Panama & the Cayman Islands’ AML Efforts May Lead to Removal From FATF Gray List

According to the Paris-based watchdog, Financial Action Task Force (FATF), Panama and the Cayman Islands have significantly progressed in preventing money laundering and illicit activities.

According to the Financial Action Task Force (FATF), Panama and the Cayman Islands are likely to be removed from the ‘grey list’ of jurisdictions blackballed for lax financial controls due to substantial progress in enhancing their anti-money laundering (AML) and terrorism financing controls. An action plan developed jointly with the FATF aimed to improve the monitoring of both jurisdictions’ financial systems by implementing several controls.

G7 nations continue to monitor countries included in the FATF’s grey list. Nevertheless, these countries have agreed to address issues such as terrorist financing and money laundering that affect their markets. Furthermore, the watchdog maintains a more notorious “blacklist“ of countries exhibiting high levels of risk and are non-cooperative in their efforts to address these issues.

On the other hand, the FATF has indicated that Panama and the Cayman Islands’ efforts merit on-site assessments and inspections to ensure that the governments of those countries maintain the new controls in the future.

Panama was added to the grey list in 2019, whilst the Cayman Islands in 2021. FATF reported that over the last year, high-level political commitments had been made to work closely with the financial watchdog to strengthen its anti-money laundering controls.

A variety of effective financial sanctions and penalties implemented by both countries, as well as their commitment to prosecuting ‘all forms of money laundering’, has led the FATF to initiate an assessment of whether they should be removed from the “grey list.“

Similarly, Barbados, an offshore jurisdiction of the United States, was commended for establishing stronger anti-money laundering measures, but the FATF did not specify whether it would be subjected to an on-the-ground inspection since it failed to implement the action plan previously agreed to.

Currently, 26 jurisdictions are under the watchful eye of FATF, including Albania, Barbados, Cameroon, The Cayman Islands, the Democratic Republic of the Congo, Gibraltar, Mali, United Arab Emirates, Syria, Vietnam, Croatia, Senegal, Panama, Burkina Faso, Jamaica, Haiti, Jordan, Nigeria, Uganda, South Africa, Mozambique, Turkey, Philippines, Yemen, Tanzania, and South Sudan.

Founded in 1989, FATF was established by the G7 to promote international financial market stability and transparency. Founded in Paris, the G7 includes the United States, Canada, Japan, France, and Italy. Furthermore, the EU is a non-enumerated member of the G7.

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