Country Reports on Terrorism 2014 - Panama

Overview: In recent years, the most direct terrorism threats to Panama have been posed by the 57th Front of the Revolutionary Armed Forces of Colombia (FARC), which has long operated illegally in the Darien region of Panama. Panama's successes at confronting the FARC's presence with patrols and raids against FARC camps, as well as working closely with Colombia to secure its border, has all but eliminated the direct security threat posed by FARC within Panamanian territory, although lingering threats from the FARC remnants and narco-trafficking groups remain. Additionally, the Panama Canal Authority's vigilance, along with international support, contributed to the maintenance of a secure Panama Canal.

Panama's strategic location as a gateway between Central and South America, the large volume of cargo transiting the Canal and its free trade zones make the country vulnerable to illicit practices such as the diversion of strategic items to unauthorized users. Additionally, expansion in the banking and finance sectors, the establishment of a new diamond exchange, offshore banking facilities, tax shelters, and free trade zones leave Panama vulnerable to illicit arms and narcotics trade along with other associated forms of money laundering.

Panama's Darien region remained a significant and growing pathway for human smuggling with counterterrorism implications. In 2014, more than 7,000 migrants were stopped attempting to illegally cross into Panama. Representatives of the Department of Homeland Security-Homeland Security Investigations and the Federal Bureau of Investigation worked with Panamanian authorities to identify smuggled aliens with potential terrorism ties.

Legislation, Law Enforcement, and Border Security: Panama has not passed a comprehensive counterterrorism legal framework; however, a 2013 law modified language in the existing Penal Code to criminalize certain terrorism-related crimes for periods of time ranging from six months to six years imprisonment.

Panama continued to lack a National Control List and a Strategic Trade Control law. Initial efforts to publish a National Control List in 2013 suffered a setback early in 2014, and a change in government removed from office many of the individuals involved in the process of pursuing the publishing of a National Control List.

The Panamanian government continued its efforts to exert sovereignty in the underserved Darien region through the use of security forces. The government's primary security force for the Darien region is the National Border Service (SENAFRONT). SENAFRONT's successes over previous years have degraded the capabilities of FARC to the point that they can no longer maintain a permanent militarized presence within Panamanian territory; they and smaller narco-trafficking organizations and criminal gangs from Colombia continued to cause instability within the territory. In addition to units within SENAFRONT, the Panamanian government also maintains counterterrorism units within the National Air-Naval Service, the Panamanian National Police, and the Institutional Protection Service.

Panama received significant international praise for its 2013 actions to search and detain the North Korean-flagged merchant vessel "Chong Chon Gang" for transiting the Canal with illicit cargo. The search of the vessel found arms and related materiel that violated UN Security Council Resolutions prohibiting transfer of such items to North Korea. In February 2014, North Korea paid a US $693,333 fine to the Panama Canal Authority, and the ship left Panama with most of the crewmembers. Panama initially detained all 33 members of the crew and charged the Captain, First Officer, and Political Officer of the vessel. After reviewing the evidence, the judge assigned to the case dismissed the charges against the three officers and they were released from custody. At year's end, the vessel's cargo remained in Panamanian custody pending the results of an appeal filed by the Public Ministry.

A key focus of counterterrorism efforts in Panama was securing the borders as well as the airports and seaports throughout the country. Panama continued to participate in the Department of State's Antiterrorism Assistance program, which provided instruction and resources to assist Panama to build its capacity to achieve these objectives and prevent use of Panama as a terrorist safe haven. U.S. Customs and Border Protection (CBP) continued to assist Panamanian authorities in their efforts to improve airline screening at Tocumen International Airport. Both CBP and the U.S. Department of State's Export Control and Border Security Program (EXBS) continued to work with the Government of Panama to refine risk analysis and targeting models to identify and segment high risk travelers and cargo. Mobile security teams continued operations throughout Tocumen International Airport, identifying and intercepting fugitives, persons associated with organized crime, and individuals known or suspected of association with terrorist networks.

EXBS's engagement with the Panamanian government increased in 2014 as a result of the opening of a regional office in the U.S. Embassy in Panama City. EXBS coordinated and sponsored a wide array of training activities designed to develop and enhance the Government of Panama's ability to detect, identify, and interdict shipments of strategic goods, WMD and WMD precursor materials, and other items of interest.

