Panama benefits from image clean-up

Four months after the ‘Panama Leaks’ the Panamanian government has announced that the assets of the National Banking System reached over $99.6 billion during the first half of 2016, an increase of nearly $4.4 billion compared to the same period last year.

The increase comes as the government implements reforms to strengthen the country’s financial system and increase transparency in the services sector, according to a statement from the government of Panama.

Whiles assets in the banking system increased, profits in the banking sector declined by 2.4 percent to approximately $615 million, as a result of “increased regulations for doubtful accounts and to the adoption of international standards and the implementation of best practices for the banking system,” according to the statement.

In the wake of the panama papers scandal, which saw 11 million confidential documents leaked from Panamanian law firm Mossack Fonseca allegedly showing it helped clients to avoid tax, launder money and dodge sanctions, the Organization for Economic Cooperation (OECD) put pressure on Panama to transform its financial transparency rules.

“‘The Panama Papers’ revelations have shone the light on Panama’s culture and practice of secrecy. Panama is the last major holdout that continues to allow funds to be hidden offshore from tax and law enforcement authorities,” OECD secretary-general Angel Gurría said in a statement.

The OECD published a report disclosing that a number of countries, including Panama, are failing to comply with the international tax transparency standards and Gurría suggested that G20 members consider introducing “defensive measures against non-complaint jurisdictions.”

In May, the OECD announced that Panama, alongside Bahrain, Lebanon, Nauru and Vanuatu, agreed to share financial account information automatically with other countries. This brings to number of jurisdictions around the world that have committed to sharing information in accordance with the common reporting standard developed by the OECD and G20 countries to 101.