Panama’s location connecting Central and South America has historically made it a key transit point in illegal trafficking routes, as well as a refuge and negotiating area for criminal organizations. Its favorable economy and the Colon Free Trade Zone (CFZ)’s booming contraband market have long attracted international money launderers.
The country’s weak judicial system and high levels of corruption have allowed for transnational networks to make inroads, including Colombian guerrilla groups and Mexican cartels.
Panama’s pandillas — local street gangs — often collaborate with larger drug trafficking organizations, and as the amount of drugs passing through the country has risen over recent years, so has violent crime.
Despite being the fastest growing economy in Latin America, the poverty rate remains high.
Panama is the southernmost country on the Central American isthmus, bordering Colombia to the East, Costa Rica to the West, the Pacific Ocean to the South and the Caribbean Sea to the North. Sometimes referred to as “the mouth of the tunnel,” it has long been the entry point for drugs heading to Mexico or the US from South America — the world’s only cocaine producing region. The trafficking of arms, drugs and persons is facilitated by dense strip of forest known as the Darien Gap, which serves as a porous border with Colombia while also being generally uncrossable by land vehicle.
The Panama Canal has been a gateway between East and West since 1914, and has long facilitated the smuggling of all types of illegal goods.
Panama’s involvement in the drug trade began in the early 20th century with the trafficking of opium from Asia to Europe through the Panama Canal, which continues to be a global gateway for the transport of both legal and illegal goods.
During the 1960s and 1970s Panama was involved in cannabis production, though this was quickly whittled out by the growing cocaine trade.
As drug trafficking movements from South America to the United States shift away from the Caribbean route that had been popular in the 1980s, Panama’s shared border with growing cocaine producer Colombia made it a natural transit point for narcotics heading north. But Panama’s illegal floodgates truly opened with the establishment of relations between the Medellin Cartel, Central American traffickers, and Panama military dictator Gen. Manuel Noriega.
Noriega became de facto ruler of Panama in 1983 and maintained a relationship with the United States characterized by decades of collaboration with the CIA, despite his involvement in the illegal drug trade.
After striking a deal with Colombian drug lord Pablo Escobar of the emerging Medellin Cartel in 1982, Noriega began charging Colombian traffickers $100,000 a load to fly cocaine to Panama. Throughout the 1980s, Colombians would also use Panama as a safe haven, to set up cocaine laboratories, and as a banking and money laundering center, setting the trend for decades to come.
Noriega’s corrupt antics eventually became too compromising for the US government, and in 1988 the United States charged the general with laundering millions of dollars, smuggling marijuana into the country and collaborating with the Medellin Cartel. Growing tensions led to the US invasion of Panama in 1989, in which Noriega was captured. Three years later, he was sentenced to 40 years in prison by a US court. He was later extradited to France to stand trial, and after being convicted there was returned to Panama to serve time for human rights abuses.
Following the US invasion, Panama’s Armed Forces were abolished permanently in 1990. Citizen safety is now in the hands of Panama’s Public Security Forces, which are subordinate to the Ministry of Public Security.
In the late 1980s, Panama’s first pandillas — or street gangs — emerged. With the loss of the military and a high poverty rate, their numbers began to rise.
Today, an estimated 90 percent of cocaine reaching the United States passes through Panama’s territory or waters.
Panama has historically been an international money laundering hub due to its extensive banking sector, its dollarized, fast-growing economy and the presence of the second largest free trade zone in the world in Colón (CFZ). High bank secrecy levels and a lax and often corrupt judicial system are further factors — as revealed by the Panama Papers.
That scandal laid bare the country’s role in global money laundering in 2016, when millions of leaked documents revealed how Panamanian law firm Mossack Fonseca helped set up offshore accounts and shell companies for thousands of elite clients across the world.
Human trafficking has been a prominent issue in Central America since the 1990s, and women continue to be trafficked to Panama to cater to the demand of high society, a large expatriate community and sex tourists — especially from the United States.
Most trafficking of persons to, from and through Panama is linked to the sex industry, but forced labor is also a problem. Colombia’s narco-paramilitary group the Urabeños are thought be involved in local prostitution activities. Adult prostitution is legal in Panama.
Panama’s pandillas — or local street gangs — have been around since the end of the 1980s, though not to the same extent as in other countries in the region. For a long time, these groups mainly carried out petty crimes, but they later began to agglomerate, grow in size and become more organized.
Local youths are recruited by organized criminal groups to transport or store drugs and provide intelligence. The gangs are paid with money, weapons or drugs that they later use to set up their own micro-trafficking trade. Small groups known as “tumbadores” specialize in drug robbery from other criminal groups, at times with the cooperation of security forces. Pandillas also engage in human trafficking, money laundering and kidnapping.
