How Does Panama's Removal From The European Union's Gray List Impact The Financial System And Investment?

• Published date: 26 September 2025
• Law Firm: Icaza Gonzalez-Ruiz & Aleman
• Author: Ingrid Rojas

In an environment where financial crime is constantly evolving, Panama must maintain active vigilance, keep its regulatory frameworks updated, and strengthen its compliance culture, according to Luis Chalhoub, a partner at Icaza, Gonz'lez-Ruiz & Alem'n.

Panama was recently removed from the European Union's list of high-risk jurisdictions, a list it entered in 2020 due to strategic deficiencies in its anti-money laundering (AML) and counter-terrorist financing (CTF) regime.

The announcement was made on July 9 with the approval of Delegated Act C (2025) 3815, through which the European Parliament amended Delegated Regulation (EU) 2016/1675. This regulation created the EU list on July 14, 2016, using the Financial Action Task Force (FATF) lists as a reference.

The Ministry of Economy and Finance stated, "This decision reflects the international community's confidence in the reforms implemented and Panama's capacity to guarantee transparency and effective cooperation."

About 30 nations remain on the list of third countries that pose a high risk to the European Union's financial system based on a methodology developed in 2020. The list is updated periodically, with some countries exiting and others entering. On August 5 of this year, Angola, Algeria, Ivory Coast, Laos, Lebanon, Monaco, Namibia, Nepal, and Venezuela were added.

Steps Taken to Address Past Lags

In 2023, after four years, the country also celebrated its exit from another list, that of the FATF, whose recommendations are also considered by the European Union, which is a member of the organization.

The FATF's international recommendations and standards are aimed at promoting the proper use of the global financial system, so countries must implement them as enforceable policies and actions, explains Luis Chalhoub.

The organization, created in 1989, periodically conducts reviews to determine whether countries are complying. By 2020, Panama was "somewhat behind."

According to Chalhoub, out of FATF's 40 recommendations, the most relevant for Panama were: updating its legislative framework, identifying beneficial owners, strengthening asset-freezing measures, and improving international cooperation.

He estimates it took Panama more than two years to complete the update process. Afterward, the country had to wait for inspections, reviews, and reports before finally exiting the FATF list.

• LexLatin: Regarding the country's exit from the EU's gray list, what progress has been made in regulatory matters?

Luis Chalhoub: In Panama, the financial sector is regulated by different...