Panama FATF Standing and AML/CFT Compliance Explained

FATF and Panama: Setting the ContextCopy link to section

The Financial Action Task Force sets the global standards for combating money laundering and terrorist financing, and its assessment of FATF in Panama directly shapes how foreign-owned entities there are treated by banks and counterparties abroad. Panama exited the FATF grey list at the October 2023 Plenary after more than four years under increased monitoring, and was later removed from the EU high-risk third countries list with effect from 5 August 2025.

For a foreign business owner or adviser, that status matters because it governs whether your Panamanian company triggers enhanced due diligence when it transacts internationally. This article explains how Panama reached its position, what its mutual evaluation found, the legal framework now in place, and what the outcome means in practice. It is written for non-residents who own or advise on Panamanian companies and need to understand the compliance environment before incorporating or maintaining an entity. The FATF country profile for Panama records the formal monitoring history.

What the Financial Action Task Force Is and Why It MattersCopy link to section

The G7 countries created the FATF in 1989 to coordinate the worldwide response to money laundering. It has since become the global standard-setter on anti-money laundering (AML), countering terrorist financing (CFT), and counter proliferation financing.

Its 40 Recommendations describe the legal, regulatory, and operational measures that states should adopt. They are not law in themselves; instead, they form the framework that national legislatures, supervisors, and financial intelligence units use to build their own rules.

The Recommendations span seven areas, from AML/CFT policy coordination through preventive measures, beneficial ownership transparency, and international cooperation. In 2012 the FATF merged its earlier recommendations and the Special Recommendations on Terrorist Financing into the single set of 40 that remains in force.

Members meet in Plenary three times a year. At those sessions the body identifies jurisdictions with weak controls and publishes two lists, issued on the same three-times-yearly cycle.

A full mutual evaluation can take up to 18 months. The FATF revised its assessment methodology in 2022 and began its 5th round of evaluations under that approach in 2024.

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Panama's History with FATF and the Mutual Evaluation ProcessCopy link to section

Panama has committed to international AML/CFT standards since 2010, the year it joined GAFILAT, a FATF-style regional body. It is among the jurisdictions that have experienced more than one grey-listing episode.

An earlier engagement under the FATF International Cooperation Review Group ended in February 2015, when the country was removed after substantially completing an agreed action plan. The chapter that defined its modern record began with the next evaluation.

GAFILAT conducted an on-site visit from 15 to 26 May 2017, testing compliance with all 40 Recommendations and the effectiveness of the system. The resulting report was adopted in December 2017 and endorsed by the FATF.

That evaluation drove the consequences that followed.

• June 2019: grey-listed after scoring roughly 75% on technical compliance but only about 30% on effectiveness; a high-level political commitment to work with FATF and GAFILAT followed.
• January 2021: the action-plan deadline was missed.
• October 2021: FATF again urged completion of outstanding items; the deadline was later extended to October 2023.
• February 2023: FATF strongly urged completion by June 2023, warning of a possible call for enhanced due diligence worldwide.
• June 2023: FATF confirmed the action plan was fulfilled and approved an on-site verification mission.
• October 2023: delisted at the Plenary, following an on-site visit in September 2023.

The grey-list period ran from June 2019 to October 2023, a span of over four years.

Results of Panama's Mutual Evaluation: Technical Compliance and Effectiveness RatingsCopy link to section

The 2017/2018 evaluation graded two things separately: technical compliance against all 40 Recommendations, and effectiveness measured across 11 Immediate Outcomes. The distinction matters, because a country can have strong laws on paper while applying them poorly in practice, which is precisely the gap the original report exposed.

At the time of the original report, the raw technical picture was weak: 3 Recommendations compliant, 26 partially compliant, and 19 not compliant, with none of the 16 Principal and Fundamental Recommendations rated compliant or largely compliant. Follow-up re-ratings later improved this to 33 of 40 rated compliant or largely compliant.

Effectiveness told the harder story.

The 2019 enhanced follow-up report re-rated nine Recommendations upward, reflecting legislative progress after the evaluation. Recommendation 14 and Recommendation 33 each moved from partially compliant to compliant, and Recommendation 32 moved from largely compliant to compliant.

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How Panama Aligns with the 40 RecommendationsCopy link to section

The principal AML statute is Law 23 of 2015, which sets out the prevention policies for money laundering, terrorist financing, and proliferation financing. It was reformed between 2023 and 2024, obliging regulated entities to adapt to the revised requirements.

Beneficial ownership transparency was the issue that drove most of Panama's action-plan obligations. The FATF wanted assurance that obliged entities verify up-to-date ownership information and that authorities can access it without delay.

Law 129 of 2020 answered that concern by creating a centralised register of beneficial owners of legal persons, the Registro Único de Beneficiarios Finales (RUBF). The register is private rather than public, accessible to competent authorities rather than open to general inspection. By June 2023, the FATF acknowledged that the system maintained accurate, current ownership data with timely access for authorities.

Virtual asset service providers fall within the AML regime and must register and report suspicious activity. A purpose-built licensing regime for the crypto and fintech sector was absent until January 2026, and Draft Law 314 is expected to close the remaining distance to FATF standards on virtual assets.

Panama's AML/CFT Legal and Institutional FrameworkCopy link to section

Several statutes work together rather than a single code. Knowing which body supervises your sector matters more to a foreign owner than the citation itself.

AML duties reach beyond banks. Securities brokers, fund managers, credit cooperatives, money remitters, insurers and reinsurers, casinos, real estate professionals, and lawyers or notaries who handle client funds or form companies all carry obligations.