Recently, Panamanian gangs have been creating sophisticated structures known as “oficinas de cobro,” which work directly with transnational drug traffickers.
Two rival groups formed by the association of various street gangs — “Bagdad” and “Calor Calor” — are currently believed to be the most powerful in the country.
An anti-pandilla law was established in 2004, punishing gang members with prison sentences of one to three years, although this failed to resolve the issue. The number of gang members reportedly increased by 441 percent between 2007 and 2013, gathering an estimated 7,500 youths. In 2015, there were believed to be at least 204 pandillas in the country.
In 2014, President Juan Carlos Varela’s administration introduced a gang rehabilitation program called “Barrios Seguros,” which reportedly had over 3,000 youths join within a year.
Various transnational criminal organizations use Panama to traffic drugs, escape the heat in their home countries or to negotiate business deals.
The Revolutionary Armed Forces of Colombia (Fuerzas Armadas Revolucionarias de Colombia – FARC)’s 57th Front has been a key player in trafficking drugs from Colombia into Panama through the Darien Gap in cooperation with other international groups. The front has been present on both sides of the border since the 1990s, although it is currently in a weakened state.
Colombian neo-paramilitary groups, or BACRIM, are also known to operate along the border with Panama. The most powerful BACRIM the Urabeños engage in drug trafficking and control a number of licit and illicit networks in the neighboring country.
In 2013 Panama identified at least four Mexican criminal organizations operating within its borders — the Sinaloa Cartel, the Zetas, the Beltran Leyva Organization (BLO), and the Juarez Cartel — although evidence suggests that more are active in the country.
Following his capture in Mexico in 2010, BLO member Edgar Valdez Villarreal, alias “Barbie,” stated: “All of the drugs that we received in Mexico came from Colombia and we transported them from Panama.”
Permanent criminal migration to the Central American country is a more recent phenomenon, and appears to go hand in hand with the increasing sophistication of local groups.
Since Panama’s Armed Forces were abolished in the 1990s, citizen security has been the responsibility of the Panamanian Public Security Forces, which are under the Ministry of Public Security. These currently comprise of the National Police (PNP), National Air-Naval Service (SENAN) and National Border Service (SENAFRONT).
Panama’s security forces have long been criticized for being ineffective and largely corrupt, with a number of drug trafficking organizations infiltrating and at times recruiting authorities.
Since the 1980s, there have been reports of Panamanian police participating in both the active trafficking of drugs and the robbery illegal substances, often in cooperation with tumbadores — gangs of drug thieves.
Some believe that the relatively low frequency of violent crime in Panama compared to other countries in the region is largely due to criminals relying on the bribing of justice and security officials, rather than intimidation tactics.
Panama has various air and naval anti-drug bases along its coastlines, as well as radar systems. US aid to Panama focuses heavily on collaboration against drug trafficking and organized crime, and law and order, and numerous US institutions provide drug enforcement assistance to Panama.
Panama has a civil law system, and its highest judicial authority is the Supreme Court, which also hears constitutional cases. The rest of the judicial branch includes superior courts, provincial and municipal courts.
The Public Ministry is an autonomous, unaffiliated body responsible for criminal prosecution and for overseeing public officials. It consists of the Attorney General (“Procurador”) and of District Attorneys (“Fiscales”), among other representatives. Criminal investigations are carried out by the Public Ministry’s Judicial Technical Police to support prosecutions.
Panama’s judiciary is independent by constitution, although it is susceptible to government influence and corruption.
In 2015–2016 World Economic Forum ranked Panama 119th out of 140 countries for judicial independence.
Panama’s prison system is overseen by the Ministry of Interior (Ministerio de Gobierno) through the National Directorate of the Penitentiary System (Dirección General del Sistema Penitenciario – DGSP).
With a prison population of 17,197, the country had an incarceration rate of 426 per 100,000 in 2016 — the twelfth highest in the world. Panama’s jailed population is on a rising trend, and ten percent of inmates are foreign.
Harsh prison conditions and prolonged pretrial detention are considered to be among the country’s main human rights abuses. The system has been criticized for its poor hygiene, health conditions and infrastructure, and for inhumane punishment by officials.
Panama had the sixth highest rate of pretrial detention in Latin America in 2016, with 63 percent of prisoners awaiting trial.
Furthermore, overpopulation in jails is at 116 percent, although this is relatively low compared to its Central American neighbors.
The DGSP has been struggling with a shortage of resources and staff, which is susceptible to corruption.