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DE RUEHZP #0021 0082103
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O 082103Z JAN 09
FM AMEMBASSY PANAMA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 2828
INFO RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY

C O N F I D E N T I A L PANAMA 000021 
 
SENSITIVE 
SIPDIS 
 
PASS TO SARA SENICH AT TREASURY 
 
E.O. 12958: DECL: 01/05/2019 
TAGS: ECON EFIN SNAR KTFN PM
SUBJECT: EMBASSY ANTI-MONEY LAUNDERING OUTREACH 
 
Classified By: Ambassador Stephenson for reasons 1.4 (b) and  (d). 
 
 ¶1. (C) Summary: Spearheading Mission Panama's anti-money 
laundering outreach, Ambassador Stephenson met with Colon 
Free Zone (CFZ) General Manager Nilda Quijano during a 
December 17 visit to Colon.  Quijano described the 
competitive advantages of the CFZ for legitimate businesses 
and the steps being taken to scrutinize illegal activity and 
marginalize illicit firms.   On December 22, Ambassador 
raised with First Vice President and Foreign Minister Samuel 
Lewis Navarro press coverage of the apparent failure of 
Panama's Financial Analysis Unit (UAF) to report unusual 
transactions of Colombian pyramid scheme kingpin David Murcia 
Guzman.  Ambassador Stephenson emphasized the importance of 
UAF credibility and efficacy. End Summary. 
 
¶2. (C) At the CFZ, Quijano, who is appointed to a five-year 
term by the President, spoke about her efforts to reform the 
CFZ, which are crucial to the zone's growth strategy. She 
emphasized that significant growth in government support over 
the past 4 years has, combined with revenue, allowed current 
and capital expenses to rise from $29 million in 2005 to $60 
million in 2008.   Those funds are being spent to digitize 
records of cargo movement in the Zone - a project that 
currently is at 70% completion.  Quijano praised the 
NAS-funded evolusoft project, noting that voluntary 
participation and certification in anti-money laundering 
training for firm representatives will become mandatory and 
that monitoring of transactions under this project also will 
become mandatory.  Quijano spoke at length about pushing out 
the bad actors in the zone -  "I've raised the rent, and if a 
company goes sixty days without a transaction, they don't 
belong here." 
 
¶3.  (U) Recent growth in the CFZ, the second largest free 
trade zone in the world after Hong Kong, is fueled primarily 
by imports from Asia (63%) and re-exports to Central and 
South America (94%).   The United States and Canada provide 
only 15% of imports into the CFZ and receive only 5% of its 
re-exports.   Growth through most of 2008 had been 30% above 
2007 levels.  However, due to the global financial crisis, 
growth is expected to be flat -- at best -- in 2009.   The 
CFZ's comparative advantage is its close proximity to the 
Canal (which carries 5% of world trade) and modern ports, and 
the Kansas City Southern Railroad.  Merchants' ability to 
assume credit and inventory risk, to sell goods in scalable 
quantities, and to arrange finance and transport all have 
contributed to the CFZ's success since its founding in 1948. 
 Logistics firms increasingly are using the Zone to repackage 
or modify higher value goods for specific markets.   Also, 
the network of FTA's during the past decade has drastically 
reduced tariffs in the Americas, further fueling the growth 
of the CFZ. 
 
¶4.  (C) On December 22, during a wide ranging conversation 
with First Vice President and Foreign Minister Samuel Lewis, 
Ambassador Stephenson raised press coverage of the Financial 
Analysis Unit's (UAF's) reported failure to report suspicious 
transactions by Colombian pyramid kingpin David Murcia Guzman 
(DMG).   Guzman was arrested by Panamanian public forces and 
deported to Colombia on November 20.  While, according to the 
press, DMG's bank, Multibank, duly reported transactions 
totaling $1.23 million in late 2006, the UAF failed to 
provide this information to the Attorney General as required 
by law.  Ambassador stressed that the credibility and 
efficacy of the UAF were crucial in fight against money 
laundering.  First Vice President Lewis agreed and added that 
"we as a government need to pull together all of the measures 
we have taken to tighten financial regulations so that we can 
present it in a clear fashion." 
 
¶5.  (C) Comment:  Post will subsequently report on the 
progress of automation efforts in the CFZ.   Ambassador's 
message to Lewis was a powerful indicator of USG interest in 
ensuring that the UAF can function as a full partner with 
U.S. FINCEN and other financial analysis units. 
STEPHENSON