Chronicles from: Andrei Slavenkov - Financial Crime Analyst (Netherlands)
PANAMA PROPOSES TO SET UP ITS STATE-OWNED BANK AS CORRESPONDENT IN NEW YORK
Faced with the closing of an increasing number of correspondent relationships with New York financial institutions, Panamanian banks are desperate to acquire news correspondent accounts in the United States, lest they be totally denied access to the American financial structure. it has been proposed that a state-owned bank, the National Bank of Panama (Banco Nacional de Panamá) a/k/a/ Banconal, itself open a branch in New York, and thereafter serve as the correspondent for all the country's commercial banks, eliminating the fear that further relationships with American banks will be terminated.
This planned arrangement is not only flawed; it is downright dangerous, for the following reasons:
(1) Notwithstanding its name, the National Bank of Panama is NOT a central bank; the country has no central bank. Panama, though its official currency is the Balboa, runs on a dollarized economy. The name confuses foreign financial institutions not familiar with Panama; it is hardly the safe, highly regulated entity that the name connotes. Is there an intent to deceive the financial world, by inserting it between Panamanian banks and the financial world ?
(2) The National Bank of Panama, which its proponents have stated once operated a facility in New York, and is therefore best suited to assume the correspondent role, had only an agency in the US, and it was during the Noriega regime. Closed on May 22, 1991, by New York State regulators, it did not have a stellar record during the nine years it was open.
(3) Panama's banks, which are never charged with money laundering, by the country's regulators or law enforcement agencies, but are deeply involved in supporting criminal elements, are simply not to be trusted to maintain banking best practices compliance, with effective AML/CFT programs. Placing a "government-owned" bank, as an intermediary, basically puts distance between North American banks, and the bad actors, who are clients of Panamanian banks. It is an attempt to stamp an approval rating upon suspicious transactions, and to keep US banks at arms length.
This is not only a bad idea, it could allow laundered narcotics profits, the proceeds of bribes and kickbacks given to corrupt PEPs, and even terrorist funding, into the Continental United States, with impunity. Let us hope that the New York Department of Financial Services, whose actions have demonstrated that it is the single most effective financial regulatory agency in the United States, denies Panama's banks a license for this front, through which they can move dirty money into the global financial structure.