RegAlert2000-07-01 | FinCEN Advisory - Issue 23Added · Updated
Transactions Involving Panama (FinCEN Advisory - Issue 23)
Banks and other financial institutions operating in the United States are advised to carefully consider the impact of serious deficiencies in Panama's counter-money laundering systems when dealing with transactions originating in, routed to, or involving entities or persons in Panama, particularly those involving large sums of money. Institutions subject to suspicious transaction reporting rules under 31 C.F.R. 103.18 should examine facts relating to transactions of $5,000 or more to determine if reporting is required. The Treasury Department will consider any report relating to a transaction described in this Advisory to constitute a report of a suspicious transaction relevant to a possible violation of law, providing protection from liability under 31 U.S.C. 5318(g)(2) and (g)(3).
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1
United States Department of the Treasury Financial Crimes Enforcement Network Subject:
Transactions
Involving
Panama
Date:
July
2000
Advisory:
Issue 23
FinCEN Advisory
This Advisory is being issued to inform banks and other financial institutions operating in the United States of serious deficiencies in the counter-money laundering systems of the Republic of Panama. The impact of such deficiencies on the scrutiny that should be given to certain transactions or banking relationships involving Panama, in light of the suspicious transaction reporting obligations of financial institutions operating in the United States, is discussed below. Panama occupies a critical strategic and economic position between Central and South America. Its population is roughly 2.8 million. Panamas well-developed services sector accounts for roughly threequarters of its GDP. The services sector includes the Panama Canal, shipping and container port activities, and local and offshore banking and insurance services. Panamas free trade zone (the Colon Free Zone) is the worlds second largest free trade zone and plays an important part in Panamas service economy. The U.S. dollar is legal tender in Panama. Panamas geographic proximity to the worlds largest cocaine producer, combined with its developed international banking sector, canal, and free trade zone make Panama particularly vulnerable to persons who seek to launder the proceeds of narcotics trafficking and other crimes. Panamanian companies, like other offshore vehicles, can form layers within intricate chains of ownership of assets in other countries. In addition, specialized money laundering mechanisms, such as the so-called Black Market Peso Exchange, have developed in an attempt to take illegal advantage of the Colon Free Zone. See FinCEN Advisories 9 (November
1997) and 12 (June 1999).
The counter-money laundering regime embodied in the legal, supervisory, and regulatory systems of Panama suffers from serious systemic problems. l Money laundering is a crime in Panama only if it is linked to narcotics trafficking.
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Source: Financial Crimes Enforcement Network — original document · Summary generated with machine assistance and reviewed before publication; the authoritative text is the regulator's original document. How RegAlert works
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