Panama’s regulator has ordered the liquidation of local financial services firm FPB Bank amid ongoing investigations into its alleged links to Brazil’s wide reaching Lava Jato corruption scandal.
The Superintendencia de Bancos de Panamá had seized control of the bank in February, a few months after its name was mentioned in the Lava Jato case. Brazilian authorities claimed it had links to Mossack Fonseca, the Panamanian law firm at the epicenter of the notorious Panama Papers.
In its statement published on Wednesday, the Panamanian regulator said that liquidation was the only solution as issues that led to it seizing control of the bank ‘have not been corrected’.
It added: ‘The reputational risks, as well as the ongoing legal investigations that are taking place in both Panama and abroad, do not allow favorable conditions for carrying out a reorganization or sale of the bank.’
It officially launched the liquidation proceedings on Tuesday April 11 and added that depositors with less than $10,000 will be paid their money back in full until the liquidator issues its preliminary report on its forced liquidations.
FPB Bank had not responded to requests for comment in time for publication.
According to local Panamanian paper La Prensa, a number of offshore companies were opened through Mossack Fonseca of which at least four were used by suspects in the Lava Jato case. The FPB Bank, in turn, acted in association with the firm, research documents reveal.
FPB Bank, which has both banking and broker-dealer services, was founded in 2005 and has over 40 employees.