Registration in the RUBF climbed sharply during the reform push. By April 2023, 129,321 legal persons were registered against roughly 200,182 active companies, a coverage rate of 65%, up from 28% in January of the same year.

If you own a Panamanian entity, the update mechanism is specific and time-bound. The legal representative must notify the resident agent of any change in ultimate beneficial owner within 15 business days, and the resident agent then has 5 business days to update the register.

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Key Reforms Panama Adopted to Address FATF ConcernsCopy link to section

The reform programme targeted the effectiveness gap, not just the statute book. The centralised beneficial ownership register stands as the most significant single measure, designed to address the misuse of anonymous corporate structures.

• The Financial Analysis Unit was strengthened to detect and investigate suspicious transactions and to share information domestically and internationally.
• The SSNF was created to supervise real estate, legal services, and gambling, sectors that had been weakly monitored.
• Panama demonstrated capacity to investigate and prosecute money laundering tied to foreign tax crimes, a deficiency the FATF had named specifically.
• Real estate transactions drew new customer due diligence rules.

A separate strand addressed maritime sanctions exposure. Executive Decree 512 of October 2024 empowered the Maritime Authority to cancel vessel registrations linked to sanctioned persons, and by March 2025 over 125 vessels on EU, UK, and OFAC watchlists had been removed from the registry.

The Role of GAFILAT and Regional CooperationCopy link to section

GAFILAT is the FATF-style regional body for Latin America, bringing together 18 member states including Argentina, Brazil, Chile, Colombia, Mexico, Peru, and Panama. It holds associate member status within the FATF and so takes part in shaping the 40 Recommendations.

Panama's evaluations run through this body rather than directly through the FATF. GAFILAT conducted the 2017/2018 mutual evaluation, adopted the report in December 2017, and tracked progress through enhanced follow-up reports that granted new ratings as deficiencies were resolved.

The findings carry full international standing because the FATF reviewed and endorsed them. GAFILAT also trains evaluators each year and provides technical assistance to members implementing the Recommendations. You can read its own description of its role.

What FATF Engagement Means for Non-Resident Owners and AdvisersCopy link to section

For a foreign owner, the status determines how readily a Panamanian entity moves money across borders. During the grey-list years, counterparties worldwide applied enhanced due diligence to Panamanian entities by default, slowing transactions and raising compliance costs.

Delisting changed the baseline. As of 27 October 2023, the country is no longer under increased FATF monitoring, which removed the automatic enhanced due diligence trigger under FATF standards.

The European Union followed a slower path. Its initial proposal to remove Panama in March 2024 was rejected by the European Parliament over concerns about Panamanian-flagged "ghost ships" potentially breaching Iran and Russia sanctions.

That position reversed in 2025. Commission Delegated Regulation (EU) 2025/1184 removed the country from the EU high-risk third countries list with effect from 5 August 2025, so European banks and businesses no longer apply enhanced due diligence to transactions from Panama by default.

Two cautions remain for advisers.

• The EU non-cooperative tax jurisdictions list is a separate instrument from the AML/CFT high-risk list; check Panama's status on it independently, as the two operate on different criteria.
• Individual banks and correspondent institutions may keep their own Panama-specific risk assessments, so expect continuing KYC and enhanced due diligence requests at the institutional level.

The beneficial ownership duty also reaches non-residents directly. If you hold a Panamanian company through a nominee or other structure, the 15-business-day notification to your resident agent still applies to changes in ultimate ownership.

Outlook for Panama's FATF StandingCopy link to section

Removal from both the FATF grey list and the EU high-risk list signals stronger alignment with international standards. The country's record of repeated grey-listing, however, is a reminder that standards keep tightening and that maintaining compliance demands continuous effort.

The 5th round of evaluations, launched in 2024 under the 2022 methodology, will eventually reach Panama once GAFILAT adopts the new approach. That round is more demanding than the one Panama last faced.

New prioritisation criteria announced in October 2024 add pressure. The FATF will focus on high-income countries and financial centres above USD 10 billion, a category Panama falls within as a regional hub.

The unfinished item is virtual assets. The absence of a purpose-built crypto licensing regime until January 2026, with Draft Law 314 still pending, is a gap that could affect future scoring under Recommendation 15 if left unaddressed. No date for the next mutual evaluation has been published.

ConclusionCopy link to section

A Panamanian company you own or advise on now sits in a markedly better position than during the grey-list years, free of the automatic enhanced due diligence triggers under both FATF and EU rules. That improvement rests on real reforms, particularly the beneficial ownership register, which carry ongoing duties you must meet, including prompt notification of ownership changes to your resident agent. Individual banks may still apply their own scrutiny, and the separate EU tax list deserves an independent check. The trajectory is positive, but a tougher evaluation round and an unresolved crypto framework mean the standing should be treated as earned rather than permanent.

How Expanship Can Help Your Business in PanamaCopy link to section

Expanship helps foreign owners meet the beneficial ownership and AML obligations that flow from Panama's FATF commitments, including resident agent reporting to the RUBF and the wider compliance duties under Law 23 of 2015. The same team supports the full lifecycle of a foreign-owned entity, from formation through routine maintenance.

• Company formation and structuring for non-resident owners
• Registered agent and registered office services
• Tax registration and ongoing filing
• Beneficial ownership and AML compliance management
• Accounting and bookkeeping
• Introductions to banking partners

To discuss your entity's compliance position, contact Expanship Panama.

Frequently Asked QuestionsCopy link to section