Is Panama on the Grey or Black List? The Answer

Panama on the Global Watchlists: What Grey and Black Listing Really MeansCopy link to section

The grey and black list status of Panama is mixed: the country sits on the European Union's tax blacklist (Annex I) while having exited the Financial Action Task Force grey list in October 2023 and never having appeared on the FATF black list. For a foreign owner, this split matters because each list triggers different consequences, from bank scrutiny to tax penalties applied by counterparties abroad. This article explains which bodies list the country, why, what has changed, and what each status means in practice for an entity with cross-border dealings. It is most relevant to non-resident owners, investors, and advisers weighing whether to incorporate in or maintain a firm tied to Panamanian structures, especially where European clients or banks are involved.

A "grey list" generally signals a jurisdiction under increased monitoring that has committed to fixing identified weaknesses; a "black list" signals a more serious finding of non-cooperation. The EU keeps its list of non-cooperative jurisdictions separate from its anti-money-laundering list, so a single country can be treated differently on tax and on financial crime.

The Bodies That List Panama: EU, FATF, OECD and BeyondCopy link to section

Several institutions assess the country, and they do not coordinate their findings. Understanding which one issued a listing tells you what the listing is actually about.

The FATF, founded in 1989 by the G7, sets the global AML/CFT standard through its 40 Recommendations. It publishes two lists after each of its three annual plenaries in February, June, and October: "Jurisdictions under Increased Monitoring" (the grey list) and "High-Risk Jurisdictions subject to a Call for Action" (the black list).

The EU runs two distinct lists that are often confused. ECOFIN maintains the EU list of non-cooperative jurisdictions for tax purposes, updated twice a year and managed operationally by the Code of Conduct Group, while the European Commission maintains a separate AML/CFT high-risk list covering financial-crime deficiencies.

The OECD Global Forum on Transparency and Exchange of Information for Tax Purposes brings together more than 170 jurisdictions and peer-reviews both the Exchange of Information on Request standard and the Automatic Exchange of Information standard. Its ratings feed directly into the EU's tax screening criteria.

The Basel AML Index, published by the Basel Institute on Governance, is not an intergovernmental list but a risk-scoring tool tracked by compliance teams. Its methodology was amended in October 2023 to credit jurisdictions that graduate from the FATF grey list with at least moderate AML/CFT effectiveness.

Panama

Company Incorporation in Panama

Set up your company in Panama with Expanship handling registration end to end.

Learn more

Panama's FATF Grey List History: Listings, Action Plans and the 2023 DelistingCopy link to section

Panama entered the FATF grey list in June 2019, with 15 actions identified as unfulfilled at the time. The action plan covered weaknesses in the transparency of company ownership and the supervision of its financial system.

The original deadline was extended to October 2023. In June 2023 the FATF confirmed the action plan had been fulfilled and scheduled an on-site mission, which led to delisting later that year.

On 27 October 2023, at a plenary in Paris, the country was removed from the grey list and is no longer subject to intensified monitoring. Jordan, the Cayman Islands, and Albania were confirmed as having met their action plans at the same session.

One point deserves emphasis for any owner who has heard the phrase "Panama blacklist" used loosely: the jurisdiction has never appeared on the FATF black list. Its FATF exposure was confined to the grey list category of increased monitoring.

The EU Lists Explained: Annex I (Blacklist) versus Annex II (Greylist) Status for PanamaCopy link to section

The EU tax list, first published in December 2017, has two parts. Annex I is the blacklist for jurisdictions found non-cooperative; Annex II is the grey list for jurisdictions that fall short of every standard but have committed to reform and are being monitored.

Panama sits on Annex I, not Annex II. On 18 February 2025 the Council kept it on the list, and the October 2025 update made no changes to Annex I.

Because the country has not made the qualifying commitments that would move it to monitored-commitment status, it is not on Annex II. That distinction matters: Annex II would carry far lighter consequences than the blacklist.

The EU's separate AML/CFT high-risk list tells a different story. The Union removed Panama from that list in 2025, after the European Parliament had opposed the Commission's earlier 2024 proposal, citing evidence on circumvention of Russia sanctions. The AML list cannot enter into force without the assent of both Parliament and the Council, which is why political dynamics, not only technical performance, shaped the timeline.

