PANAMA Law and Practice Contributed by: Inocencio Galindo, Omar Rodriguez, Maria Eugenia Brenes and Joy Paull Torres, Morgan & Morgan
Supply Chain Monitoring Panama does not yet mandate supply chain ESG compliance across all sectors. However, companies – especially those with international exposure – are increasingly expected to monitor suppliers for envi - ronmental and labour compliance. Failure to do so may result in loss of contracts, exclusion from public tenders, and international sanctions or trade restric - tions. 3.15 Artificial Intelligence and Automation Misuse Panama currently lacks a comprehensive legal frame - work specifically addressing criminal offences related to the misuse of AI, algorithmic trading or automated decision-making in financial or commercial contexts. However, certain regulatory and compliance obliga - tions do apply under existing financial and corporate There are no specific laws criminalising the develop - ment or use of trading algorithms or AI-based finan - cial tools, as long as the developers are not directly executing trades themselves. Automated Decision-Making and AI Governance Panama has no specific criminal offences tied to misuse of automated decision-making systems (eg, biased credit scoring, discriminatory hiring algo - rithms). Compliance Expectations Companies using AI in regulated sectors must ensure transparency, fairness and accountability. laws, particularly in the fintech sector. Algorithmic Trading and AI in Finance There is no regulatory sandbox for testing AI mod - els, but regulators may issue non-binding opinions on
Corporate Liability While corporate criminal liability exists for environ - mental and financial crimes, there is no express provi - sion for AI misuse. However, if AI systems are used to commit fraud, violate AML laws or breach consumer protection standards, companies may be held liable under general criminal or administrative law. 3.16 Crypto-Assets and Digital Currency Crimes Crypto-assets are not recognised as legal tender, though they are legally used in transactions. Panama does not yet have a unified crypto law, though several offences may apply under general financial and AML laws: • fraud and misrepresentation – misleading inves - tors in initial coin offerings or token sales, and false claims about project viability or returns; • market manipulation – such as pump-and-dump schemes, wash trading or spoofing on crypto exchanges; • money laundering – use of crypto to conceal illicit funds, or lack of KYC/AML procedures; and • operating without a licence – offering exchange, wallet or token services without registration. If it is established during the investigation process that all the requirements set forth in both the law and the regulations aimed at preventing money laundering were met, and also that there was no money launder- ing, an acquittal should consequently be obtained. Compliance and Regulation of Law The law establishes requirements that must be includ - ed in compliance programmes. If an organisation cre - ates regulations to prevent the receipt of money from an illicit source, the actions of someone within the organisation who, for some reason, receives money from an illicit source should not be considered inten - tional. 4. Pleas and Defences 4.1 White-Collar Defences
compliance matters. Gatekeeper Liability
Financial institutions are expected to monitor their platforms for AML compliance. This includes oversight of automated systems used for transaction monitoring and risk scoring.
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