LavadoCrdenas - Eng

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     Experiences, Efforts and
in Combating Money Laundering

          May 2002
Sequence of Events

n   16 February 2000
    n   Panama is advised by FATF that it is being
        evaluated on 40 Recommendations
n   8 May 2000
    n   Panama receives draft offsite assessment
        and questionnaire
n   8-9 June 2000
    n   First discussion on draft offsite assessment
        with FATF Review Group for the Americas in
        Miami, Florida

Sequence of Events
n   22 June 2000
    n   Panama included, together with 14 other
        jurisdictions, in list of Non-Cooperative
        Countries and Territories.
n   2 October 2000
    n   Government issues Laws 41 and 42
n   3 October 2000
    n   Government issues Decrees 163 and 213

Sequence of Events

n   5 October 2000
    n   FATF acknowledges fast progress made by
        many of the 15 jurisdictions identified as
        non-cooperative, but says it would be
        premature to remove any of them from the
        NCCT list
n   12-13 December 2000
    n   Second meeting with FATF in Miami, Florida
n   3 January 2001
    n   Government issues Executive Decree 1

Sequence of Events

n   1 February 2001
    n   FATF issues communiqué praising progress
        made, but still not satisfied because
        countries have not implemented necessary
n   9 February 2001
    n   FATF congratulates Panama on progress
        made and requests anti-money laundering
        Implementation Plan

Sequence of Events

n End      February 2001
    n   Panama submits Implementation Plan
        to FATF
n   3-4 May 2001
    n   Onsite FATF assessment
n   22 June 2001
    n   Panama removed from NCCT list

Reasons for including Panama as NCCT

n   Not criminalizing money laundering for crimes
    other than drug trafficking
n   Inadequate reporting of suspicious activities to
    competent authorities
n   Too many restrictive rules on international
    information exchange
n   Civil law provisions hindering identification of
    true beneficial owners of trusts

Risks Faced
n   Interruption of efforts to improve country’s
    image with the beginning of a new democracy
n   Panama seen as ideal country for money
n   Panama seen as a crime haven
n   International banks no longer willing to establish
    themselves in our financial center
n   New investments stopped
n   Some banking operations encountered difficulties

Efforts Made
n   Panama case discussed at national and
    international forums
n   Joint effort by Government, private sector and
    political forces to approve legislation
n   Visits to FATF member countries seeking
    international support
n   Development of an anti-money laundering
    implementation plan
n   Ongoing training

Implementation of the Action

n   Adjustment and modernization of the legal system
n   Collaboration agreements between Supervision and
    Control, and law enforcement agencies
n   Information sharing agreements with counterpart
    international agencies
n   Creation of additional inspection units in certain
    Supervision and Control agencies
n   Allocation of additional human and other resources
n   Continuous training of inspection staff and reporting
n   Ongoing monitoring of compliance with anti-money
    laundering regulations by Supervision and Control

Adjustment and Modernization of the
   Legal and Regulatory System

n Law     41 dated October 2, 2000

n   New section added to Penal Code
    criminalizing money laundering and
    increasing penalties for underlying
    crimes other than drug trafficking
n   Greater number of underlying crimes in
    addition to drug trafficking

Additional Underlying Crimes

n   Fraud                   n   Corruption of public
n   Illegal arms traffic        officials
n   Trafficking in people   n   Terrorist acts
n   Embezzlement            n   Auto theft or
n   Abduction                   international trafficking
                                in stolen vehicles
n   Extortion

Adjustment and Modernization of the
   Legal and Regulatory System

        n   Law 42 dated October 2, 2000:

n   Establishes additional reporting agencies besides
n   Requires reporting agencies to:
     n Adequately identify customers
     n Submit reports to Financial Intelligence Unit
     n Establish internal control procedures and

Adjustment and Modernization of the
   Legal and Regulatory System

     Law 42 dated October 2, 2000:

n   Communicate any suspicious events,
    transactions or operations directly and
    voluntarily to the FIU