Panama

Ongoing Compliance in Panama

Keep your Panama entity compliant with filings, returns, and statutory obligations.

Learn more

OECD and Tax-Transparency Assessments: Where Panama Currently StandsCopy link to section

The Global Forum applies four ratings under its Exchange of Information on Request standard: Compliant, Largely Compliant, Partially Compliant, and Non-Compliant. A "Partially Compliant" rating means at least one material deficiency has had, or is likely to have, a significant effect on information exchange in practice.

In 2016 the country was rated "Non-Compliant" on transparency and exchange of information. By 2019 it had moved up to "Partially Compliant," but a 2019 peer review still flagged weaknesses.

This rating is the hinge for the EU listing. Panama remains on Annex I in part because it does not hold an EOIR rating of at least "Largely Compliant," the threshold the EU sets under its criterion 1.2.

Engagement continues. In April 2024 the Global Forum Secretariat and the Ministry of Economy and Finance ran a workshop on CRS compliance audits in Panama City, drawing 38 participants from 15 jurisdictions, and the government has signed a memorandum of understanding to advance OECD accession.

No verified second-round rating upgrade beyond "Partially Compliant" appears in the public record, and the continued Annex I listing implies the threshold has not yet been met. Monitor the OECD ratings portal for movement.

The Specific Reasons Cited Against Panama Across Each ListCopy link to section

Each list cites its own grounds, and they do not overlap neatly. Reading them together explains why one status improved while another did not.

The FATF's 2019 grey-listing turned on the opacity of company ownership. The jurisdiction had long been used to incorporate shell companies that concealed true owners, and the FATF's pressure drove the creation of a beneficial-ownership registry as a direct response.

The EU keeps the firm on Annex I for two reasons:

• It does not hold an EOIR rating of at least "Largely Compliant" from the Global Forum (criterion 1.2).
• It maintains a foreign-source income exemption regime the EU views as harmful (criterion 2.1).

The Council did agree to drop one earlier concern. The entry relating to Country-by-Country Reporting (criterion 3.2) was removed after the most recent BEPS Inclusive Framework peer review found it fulfilled.

Parliament's objections to AML delisting ran on a separate track. In March 2024 it rejected the Commission's removal proposal over the maritime registry, including allegations of "ghost ships" linked to sanctioned entities in Iran and Russia, and residual concerns over the refusal to recognise blacklists from non-governmental bodies such as United Against Nuclear Iran.

Behind all of this sits the 2016 Panama Papers leak, in which the ICIJ published 11.5 million documents from Mossack Fonseca. That episode damaged the country's reputation and intensified scrutiny that overlaps with list-driven friction to this day.

Panama

Panama Incorporation Pricing

See transparent pricing to incorporate and maintain a company in Panama.

View pricing

Commitments and Reforms Panama Made to Secure DelistingCopy link to section

The route off the FATF grey list ran through concrete legal and institutional change. These reforms are why a foreign owner now faces a cleaner AML picture than a few years ago.

• The National Risk Assessment was updated to cover money-laundering and terrorist-financing risks more fully.
• Staff and resources were increased at the Financial Analysis Unit (Unidad de Análisis Financiero), which investigates such cases.
• The AML/CFT regulation was modified and the Single Registry of Final Beneficiaries was adopted through Law 129 of 2020, accompanied by a Final Beneficiary Guide.

Separately, the AML framework rests on Law 23 of 2015, reformed between 2023 and 2024, which required regulated entities to adapt to the changes.

For the EU AML high-risk delisting in 2025, the maritime issue was addressed head-on. Executive Decree 512 of October 2024 empowered the Maritime Authority to deregister vessels linked to international watchlists, and by March 2025 more than 125 flagged ships had been removed.

The EU tax blacklist is the unfinished item. Exit will require verifiable reforms that raise the EOIR rating and address the foreign-source income exemption regime while the government tries to preserve the country's competitiveness.

