Published On: Mon, May 9th, 2016

Panama banks now refuse to accept foreign checks

mossackfonsecaMIAMI - In an obvious response to the pressures that have arisen as the result of the publication of the Panama Papers documents, many financial institutions in Panama are now refusing to accept checks drawn on foreign banks for deposit into their accounts.

This has been confirmed by local businesses in Panama City, who have been rebuffed when they attempt to make deposits of checks of foreign banks.

This new development will seriously undermine the payment of expenses, including salaries by foreign-owned Panama City businesses, who have resorted to the use of checks after American & Canadian banks have allowed their clients to wire only a small amount of funds to Panama, or totally refused to send any money to Panamanian financial institutions.

Considering that non-payment of employee salaries, as well as defaulting on Social Security remittances, are considered serious offences in Panama, foreign-based employers in Panama City are finding themselves at risk, and may be forced to consider shuttering their businesses altogether, lest they find themselves facing criminal charges, which could be extraditable offences.

Also, those businesses that must pay their outstanding debts to government agencies in cash, as is generally required, will not be able to get the dollars they need to satisfy those obligations.

What this will do to the already shaky economy of Panama cannot yet be calculated. With employees unable to be paid, they will refuse to show up for work, disrupting the ordinary conduct of many businesses in the country's capital.

These new measures will force legitimate businesses that want to remain open to purchase dollars from criminal elements who are seeking to launder narcotics proceeds, and to smuggle cash in bulk into Panama, both of which will strengthen criminal operations in Panama, especially the black market peso exchange.

By Kenneth Rijock

Kenneth Rijock is a banking lawyer turned-career money launderer (10 years), turned-compliance officer specialising in enhanced due diligence, and a financial crime consultant who publishes a Financial Crime Blog. The Laundry Man, his autobiography, was published in the UK on 5 July 2012.

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