Reporting Entities and Supervision
      and Control Agencies
  n   Banks and trusts              n   Superintendency of Banks
  n   Foreign exchange offices,     n   Ministry of Commerce and
      money remitters and real          Industry
      estate agents                 n   IPACOOP
  n   Thrifts                       n   National Securities
  n   Stock exchanges, securities       Commission
      dealers/brokers and           n   Free Zone management
      investment managers           n   Gambling Control
  n   Free Zone companies               Commission
  n   Casinos, gambling houses      n   Superintendency of
  n   Insurers and reinsurers           Insurance and Reinsurance

    Adjustment and Modernization of
    the Legal and Regulatory System

             Executive Decree 163 of 2000
n   Modifies role of the Financial Intelligence Unit enabling
    it to:
     n Share information with counterpart entities in other
        countries to analyze cases presumed to be money
     n Provide information directly to the Attorney General
        when, according to the FIU, police investigation is
     n Remove restrictive rules in order to facilitate FIU’s
        direct access to information in financial entities, thus
        enhancing information sharing with counterpart
Adjustment and Modernization of the
   Legal and Regulatory System

             Decree 213 of 2000

 n   Modifies trust regulation
 n   Enables Supervision and Control agencies to
     provide information about trusts to pertinent
     administrative and judicial authorities
 n   The above rectifies provisions hindering
     identification of beneficial owners of trusts

Adjustment and Modernization of the
   Legal and Regulatory System
     n Executive      Decree 1 of 2001
 n   Regulates Law 42 of 2000
 n   Establishes obligations for Supervision and
     Control agencies
 n   Establishes obligations for reporting agencies
 n   Empowers Supervision and Control agencies to
     set additional measures intended to facilitate
     compliance with Law 42

Adjustment and Modernization of the
   Legal and Regulatory System

      Agreements 8 and 10 -2000
                 Compliance officer
  n   All banks should designate a compliance officer
      and communicate changes to the
      Superintendency of Banks
  n   Qualifications and duties of compliance officer
  n   All suspicious activities to be reported by
      compliance officer directly to the FIU

Adjustment and Modernization of the
   Legal and Regulatory System

           Agreement 9-2000
     Abuse of the banking system
n   Mandatory identification of customers, investors,
    agents and intermediaries
n   Notion of customer, identification criteria and
    customer profiles
n   Suspicious activities recognition criteria
n   Keep KYC policy manual up to date
n   Establishes penalties of US$ 5,000 to
    US$ 1,000,000

Adjustment and Modernization of the
   Legal and Regulatory System
        Agreement 4-2001
       Corporate governance

n   Minimum requirements for good corporate
n   Determines internal control system
n   Board and senior management responsibilities
n   Establishes Audit Committee and Risk Unit

         Signed Memoranda of

Superintendency of             Financial Intelligence Unit:
n   Peru       Costa Rica      n   United States    Belgium
n   Ecuador    El Salvador     n   El Salvador      Colombia
n   Guatemala Brazil           n   United Kingdom   France
n   Colombia Montserrat        n   Spain            Paraguay
n   Bolivia    Nicaragua       n   Venezuela        Brazil
n   Dominican Republic         n   Germany          Costa Rica
n   Turks and Caicos Islands   n   Guatemala

         Compliance Results

n   Better image
n   More control
n   Enhanced transparency and integrity
n   Stronger financial center – new investments and
    new banks
n   International recognition
n   Highly-qualified human resources
n   KYC policy approved by US Internal Revenue
n   Panama seen as a model and cooperative


n   Raise awareness of the risk involved in
    not taking prompt action against money
n   Bring legislation in line with FATF’s 40
    Recommendations, 25 Criteria and 8
    Special Recommendations on combating
    the financing of terrorism

n   Develop and execute a dynamic
    Implementation Plan
n   Enhance coordination within the national
    money laundering prevention, detection,
    analysis, supervision and investigation
    network to better comply with the
    Implementation Plan

            Future Action
n   Regular    updating     and      continuous
    implementation of anti-money laundering
    Implementation Plan
n   Follow-up on modifications regarding money
    laundering to be made in the 40 FATF
n   Follow-up on 8 Special Recommendations on
    combating the financing of terrorism
n   Panama to continue cooperating with efforts to
    combat money laundering and the financing of

    Countries that maintain us on Regional
                Tax Haven Lists

n Argentina
n Brazil
n Mexico
n Peru
n Venezuela

Superintendency of Banks of Panama

  For more information visit our Web
      site at


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