Overview: Panama's air travel infrastructure combined with its financial infrastructure – it is the second largest free trade zone in the world – along with its canal and geographic location, make Panama a key transit hub, but also attracts a fair share of illicit travel. For instance, in 2017 more than 8,000 migrants entered Panama illegally. To ensure domestic and regional security, Panamanian authorities continued to work with the U.S. government to detain and repatriate individuals for whom there were elevated suspicions of links to terrorism.

The Darien jungle is a well-known smuggling route and represents a potential vulnerability that terrorist groups could exploit. Panamanian security, immigration, and intelligence authorities have greatly improved their ability to operate in the Darien region, effectively exercising control over the sparsely populated terrain, and increasing situational awareness and coordination among government agencies.

While the conclusion of the Colombian Peace Process with the Revolutionary Armed Forces of Colombia (FARC) has reduced the threat of the FARC itself in the Darien, transnational criminal organizations still use old FARC routes for illicit transit of travelers that raise terrorist concerns and contraband goods. Building on previous cooperation with its neighbors, Panama conducted a series of targeted operations with Colombia and Costa Rica in an effort to secure its borders against illicit migration and illicit narcotics trafficking.

Panama is a member of the Global Coalition to Defeat ISIS and remained involved in the Coalition's Counter-Finance working group.

Legislation, Law Enforcement, and Border Security: Panama does not have comprehensive counterterrorism legislation or a robust counterterrorism legal framework. Officials from the National Security Council, the border service, the immigration service, and the police meet frequently amongst themselves and with U.S. government officials to coordinate and act on migration alerts and detain and deport travelers who may represent a security risk.

In May 2017, President Varela signed Executive Decree 81, which was Panama's first step toward implementing controls over dual-use goods. The decree created a committee and sub-committee charged with its implementation, including a licensing regime, protocols for classification, verification, and end-use analysis. In addition, in April 2017 the president signed Executive Decree 129, which endorsed the National Interagency Plan for the Prevention and Response to Threats or Incidents involving Chemical, Biological, Radioactive, Nuclear, Explosive Weapons and their Delivery Systems under the direction of the National Security Council.

Separately, the lack of funding for maintenance of non-intrusive inspection equipment operated by the National Customs Authority has led to a sharp decrease in cargo scans in 2017. This has significantly reduced interdiction efforts at key inspection stations, as demonstrated by reduced numbers of inspections and seizures. This reduction in capability limits the government's ability to analyze cargo transiting the country, including at the international airport and entry and exit of the Colon free trade zone.

A key focus of counterterrorism efforts in Panama is the enhanced screening of individuals entering Panama's borders, including through Darien foot routes, airports, and seaports.

Panama, through the U.S. Department of Homeland Security's Biometric Identification Transnational Migration Alert program, collaborates with its regional partners to enhance risk-based traveler screening and migration and criminal databases. Mobile security teams, including those operating under the U.S. Customs and Border Protection Joint Security Program, partnered with Mexican law enforcement officers at Tocumen International Airport to identify air passengers linked to terrorism, narcotics, weapons, and currency smuggling, as well as to intercept fugitives, persons associated with organized crime, and other travelers of interest.

Panama cooperated with U.S. law enforcement on various counterterrorism cases this year, including individuals linked to Hizballah.

Countering the Financing of Terrorism: Panama served as vice-president of the Financial Action Task Force of Latin America (GAFILAT) in 2017 and will assume the GAFILAT presidency in 2018. Panama's financial intelligence unit, Financial Analysis Unit Panama, is a member of the Egmont Group.

Panama conducted a national risk evaluation in 2017 to identify the sectors most vulnerable to money laundering and terrorist financing. The results of the evaluation were used to prepare a national strategy in conjunction with the International Monetary Fund, the National Strategy to Combat Money Laundering, Terrorism Financing and WMD Proliferation. This national strategy recognizes that while the terrorism risk in Panama is relatively low, its financial sector could be vulnerable to terrorist financing without the proper safeguards.

In February 2017, the Securities Market Superintendency implemented stricter Know Your Customer regulations including a requirement for the subscriber to provide identity, bank reference, beneficiary declaration, and origin of funds documentation.

Panama's Merchant Marine Ship Registry de-flagged vessels linked to sanctionable trade as outlined in UN resolutions and the U.S. Department of the Treasury's Specially Designated Nationals and Blocked Persons List. Panama has yet to identify and freeze assets belonging to terrorists or sanctioned individuals and organizations. It has not prosecuted terrorist financing cases.

For further information on money laundering and financial crimes, see the 2018 International Narcotics Control Strategy Report (INCSR), Volume II, Money Laundering and Financial Crimes.

Countering Violent Extremism (CVE): There have been no changes since the 2016 report.

International and Regional Cooperation: Panama is an active participant in the United Nations and regional security initiatives such as the Organization of American States Inter-American Committee Against Terrorism (OAS-CICTE). Panama has held the presidency of the OAS-CICTE since March 2017. During the 17th CICTE Session in April 2017, members adopted a declaration to strengthen national financial systems in an effort to prevent terrorism and the proliferation of weapons of mass destruction.

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