Key Takeaways
- President Laurentino Cortizo of Panama has stated that he will not sign a law governing the use of cryptocurrencies until it includes stricter anti-money laundering provisions.
- Last month, the country’s legislative assembly passed a bill that makes it simpler for cryptocurrency exchanges to get licence to operate in the country and supervises digital currency transactions.
- The bill has been forwarded to the executive branch, where Cortizo must determine whether to sign it or veto it in part or in whole.
- Panama’s developed financial market and well-established financial sector make it an attractive target for drug cartels attempting to launder their profits in adjacent Colombia and Mexico.
President Laurentino Cortizo of Panama has stated that he will not sign a law governing the use of cryptocurrencies until it includes stricter anti-money laundering provisions.
On April 28th, lawmakers in Panama’s National Assembly approved a bill that will govern the use and sale of crypto assets in the Central American country known for its offshore financial services hub.
The bill allows for both private and public use of crypto assets, as well as the payment of taxes with cryptocurrency. Experts have cautioned that it could tarnish Panama’s image as a financial backwater.
President Laurentino Cortizo of Panama has stated that he will not sign a law governing the use of cryptocurrencies until it includes stricter anti-money laundering provisions.
However, the bill must be signed by the president to become law, and Cortizo said he wanted assurances that it meets worldwide anti-money laundering norms.
“I will not sign that law if I am going to answer you right now with the facts that I have, which is insufficient,” Cortizo said at the Bloomberg New Economy Gateway Latin America conference in Panama City. “If the law contains money laundering provisions, I must exercise extreme caution.” We place a high value on anti-money laundering efforts.”
The bill received 38 votes in favour, two abstentions, and no votes against it in the assembly.
Panama is on the list of “jurisdictions with strategic inadequacies” in the fight against money laundering and terrorism financing, according to the Financial Action Task Force. The government of Cortizo has promised to put the task force’s recommendations into action and tighten controls on filthy money.
Panamanians can now use crypto assets as a form of payment for any civil or commercial transaction that is not banned by Panamanian law.
Panama is on the European Union’s list of tax shelters, according to Romain Dromard, chief executive officer of financial investment advisory firm K&B Family Office. The country’s dollarized market and well-developed finance sector make it an enticing subject for drug trafficking organisations looking to launder their gains in neighbouring nations like Colombia and Mexico.
Panama has a reputation as a tax dodge or haven as a result of the leak of the famous Panama Papers in 2016, which revealed high-profile public personalities’ concealed riches in the country.
The bill also allows the government to use blockchain technology to move public records. The bill’s supporters claim it will help Panama become a digital powerhouse in Latin America and encourage investment from financial technology firms.
According to Jose Fabrega of CryptoSPA, a centre for crypto and blockchain services, the bill could make institutions that have established hurdles to employing cryptocurrency more helpful. Still, according to K&B’s Dromard, the role of banks under the new laws is uncertain, and institutional structures would take years to utilise the assets.
Cortizo stated that he could approve some sections of the measure while vetoing others. His lawyers are going over the bill with him and will offer a referral.
“From what I’ve heard, it’s an innovative law, and it’s a good law,” he remarked. “However, we have a sound financial system here in Panama, and one of the things I’m looking forward to is when crypto-assets are regulated globally.”
Panama would be riding on the coattails of El Salvador and the Central African Republic in adopting the legislation, as both nations have already authorised Bitcoin as an official currency.
Panama will introduce an authorised digital wallet, similar to El Salvador’s Chivo app, to allow residents to “carry out transactions using these new technologies in a secure manner,” according to the bill.
