Anti-Money Laundering in Panama

Panama has been long known for their logistics and finances, but it has also encountered intense global scrutiny because of their past financial scandals and strict secrecy laws. Since the 2016 “Panama Papers” fallout, the country has made major changes to strengthen its anti-money laundering (AML) regime. This 2025 guide outlines and showcases Panama’s updated AML frameworks.

What Is the AML Legal Framework in Panama?

Panama’s AML legal framework has come a long way, especially since 2016. The country now has a multi-layered approach that matches international standards. Here are the core legislative acts that shape Panama’s AML regime:

• Law 23 of 2025 serves as the cornerstone of Panama’s AML and Counter-Terrorism Financing (CFT) efforts. It establishes compliance obligations across financial and non-financial sectors, then sets the requirements for customer due diligence (CDD), enhanced due diligence (EDD), and suspicious transaction reporting (STR).
• Executive Decree No. 363 of 2015 is the practical foundation that brings Law 23 to action. This law lays clear guidance for businesses to follow on how to handle risk assessments, record-keeping, and building a strong internal compliance program, this   decree helps companies apply the law to real-time events.
• Law 70 of 2019 focuses on preventing the financing of terrorism and the spread of weapons of mass destruction. This strengthens Panama’s legal framework and brings the country aligned with international standards surrounding Panama with security and cooperation.

Panama’s legal framework aligns with Financial Action Task Force (FATF) recommendations and is monitored regularly by GAFILAT (Financial Action Task Force of Latin America).

 Who Regulates AML Compliance in Panama? 

Panama’s AML/CTF framework has clearly defined roles and regulatory requirements. These are essential for maintaining financial integrity and preventing acts of the financial system for illicit purposes. All regulated entities are subject to strict compliance obligations that are enforced by national authorities.

Through these roles and responsibilities, Panama aims to ensure that all regulated entities maintain a proactive and risk-based approach to AML/CTF compliance. Panama complies with international standards set by the Financial Action Task Force (FATF).

Multiple authorities are tasked with ensuring AML compliance across sectors:

Which Sectors Are Subject to AML Obligations in Panama?

Panama’s AML obligations are not limited to banks. A wide range of businesses fall under the compliance umbrella:

Financial Institutions:

• Banks provide loans, deposits, and payment services.
• Securities broker and fund managers handle investments and trades.
• Credit cooperatives and money remitter allow domestic and international money transfers.
• Issuers and reinsurers offer risk management using policies.

Designated Non-Financial Businesses and Professions (DNFBPs):

• Casinos and Gaming Venues: Due to high cash flow and risk
• Real estate professionals: Often involved in large-sum transactions
• Lawyers and notaries: Those who manage client funds of form companies
•  Accountants and corporate service providers: They can inadvertently enable hidden ownership
• Precious metal and gem dealer: High-value goods mean high money laundering risk.

What Are the KYC and EDD Requirements in Panama? 

Know Your Customer (KYC) and Enhanced Due Diligence (EDD) are fundamental in Panama’s AML framework. Understanding these processes is programmed to ensure that financial Institutions, law firms, real estate agencies, and other regulated entities can identify and assess the risks associated with their clients — this promotes transparency and prevents illicit financial activity.

Customer Due Diligence (CDD):

• ID Verification: Using passport, national ID, or driver’s license.
• Business Relationship Insight: Understanding the nature and purpose of the business relationship by gathering information on the client’s activities, transactions, and overall goals for the relationship.
• Beneficial Ownership: Identifying who controls a legal entity

When is Enhanced Due Diligence (EDD) Triggered in Panama?

EDD is utilized in situations where there is a higher risk of money laundering, terrorist financing, or other financial crimes. Unlike Customer Due Diligence (CDD), EDD involves a deeper examination of the client’s profile, background, activities, and where their source of funds is. This ensures a deeper understanding of the associated risks. In Panama, EDD is triggered in the following scenarios:

• Politically Exposed Persons (PEPs): Additional scrutiny for those in prominent roles, including their relatives due to higher risk of corruption and money laundering
• High-risk jurisdictions: Tighter monitoring for clients from countries with poor AML controls
• Shell companies/trusts: Extra investigation to ensure transparency

How Are Suspicious Transactions Reported?

Reporting suspicious activity is a fundamental component of Panama’s Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF) obligation. All of the regulatory entities which include financial institutions, law firms, real estate agencies, and other service providers are legally necessary to be monitored and report any activity that could possibly be suggested as money laundering or any other illicit financial behavior.

If there is a suspicious transaction, it must be reported to the Financial Analysis Unit (UAF)

• File STRs within 15 working days of detecting suspicious activity
• There’s no specific threshold for filling an STR. If the behavior or transaction is suspicious, it should be reported.
• Entities are required to keep records for at least 5 years in case of audits or investigations.

What Are the Penalties for AML Non-Compliance in Panama?

Panama has a strict and increasingly sophisticated approach when it comes to enforcing its Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF) regulations. Individuals or entities who are found violating these regulations may face a range of serious consequences. These consequences reflect that Panama’s government is committed to upholding international compliance standards and protecting the integrity of its financial system.

Panama takes compliance seriously, and the consequences are just as serious. The following list showcases the penalties and legal consequences that individuals and entities face if they commit eliciting financial violations of AML laws in Panama:

• Fines: Up to $1 million per violation
• Criminal Charges and Imprisonment: Jail time between 5-10 years for serious breaches
• License Suspension or Revocation: In addition to fines and criminal charges. Regulatory authorities have the power to suspend or revoke the operating licenses of non-compliant businesses. Operations would be shut down.
• Public Sanctions: In some cases, the regulatory authorities may choose to publicly disclose the names of individuals or entities that have committed illicit financial activities. This results in Serious reputational damage, affecting both business relationships and access to banking services, investors, and the international market.

Is Panama on Any International AML Watchlists? 

2 years ago, in October 2023, Panama was finally and officially excluded from the grey list within the Financial Action Task Force. Hence, the country is not subject to intense monitoring due to its current framework of global compliance in the fight against money laundering and terrorist financing. Directly after making beneficial ownership more transparent and the overall system more effective, both FATF and GAFILAT are keeping Panama meticulously observed through ongoing follow-ups to make sure progress is moving in the appropriate direction.

Recent AML Developments in Panama 

• FATF Delisting (2023): Panama was delisted after introducing major regulatory reforms to strengthen its financial system resulting in its removal from FATF.

 Beneficial Ownership Registry (2021): Companies are now strictly required to disclose their ultimate beneficial owners.

• Real Estate AML Reform: New rules are also applied to real estate transactions; additional strict customer due diligence (CDD) must be followed. This reduces the risks in the poverty sector.

How Can Sanction Scanner Help?

These are the tools we use to help Panama stay compliant with real-time, automated AML screening tools:

• PEP and Sanction List Monitoring: PEP and Sanction List are tools that monitor PEPs and enable real-time monitoring of sanction lists to ensure compliance that aligns with global standards
• Transaction Screening: Transaction Screening is a tool that offers you a consistent review of financial activity to detect any potential financial anomalies.
• Adverse Media Checks: Adverse Media Checks is a tool that identifies any reputational red flags, threats, or damage tied to your clients, partners, or entities to prevent or minimize reputational and reputational risks.
• Customizable Risk Scoring: Customizable Risk Scoring, as a tool, tailors to what your business needs, fine-tuning risk settings to match your business, and receiving a view of where and what the real risks are
• Audit Repairing: Auto Repair provides automatically generated details of reports that will prepare you for audits and regulatory reviews.