ICIJ: Panama removed from EU’s tax haven ‘blacklist’ a decade after the Panama Papers

• Panama created a registry of beneficial owners and passed the Economic Substance Law requiring multinational companies to show local presence.
• Experts warn Panama must address risks from virtual assets and crypto-economy to avoid returning to the blacklist.

The EU removed Panama from its tax haven blacklist, acknowledging reforms such as the creation of a beneficial ownership registry and the Economic Substance Law, which mandates multinational companies to demonstrate local substance or face a 15% tax rate. This follows years of scrutiny after the Panama Papers investigation exposed widespread use of shell companies for hiding wealth.

Despite the removal, experts caution that Panama faces ongoing challenges, particularly in regulating virtual assets and the crypto-economy. Compliance officers should monitor these areas closely, as insufficient controls could lead to Panama being blacklisted again, according to Transparency International’s Panama chapter.

• 214,000 shell companies registered by Panama-based law firm
• 15% tax rate for companies lacking economic substance
• 11.5 million financial and legal records exposed in Panama Papers

• Review Panama’s registry of beneficial owners for compliance with disclosure requirements.
• Assess multinational clients for adherence to Panama’s Economic Substance Law and the 15% tax rate risk.
• Monitor client exposure to virtual assets and crypto-economy in Panama, as flagged by Transparency International’s Panama chapter.

Panama’s removal from the EU blacklist signals improved transparency, but compliance officers must remain vigilant. The country’s reforms, including beneficial ownership disclosure and economic substance requirements, address past weaknesses exposed by the Panama Papers. However, emerging risks from virtual assets and the crypto-economy require ongoing scrutiny. Failure to implement effective mechanisms against fraud in these areas could result in renewed regulatory action or blacklisting, impacting cross-border business and AML/CFT obligations.