Note: this is just a translation of a news article appearing in La Prensa Panama newspaper in Panama. The article is authored by Roberto González Jiménez and is the property of La Prensa Panama. The British Chamber of Commerce in Panama does not claim ownership of the contents of the article, just the translation presented below
In an effort to reduce risk, certain banks are limiting the access to financial services for gambling companies, remittances and stock-houses.
Distance from risk is the slogan of correspondent banks, and are causing some businesses to see reduced access to financial services.
This phenomenon can have a pernicious effect, since companies unable to open bank accounts will be forced to deal only in cash, where controls are reduced. This was one of the problems raised yesterday by local and international representatives during the XXI Hemispheric Congress for the Prevention of Money Laundering, Financing of Terrorism and the Proliferation of Weapons of Mass Destruction.
Miguel Antonio Gómez, from the Committee of Compliance Officers of the Colombian Association of Gaming Operators, explained the difficulties his country faces in order to maintain good relations with banks, and the negative effects of this reality. “It’s good if I can channel resources through the financial sector as there is a trace. But if I do not have access to the financial sector, I keep the resources and start paying payrolls and suppliers in cash. Through the financial system there can be a control of money and resources.” he said.
This situation also occurs in Panama. Most banks have closed accounts with companies linked to the gambling industry. It was previously known that the National Bank of Panama was accepting the deposit of money from the gambling industry, but only for the payment of taxes and the percentage that the Board of Control of Gambling receives.
Edison Silva, who chairs a remittance company in Panama, said there is a duality between the need to implement a risk management system that ensures that the company is not used for nefarious purposes, but at the same time that it does not affect customers and profitability.
Silva said the remittance sector is one of the most affected by the de-risking phenomenon and stressed the importance of this sector for some economies in the region: representing 10% of the GDP in Guatemala and the Dominican Republic, and around 25% in Haiti.
For the businessman, part of the pressure that banks exert is due to ignorance regarding the activity. “What business is not susceptible to being used for money laundering?” he asked. “We are one of the few businesses that can actually prove where our money goes.” However, he lamented that the bank closed their doors on the grounds that “the correspondent relationship was in danger.”
From the stock-brokerage sector, another of those affected, they believe that more direct communication between banks and companies must be established. Gabriel Fabrega, director of the Panamanian Chamber of Capital Markets, said that an approach is being made for industry representatives to meet with the correspondents of the Panama National Bank, “to see what their concerns are when it comes to managing the activity of securities, and seeing how they can identify a working method that allows the National Bank to enter this activity”.
The banks themselves, both Panamanian and Latin American, have been victims of the phenomenon and have seen how their correspondents have reduced their relationships with entities in the region, especially the smaller ones.
Carlos Troetsch, Chairman of the Panama Banking Association, said that there is still pressure in this regard, and that they are working on the creation of a bank of regional banks in order to have access to these services.
The Banker recognises that although the perception of Panama has improved, there is still work to be done. “Panama is well analysed by banks and the country’s risk is declining, but it is something that we must continue to push with our fellow correspondents,” he said.