The European Union this week published its first list of 30 international tax havens, and the Republic of Panama appears on the list. While no EU sanctions, or punitive measures, will result from this action, there will certainly be consequences in another arena.
By the EU designating these countries as the "top 30 non-cooperative jurisdictions, consisting of those countries or territories that feature on at least ten member states' blacklists." will not win Panama any points with the Financial Action Task Force (FATF), which could change its present classification of Panama from the "Grey List," to the worst category, commonly known as the Black List.
Panama, which speedily passed additional AML/CFT legislation earlier this year, is presently embroiled in the PAN governmental corruption scandal, and should money laundering charges be filed against several local financial institutions, as has been rumored, the chances that the country will receive favorable treatment from the FATF will be reduced from slim to virtually none.
Between the PAN scandal, and the Financial Pacific/Petaquilla Mining scandal, a large number of Panama's banks are alleged to have accepted huge sums for deposit, from government officials and employees, with absolutely no compliance performed on Source of Funds. If thirteen banks are charged with money laundering, due to PAN, as is rumored, look for Panama to be blacklisted by FATF, either late this year, or in early 2016, and many observers feel that it is richly deserved, for the AML/CFT compliance at many local banks is pure fiction.
The impact of Panama being placed in the same category as a country like North Korea cannot be underestimated; expect serious capital flight, a massive increase in Country Risk, and a huge drop in new foreign investment.