and procedures, including fit and proper tests of owners and senior managers.
Supervisory/competent authorities should issue guidance on AML/CFT obligations for regulated entities and ensure that there are mechanisms for providing feedback on effectiveness consistent with Recommendation 25.
Ensure SSRP, BHN, MICI are adequately resourced (including human, financial, and technical skills) to effectively supervise consistent with Recommendation 30 all of the entities that they are responsible for.
Competent authorities need to create processes for collecting and sharing statistical information on the effectiveness and efficiency of the AML/CFT regime consistent with Recommendation 32.
|Money value transfer services (SR.VI)|
Ensure that MICI is adequately resourced to supervise remittance and exchange houses.
Consider adjusting the threshold amount for filing currency transaction reports to provide the UAF with useful information for the detection of structured transactions in the remittance area.
|3. Preventive Measures—Nonfinancial Businesses and Professions|
|Customer due diligence and record-keeping (R.12)|
Extend customer due diligence and recordkeeping obligation to lawyers, accountants, and dealers in precious metals and stones.
Provide guidance to DNFBPs for customer due diligence that considers the specific risks from money laundering.
Review the legal framework for DNFBPs to ensure regulations are supported by clear legal powers.
|Monitoring of transactions and relationships (R.12 & 16)|
Extend monitoring obligation to real estate agents and promoters for customers meeting FATF thresholds, and for both casinos and real estate agents, to monitor customer activity and to report any suspicious transaction to the UAF.
Authorities should identify the risks that DNFBPs face according to their special nature and issue relevant guidance based on the risk presented. Different degrees of control may be warranted in different industries.
|Suspicious transaction reporting (R.16)|
Provide training to authorities and issue guidance to DNFBPs on the typologies of money laundering in their respective sectors. The AML/CFT regulations for real estate businesses merit review to make them sector specific, having regard to the different risks of real estate as opposed to that of financial institutions.
Extend legal protection to DNFBPs from civil or criminal liability for reports made in good faith.
|Internal controls, compliance & audit (R.16)|
Clarify the obligation of when to file cash-threshold reports or suspicious transaction reports by regulated institutions.
DNFBPs should be required to implement adequate internal controls (i.e., AML Programs) according to their specific activities.
|Regulation, supervision and monitoring (R.17, 24–25)|
MICI should implement an AML/CFT oversight program that allocates resources based on money laundering risks within each sector. The program should include criteria for monitoring (off-site surveillance) and inspections.
The auditors of MICI should receive training on AML/CFT issues targeting in order to be able to identify areas of priority.
Ensure greater stability and independence of personnel of the Gaming Board, and update the regulations and inspection procedures to prevent the misuse of casinos by their own owners or operators.
|Other designated nonfinancial businesses and professions (R.20)|
Strengthen enforcement of preventive requirements for Free-Trade Zone merchants, especially in higher risk areas. Better auditing capabilities and training for the administrator in the ZLC are needed, as well as close cooperation with the UAF and with Customs.
Free Trade Zone merchants need training and awareness of the modalities by which their businesses could be misused for money laundering, in order to foster compliance with the obligation to report suspicious transactions.
MICI should ensure that the Directorate of Finance Companies (Empresas Financieras) has adequate resources and training.
Regulation and oversight of pawn shops needs to be targeted according to its identified risks to better prioritize the scarce resources available to the MICI.
|4. Legal Persons and Arrangements & Nonprofit Organizations|
|Legal Persons—Access to beneficial ownership and control information (R.33)|
To the extent that lawyers are involved in the financial activities or nonfinancial activities described under the FATF recommendations, these activities should be regulated and supervised.
|Legal Arrangements—Access to beneficial ownership and control information (R.34)|
Company incorporation and related services should be subject to AML/CFT reporting obligations, to avoid the negative incentive that trust companies owned by law firms do not have to report suspicious transactions.
|Nonprofit organizations (SR.VIII)|
The Ministry of Government and Justice should create a registry (inventory) for NPOs, and undertake a risk assessment of the NPO sector. Depending on the result, an updating of the regulatory framework to include AML regulations and other oversight may be appropriate.
|5. National and International Cooperation|
|National cooperation and coordination (R.31)|
Ensure that the High Level Presidential Commission against money laundering and financing of terrorism is fully appointed and functioning.
Develop a coordinating government committee on AML/CFT matters, which assigns working groups to address specific issues, including sensitive internal matters.
Review overlaps between the authorities of the AML/CFT Commission and CONAPRED as to drug and nondrug-related money laundering.
Develop a working group within the coordinating committee for the review of the supervision or need for supervision of DNFBPs.
Review the CONAPRED’s use of the drug asset forfeiture fund to determine whether current monies could be more promptly and effectively spent.
Determine whether CONAPRED could benefit from lower level task forces to improve coordination of law enforcement efforts in drug-related money laundering cases.
|The Conventions and UN Special Resolutions (R.35 & SR.I)|
Review newly-ratified financing of terrorism convention to determine which of its provisions need national enabling legislation for effective implementation.
Amend Penal Code to add additional predicate act offenses, including financing of terrorism.
|Mutual Legal Assistance (R.32, 36–38, SR.V)|
Review dual criminality principle to determine whether Panama might render mutual legal assistance in cases where Panama would normally reject the request for mutual legal assistance due to the lack of dual-criminality. Consider eliminating the requirement of dual criminality.
Review the policy that noncriminal forfeiture orders will not be recognized or enforced.
|Extradition (R.32, 37 & 39, & SR.V)|
Review the statutory authority regarding the requirement of dual criminality to determine whether Panama might render mutual legal assistance.
|Other Forms of Cooperation (R.32 & 40, & SR.V)|
Ensure that all of the statistics required by R.32 are collected and maintained.