Practical Consequences for Foreign Owners: Enhanced Due Diligence and Banking FrictionCopy link to section

The FATF period, from 2019 to October 2023, was costly for cross-border operations. Banks applied Enhanced Due Diligence to related transactions, demanding source-of-funds documentation, business rationale, and disclosure of ultimate beneficial owners.

That friction has largely receded with delisting, but the EU Annex I status carries its own ongoing costs that you should plan around. EU member states may apply "defensive measures" against blacklisted jurisdictions.

• Extra withholding taxes on payments flowing to Panama-based entities.
• Non-deductibility of those payments for the EU-based payer.
• Tougher controlled foreign company (CFC) rules capturing the entity's income.
• Limits on participation exemptions for dividends paid to EU groups.
• Stricter bank due diligence and slower onboarding.

These measures are not uniform. Member states apply different local lists, different defensive measures, and different timelines, so the impact depends on which EU countries your counterparties and shareholders sit in.

Reporting obligations bite as well. Under the EU Public Country-by-Country Reporting Directive, data for any Annex I jurisdiction must be disclosed separately rather than aggregated, for financial years starting on or after 22 June 2024. For firms in shipping, logistics, finance, and corporate services dealing with Europe, the result is longer onboarding and sharper scrutiny of structures that lack genuine local presence.

Investor and Counterparty Perception: The Reputational Cost of Being ListedCopy link to section

Listings shape perception well beyond the technical rules. Being placed on a grey or black list weighs on a jurisdiction's investment climate, trade, and capital flows, and removal works in the opposite direction.

The FATF exit was expected to ease access to credit and repair relations between local banks and their international correspondents. Removal from the EU AML high-risk list in 2025 added to that improvement, easing some banking friction even as the tax blacklist persists.

The Cayman Islands case shows how perception drives behaviour: after its grey-listing prompted EU AML blacklisting, managers seeking EU investors for securitisation vehicles moved to Bermuda and Jersey. Institutional investors and fund managers often run internal policies that simply exclude listed jurisdictions, regardless of the technical detail.

Two further realities are worth holding in mind. Technical compliance alone does not guarantee delisting, because the European Parliament's political dynamics add unpredictability, and the Panama Papers legacy continues to amplify any list-driven scrutiny.

Current Status at a Glance and the Outlook for PanamaCopy link to section

The October 2025 update left Annex I unchanged, keeping the country among 11 listed jurisdictions. Two criteria remain unresolved: the sub-"Largely Compliant" EOIR rating and the harmful foreign-source income exemption regime.

The direction of travel is toward reform. The government, led by President José Raúl Mulino, has made exit from the EU tax blacklist an explicit priority, and the OECD accession MOU commits the country to further changes in taxation, transparency, governance, and investment policy.

No public timeline exists for reaching a "Largely Compliant" rating or dismantling the exemption regime. The EU revises its list each February and October, so those are the windows to watch, alongside the October 2025 update and the OECD ratings portal.

ConclusionCopy link to section

For a foreign owner, the practical position is twofold: the AML picture has improved markedly, with the FATF grey list behind and the EU AML high-risk list cleared, while the EU tax blacklist remains the live constraint. If your structure touches European clients, banks, or shareholders, expect defensive tax measures, separate Public CbCR disclosure, and tighter onboarding until two reforms land. Building genuine local substance and tracking the February and October EU cycles are the most useful steps you can take. The trajectory points toward eventual delisting, but no fixed date supports planning around it.

How Expanship Can Help Your Business in PanamaCopy link to section

Expanship helps foreign owners assess how the EU tax blacklist and AML rules affect a specific structure, then build and maintain entities that hold up to enhanced due diligence and substance scrutiny. The same team supports the full lifecycle of a foreign-owned company in the jurisdiction.

• Company formation and structuring suited to your cross-border profile
• Registered agent and registered office services
• Tax registration and ongoing filing obligations
• Compliance management, including beneficial-ownership reporting
• Accounting and bookkeeping aligned with local rules
• Introductions to banking partners

To discuss your situation, contact Expanship Panama.

Frequently Asked QuestionsCopy link to section