2. Study Abroad in Panama July 2011 THE UNIVERSITY OF SOUTHERN MISSISSIPPI Center for Logistics, Trade and Transportation And College of Business Study Abroad in Panama Coordinated by Dr. Tulio Sulbaran Tel: 601-266-6419 - Email: tulio.sulbaran@usm.edutulio.sulbaran@usm.edu 1 Ce THE UNIVERSITY OF SOUTHERN MISSISSIPPI Jul 2012 Preventing Money Laundering in the United States vs. Panama: A Case Study of the Regulations Implemented by the Federal Financial Institutions Examination Council (FFIEC) vs. the Superintendencia de Bancos de Panama (SPB) Presented by: Bethany Biruk Tel: (904) 887-7857 - Email: Bethany.Biruk@usm.edu Center for Logistics, Trade and Transportation and College of Business

3. Study Abroad in Panama July 2012 THE UNIVERSITY OF SOUTHERN MISSISSIPPI Center for Logistics, Trade and Transportation And College of Business Video Preamble

4. Study Abroad in Panama July 2012 THE UNIVERSITY OF SOUTHERN MISSISSIPPI Center for Logistics, Trade and Transportation And College of Business Outline 1- Introduction 2- Information/Data Collection Approach 3- Case Study 4- Results and Results Impact Similarities Differences 5- Summary

5. Study Abroad in Panama July 2012 THE UNIVERSITY OF SOUTHERN MISSISSIPPI Center for Logistics, Trade and Transportation And College of Business Introduction Fraud is a generic term that embraces all the multifarious means that human ingenuity can devise, which are sorted by one individual to get an advantage over another by false misrepresentation Money laundering is the processing of criminal proceeds to disguise their illegal origin or the ownership or control of the assets, or promoting an illegal activity with illicit or legal source funds.

6. Study Abroad in Panama July 2012 THE UNIVERSITY OF SOUTHERN MISSISSIPPI Center for Logistics, Trade and Transportation And College of Business Introduction Panama has one of the fastest growing economies in Central America Panama is constructing el Metro de Panama, the first metro system in Latin America. The Panama Canal Expansion, shown on the left, is expected to be completed in 2014 64.4% of the GDP comes from the service sector Workforce of 1.57 million and an unemployment rate of 4.5%

7. Study Abroad in Panama July 2012 THE UNIVERSITY OF SOUTHERN MISSISSIPPI Center for Logistics, Trade and Transportation And College of Business Introduction The focus of this report is Preventing Money Laundering in the United States vs. Panama. More specifically, this report compares the laws implemented to prevent money laundering in the banking industries of both countries.

8. Study Abroad in Panama July 2012 THE UNIVERSITY OF SOUTHERN MISSISSIPPI Center for Logistics, Trade and Transportation And College of Business Information/ Data Collection Approach The internet research allowed me to obtain historical information, current trends, and statistical data, as well as gain a strong understanding of the economies, banking system, and money laundering issues in both countries. Google was the primary search engine used to search for information on both countries. Once the preliminary search on Google was complete, government databases and annual reports were used to gain more detail on the topic of money laundering and to obtain statistical data

9. Study Abroad in Panama July 2012 THE UNIVERSITY OF SOUTHERN MISSISSIPPI Center for Logistics, Trade and Transportation And College of Business Information/ Data Collection Approach

10. Study Abroad in Panama July 2012 THE UNIVERSITY OF SOUTHERN MISSISSIPPI Center for Logistics, Trade and Transportation And College of Business Information/ Data Collection Approach The second element of my data collection process was to perform an in-person interview with a representative of the bank regulatory agency in Panama. The main goal of the interview conducted in Panama was to evaluate if a proactive role was being taken by Panamanian banks in combating money laundering. More specifically, the interview was conducted to gain a better understanding of the laws and regulations to which the banks must comply in comparison to the laws and regulations required by banks in the United States to prevent money laundering.

