Panama has scored a major diplomatic and regulatory win after the European Parliament on July 9 formally approved the European Commission’s proposal to remove the country from the EU’s list of high-risk jurisdictions for money laundering and terrorist financing.

The proposal, issued by the Commission on June 10, followed Panama’s exclusion from the Financial Action Task Force (FATF) grey list in October 2023, and marks a turning point in the country’s long battle to rehabilitate its financial reputation post-Panama Papers.

The EU’s decision is based on FATF’s October 2023 evaluation and subsequent bilateral verifications. The EU cited Panama’s substantial improvements in transparency and beneficial ownership regulations, noting that the country now demonstrates effective responses to international requests regarding corporate information.

This development is the result of a broader, multi-year institutional push. Vice Foreign Minister Carlos Hoyos told La Estrella de Panamá that the government of President José Raúl Mulino had made the delisting a priority since day one. Hoyos said that diplomatic lobbying—particularly outreach to members of the European Parliament—was essential in ensuring the technical progress was acknowledged on the political front. He added that “laws are only effective when enforced,” and stressed Panama’s commitment to rigorous implementation and monitoring.

However, this is not Panama’s first attempt at delisting. In March 2024, the European Parliament rejected a similar proposal due to concerns over Panama’s maritime registry, including allegations of “ghost ships” linked to sanctioned entities in Iran and Russia. In response, the government issued Executive Decree 512 in October 2024, empowering its Maritime Authority to deregister vessels linked to international watchlists. By March 2025, over 125 flagged ships had been removed, a move viewed by Brussels as a key step in addressing legislative deficiencies.

Despite these gains, legal experts such as Carlos Raúl Moreno of GAPIFI caution that the European Parliament’s political character makes the outcome less predictable. Although no objections were raised this time, concerns remain regarding Panama’s refusal to recognise blacklists by non-governmental entities such as United Against Nuclear Iran (UANI), a group influential in transatlantic sanctions policy.

The delisting, while not altering Panama’s fiscal policies, could have far-reaching economic implications. Hoyos noted that the removal would facilitate foreign direct investment from EU states, citing Germany as an example where strict domestic rules had previously blocked investment in Panama due to its risk classification. It also clears the way for smoother access to international credit lines and closer regulatory cooperation.

Nonetheless, as prominent lawyer Adolfo Linares told La Estrella, the case reveals the EU’s listing mechanisms often serve dual purposes—technical and geopolitical. “These lists are not just compliance tools, but levers of influence,” he argued, accusing Brussels of applying disproportionate pressure on smaller jurisdictions under the guise of financial integrity.