Countering the Financing of Terrorism: Panama is a member of the Financial Action Task Force of Latin America, a Financial Action Task Force (FATF)-style regional body. As of December, Panama was also a member of the Egmont Group of Financial Intelligence Units.

Panama's anti-money laundering and countering the financing of terrorism (AML/CFT) regime is in a state of significant evolution. In February, the IMF published an assessment report which found that Panama failed to attain an adequate level of compliance on nearly all of the FATF recommendations. As a result, Panama was immediately placed on the FATF public statement in June. Panama was referred to the FATF review process, which resulted in the development of an action plan designed to address Panama's AML/CFT deficiencies. President Juan Carlos Varela's government, which took office in July, offered high-level political commitment to implement the actions required by the FATF action plan. Panama continued working with the Inter-American Development Bank to draft new laws that adequately criminalize money laundering and terrorist financing, as well as establishing the legal framework necessary to freeze terrorist assets. In 2014, DOJ's Office of Overseas Prosecutorial Development, Assistance, and Training (OPDAT) also began working with the Panamanian government to enhance the capacity of institutions to prosecute financial crimes involving money laundering and terrorism financing.

Panama's financial intelligence unit, the Financial Analysis Unit, bears responsibility for analyzing all suspect financial transactions. This unit, however, has been widely considered ineffective due to the lack of resources and political intervention. The result has been uneven enforcement of existing AML/CFT legislation. The Colon Free Zone, a port outside of the Panama Canal that is outside of Panama's normal customs and financial regulation, remains vulnerable to exploitation for illicit financial activities due to its lax customs, trade, and transaction oversight.

The legal framework in Panama permits the freezing, seizure, and confiscation of the instruments and proceeds of criminal enterprises, including money laundering and terrorist financing; however, it does not provide for the confiscation of property of corresponding value and the application of other measures. Panama monitors and regulates money/value transfer and other remittance services for real estate agents, exchange houses, and transfer services.

While there is no obligation for non-profit organizations to file suspicious transaction reports, the Panamanian government monitors non-profit organizations for suspicious transactions.

For further information on money laundering and financial crimes, see the 2014 International Narcotics Control Strategy Report (INCSR), Volume 2, Money Laundering and Financial Crimes: http://www.state.gov/j/inl/rls/nrcrpt/index.htm.

Regional and International Cooperation: Panama became the first Latin American nation to join the Coalition to Counter the Islamic State in Iraq and the Levant. Panama participates in UN and regional security initiatives such as the OAS Inter-American Committee Against Terrorism. Panama maintained a well-established border commission with Colombia, and continued to cooperate on training with partners in the region. The Colombian Army, Navy, and the National Police provided operational training in Panama for members of the Panamanian Public Forces through the U.S.-Colombia High-Level Strategic Security Dialogue. Panama hosted personnel from Belize, Colombia, and Costa Rica at its training facilities. EXBS sponsored a regional WMD Commodity Identification Training course in Panama City, which included instructors from Panama and Mexico and students from Panama, Costa Rica, and Colombia. EXBS also collaborated with U.S. Customs Border Protection to assess border security measures along the Panama-Costa Rica border region.

Countering Radicalization to Violence and Violent Extremism: The United States and Panama continued to work together to create opportunities for the residents of the Darien region to deter possible efforts at local recruitment by the FARC, transnational criminal organizations, and narco-trafficking organizations. Through the Central American Regional Security Initiative programs, local youth received vocational and technical training to better prepare them to find jobs or start their own businesses, and indigenous entrepreneurs obtained assistance with the marketing of their local crafts for sale both domestically and internationally.

The addition of a temporary Bureau of International Narcotics and Law Enforcement (INL) Air Wing (AW) program supported the presence and objectives of SENAFRONT, the Attorney General's Office, the Ministry of Health, the Ministry of Environment, the Ministry of Education, the Ministry of Government, the Ministry of Public Security, the Ministry of Social Development, the National Secretariat for Higher Education, Science, Innovation, and Technology, and the Secretariat for the Sustainable Development of the Province of the Darien and the Annex Comarcas. The INL AW-facilitated travel allowed Panamanian officials to reaffirm for local populations, particularly local youth populations, the presence of the state in a remote region, and supported the Panamanian government's effort to ensure not just security but social development in the underserved Darien region.