Panama is responsible for 1.4% of financial secrecy risks worldwide. This is established by the Index of Financial Secrecy (IFS, for its acronym in English), which is prepared by the Tax Justice Network, an international network for tax justice based in London, which reveals the extent to which countries can hide and launder money.
The measurement establishes that the Central American country has an opacity score of 73/100, on a scale where zero means that the jurisdiction’s laws leave no room for financial secrecy and 100 means that it allows unlimited room.
The FSI measures 20 indicators to determine the opacity score of 141 regions evaluated.
The indicators analyze compliance with a series of laws, policies and practices, such as bank secrecy, guarantees to prevent money laundering and the registration of real estate owners, the report states.
Tax Justice Network, in its index, establishes that our country has unlimited margins in 11 of the 20 activities that it evaluates to determine the degree of opacity.
Panama obtained registration of ownership (44), registration of trusts and foundations (100), registration of ownership and final beneficiaries of capital companies (100), registration of ownership of other types of assets (100), transparency of companies (100), transparency of company ownership (100), publication of financial statements of capital companies (100), country-by-country public reports (100), company tax returns (100), company identifier legal entity (100), resources of the tax administration (75), income tax consistency (75), avoid promoting tax evasion (100), secrecy in the tax court (100), harmful legal vehicles (50), public statistics (50), prevention of money laundering (33), automatic exchange of information (7),exchange of information upon request (0), international legal cooperation (21) (see graph).
In its investigation, the organization determined that there are some problems in obtaining and providing banking information.
Regarding the registration of ownership and final beneficiaries of capital companies, Tax Justice questions that although it is true that resident agents must collect and register information on the final beneficiary, no deadline is established to do so.
In this same sense, the organization clarified that the updating of legal property information cannot be guaranteed due to the circulation of bearer shares. “As of September 2021, there are no indications that anything has changed in this regard,” the organization detailed.
Another of the things that this chapter refers to is that as of November 2021, the registry of final beneficiaries has not yet been established and there is no clear schedule of when it will be done. “We give the jurisdiction the benefit of the doubt given that there is no further legislation,” the index noted in its explanation of the evaluation of this segment.
Identifying and registering the final beneficiaries is essential to combat financial opacity, warns the organization. “A beneficial owner is a real, flesh and blood person who ultimately owns, controls, or benefits from a company or legal vehicle,” she explained.
Tax Justice also stated that not all tax court rulings are published, while others are published in summary form. And decisions issued by lower courts are not available.
The index argues the score assigned to each of the country variables and which can be accessed through the following link: https://fsi.taxjustice.net/es/country-detail/#country=PA&period=22.
Economist Ernesto Bazán explained that the index seeks to measure the degree of protection for users of banking services, mainly non-residents, and, above all, banking confidentiality.
“Panama has a high degree of banking confidentiality and financial services for non-residents, so it should not surprise us that it comes out with a high score,” added the economist.
In the economist’s analysis, opacity is a necessary but not sufficient condition for money laundering.
“It would be difficult for a money launderer to go to the United States to launder money, no matter how opaque there is,” he said.
In the United States, unlike Panama, there is security of punishment for money laundering crimes because the institutions are robust and allow the origin and origin of capital to be identified, he said.
“To begin with, they have a great capacity for customer knowledge. In addition, it has a culture of prevention, a great ability to identify the origin of funds, cross-monitoring systems. It is difficult for funds to pass through there without them having an illicit origin and going unnoticed. It is impossible. And they have a great capacity to investigate and a justice system that works”, concluded Bazán.
Since 2009, the Tax Justice Network has published the Financial Secrecy Index every two years.
In addition to having extensive coverage in the international media, it is increasingly cited in academic and political research.
It is used in numerous major broader indices, such as the Center for Global Development’s Commitment to Development Index and the Basel Anti-Money Laundering Index, published by the International Center for Asset Recovery.
Additionally, multiple private consultancies and at least two central banks use the index for risk analysis.