Panama Strengthens the Integrity of its Banking System: Guarantees and Expectations for Investors in 2025

Panama, recognized for its robust International Banking Center, is in a constant process of adaptation and strengthening to ensure a financial environment of the highest financial integrity. Recently, statements by President José Raúl Mulino have highlighted the magnitude of the challenge posed by illicit money and the country’s unwavering commitment to combating it. For international entrepreneurs and investors considering moving their tax residency to Panama or establishing business operations, understanding the evolution and guarantees of its Panamanian banking system is fundamental. This article delves into recent discussions, the efforts of the banking sector and the government, and what all this means for investment confidence and security in the country.

Panama’s Firm Commitment to Financial Transparency

The presidential concern about the circulation of illicit money in the Panamanian banking system is not a call for alarm, but a clear indicator of the government’s firm commitment to transparency and the country’s reputation. President Mulino, in his recent conference, was emphatic in pointing out that the presence of funds of dubious origin compromises Panama’s international image and represents a risk to its financial stability. This approach is part of a broader context of questions about the effectiveness of justice in cases of corruption and crimes against state assets.

“All that dirty money has circulated through the Panamanian banking system,” President Mulino stated, calling on both the Judicial Branch and the banking sector to assume greater responsibility and accountability more effectively.

The presidential initiative not only seeks to identify and eradicate the sources of illicit money but also to ensure that the Panamanian judicial system functions with the necessary consistency between the severity of the crimes investigated and the sanctions applied. For an investor, this governmental stance is a sign of seriousness and a clear direction towards the eradication of practices that could undermine confidence in the business environment.

The Crucial Role of the Banking Sector in Money Laundering Prevention

Following the president’s statements, the Panamanian Banking Association (ABP), through its executive president, Carlos Berguido, has expressed its full alignment with the president’s frustration regarding the lack of effective convictions, despite significant efforts by banks. The Panamanian banking system has considerably implemented and strengthened its controls against money laundering (AML) and terrorist financing (CFT), positioning itself as a benchmark in the region.

These measures, sometimes demanding for clients, have shown positive results and are recognized both nationally and internationally. Key actions carried out by banks include:

Requirement for Transaction Support and Origin of Funds: Banks request detailed documentation to verify the legitimacy of large transactions and the origin of funds.
Denial of Account Opening: Service is denied to individuals or entities for whom there are reasonable suspicions of illicit activities.
Account Closure: If a bank detects suspicious activities or irregularities, it may proceed to close the implicated accounts.
Suspicious Activity Reports (SARs): Banks are obligated to send detailed reports on any transaction or behavioral pattern they deem suspicious to the Financial Analysis Unit (UAF). These SARs are fundamental for the initiation of criminal investigations by the Public Ministry.

The International Banking Center of Panama not only complies with global regulations but often exceeds them, setting high standards of compliance. This is an additional guarantee for investors, who can trust that their funds are operating within a framework of strict oversight and financial integrity.

Challenges and the Search for Greater Effectiveness in the Panamanian Judicial System

While the Panamanian banking system performs thorough work in detecting and reporting suspicious activities, the weak point highlighted by the ABP and President Mulino lies in the judicial phase. Frustration arises from the frequent absence of convictions for criminals, despite the solid assistance and evidence provided by banks. It is the Public Ministry and the Judicial Branch that have the responsibility to:

Prosecute criminals.
Accurately qualify crimes.
Obtain necessary convictions.
Issue exemplary sentences and measures.

Ineffectiveness in this final stage can generate a perception of impunity, which, in turn, could encourage criminal organizations to attempt to abuse the system. The concern expressed by President Mulino aims precisely to improve this disconnection, promoting greater coherence and effectiveness in the accusatory criminal system. This proactive government approach is vital to strengthen Panama’s global financial integrity, a key aspect for any international investor’s decision.

What Does This Reinforcement Imply for International Investors and Businesses?

For those seeking investment opportunities or considering establishing their tax residency in Panama, recent developments are an unequivocal sign of the seriousness with which the country addresses financial integrity. Far from being a cause for concern, this internal discussion reinforces the image of a Panama that not only recognizes its challenges but is also actively committed to resolving them.

The implications for investors and businesses are extremely positive:

Safer Environment: The continuous strengthening of the Panamanian banking system and the pressure on the judicial system to be more effective create a cleaner and safer business environment for legitimate capital.
Greater Transparency: The demand for transparency extends to all levels, benefiting businesses and individuals who operate with full legality, facilitating the identification and exclusion of malicious actors.
International Trust: By addressing these issues head-on, Panama consolidates its position as a reliable jurisdiction committed to international AML/CFT standards, which is crucial for attracting foreign direct investment and the reputation of those who establish operations here.
Need for Robust Compliance: Investors and businesses must be prepared to comply with the high due diligence standards required by the Panamanian banking system. Thoroughly understanding the tax and fiscal structure in Panama and the requirements for company formation in Panama is more important than ever.

These collective efforts not only protect the financial integrity of the country, but also safeguard legitimate investments, offering a robust and reliable framework for economic and personal growth.

Conclusion: A Panama Committed to Security and Trust

President Mulino’s recent statements and the response from the Panamanian Banking Association underscore a clear message: Panama is actively committed to strengthening its Panamanian banking system and its legal framework against money laundering. This commitment is not just a matter of compliance, but a cornerstone for ensuring the trust and financial integrity that international investors demand.

For those seeking a safe and stable destination for their tax residency or investment opportunities, Panama emerges as a jurisdiction that is not afraid to face its challenges and that works proactively to guarantee a transparent and regulated environment. This proactivity is, in itself, one of the greatest guarantees the country can offer.

At Panama Way, we understand the importance of a secure and transparent environment for your investment and tax residency decisions. Our team of experts is prepared to guide you through the requirements, ensure compliance, and facilitate your transition to Panama, taking advantage of a robust and constantly improving system. Contact us today to start your personalized consultation and discover how we can make your plans in Panama a reality.