11. Study Abroad in Panama July 2012 THE UNIVERSITY OF SOUTHERN MISSISSIPPI Center for Logistics, Trade and Transportation And College of Business Information/ Data Collection Approach The representative that I interviewed on behalf of the Superintendencia de Bancos de Panama (SBP) was Mr. Chrystian Ramirez. As an auditor for the SBP, Mr. Ramirez performs on-site visits with banks to ensure they are meeting all legal requirements set. During these on-site visits, Mr. Ramirez gains a full understanding of the operations of the banks he is auditing to ensure that, in addition to meeting the regulations and laws of Panama, no illegal activities are taking place.

12. Study Abroad in Panama July 2012 THE UNIVERSITY OF SOUTHERN MISSISSIPPI Center for Logistics, Trade and Transportation And College of Business Case Study The SBP has a proactive role in the prevention of money laundering. The staff within the Department for the Prevention and Control of Illicit Operations focuses on the prevention of criminal activity in the banking industry. Throughout the year, the staff performs audits which actively seek out potential illegal activity, and then reports any suspicious activity to the Unidad de Analisis Financiero (UAF) in an effort to reduce criminal activity and combat money laundering

13. Study Abroad in Panama July 2012 THE UNIVERSITY OF SOUTHERN MISSISSIPPI Center for Logistics, Trade and Transportation And College of Business Case Study The FFIEC provides guidelines to financial regulators to verify compliance with the banking regulations and laws in the United States. The FFIEC places a high importance on prevention of money laundering through education. The FFIEC regulates the Federal Reserve Board (FRB) which focuses on education and training on money laundering. According to the 2009 Annual Report, the FFIEC trained over 2,700 state and federal employees from various agencies, and in 2011, 80 workshops were held on money laundering prevention.

14. Study Abroad in Panama July 2012 THE UNIVERSITY OF SOUTHERN MISSISSIPPI Center for Logistics, Trade and Transportation And College of Business Results and Results Impact In evaluating the results of the case study, there were similarities and differences between the banking industries in Panama and the United States. The similarities and differences were evaluated by comparing the requirements of the laws and regulations implemented in each country specifically related to money laundering, as well as the role and operations of the regulating agency for each country.

15. Study Abroad in Panama July 2012 THE UNIVERSITY OF SOUTHERN MISSISSIPPI Center for Logistics, Trade and Transportation And College of Business Results and Results Impact

16. Study Abroad in Panama July 2012 THE UNIVERSITY OF SOUTHERN MISSISSIPPI Center for Logistics, Trade and Transportation And College of Business Results and Results Impact

17. Study Abroad in Panama July 2012 THE UNIVERSITY OF SOUTHERN MISSISSIPPI Center for Logistics, Trade and Transportation And College of Business Results and Results Impact The differences are important because it shows that the countries may have different needs and/or indicate that improvement could be made in one of the countries. It is important to identify areas of weaknesses as well as understand why one country may have different needs. Despite several differences, the results show a consistent framework. If consistency can be established across country borders, the ability to effectively overcome criminal activity, such as money laundering is increased. The framework indicates that having bank regulation, prevention laws, penalties for violating these laws, and education are important elements to the prevention of money laundering.

18. Study Abroad in Panama July 2012 THE UNIVERSITY OF SOUTHERN MISSISSIPPI Center for Logistics, Trade and Transportation And College of Business Summary Panama and the United States regulate the banking industries in an effort to prevent money laundering. Information was collected in a two step process; research preformed via the internet and an on-site interview with the SBP conducted in Panama. Even though there were several differences in the comparison of regulations regarding money laundering detection and prevention between Panama and the United States, there was a consistent framework which indicated overall that there was a similar approach. The case study identified areas of potential weaknesses in both countries. This could lead to additional research and future improvements.

19. Study Abroad in Panama July 2011 THE UNIVERSITY OF SOUTHERN MISSISSIPPI Center for Logistics, Trade and Transportation And College of Business THE UNIVERSITY OF SOUTHERN MISSISSIPPI founded in 1910 Thanks! Center for Logistics, Trade and Transportation and College of Business