Kenneth Rijock

Kenneth Rijock

Thursday, August 21, 2014

PANAMA'S FUTURE: FATF GREY LIST, JUNE 2014, TO BLACKLIST IN 2015 ?


Much has been made of late, in the Panamanian press, about the need for the Republic of Panama to improve its compliance with Anti-Money Laundering and Countering  the Financing of Terrorism, so as to be removed from the Financial Action Task Force "Grey List" in June 2015.While there is a full list of subject that Panama must improve upon*, The issue of bearer shares remains not only the biggest obstacle to getting off the grey List, but it could propel Panama back into the Black List in 2015. Allow me to explain.

Panama's Law 47 (2013) provides for a system of custody for bearer shares, effective next year. Shareholders must deposit their certificates with specific approved custodians, such as attorneys, banks and licensed broker-dealers. Those custodians are then required to notify the authorities of the identities of the Beneficial Owners. Unfortunately, it is those custodian-gatekeepers who benefit the most financially from the financial business of their anonymous corporate clients, and they have never demonstrated any willingness to adhere to the strict letter of the law, when it comes to protecting that extremely lucrative business.

Simply put, we cannot trust the designated custodians to be be the gatekeepers of the truth; they will, most likely, name front men and professional nominees as the Beneficial Owners of the Panama Corporations, while protecting the true owners, all the way to the bank. It is not a coincidence that banks in the United States and Canada are now advising that they cannot accept Panamanian corporations as new clients, and are closing existing accounts, far ahead of the implementation of the FinCEN regulations, requiring them to Know their Beneficial Owner and Control Person.

Will the whole Panama Bearer Share nightmare explode next June, and result in Panama being moved to the FATF Black List ? Unless Panama takes reforms its corporation laws, and eliminates Bearer Shares,  there will be no accurate method of identifying the true owners of Panamanian corporations. In that case, send Panama to the Black List, please, for it deserves to be there.
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(1) Criminalize money laundering, in accordance with international standards.
(2) Criminalize terrorist funding properly.
(3) Create the legal framework and mechanism to freeze terrorist assets.
(4) Strengthen the Financial Analysis Unit.
(5) Expand the requirement to report suspicious transactions to all financial institutions, professionals and other industries.
(6) Improve international cooperation in the exchange of information with intelligence units in other countries.

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