Disputes - international:
organized illegal narcotics operations in Colombia operate within the remote border region with Panama

Trafficking in persons:
current situation: Panama is a source, transit, and destination country for women and children trafficked for the purpose of commercial sexual exploitation; the majority of victims are Panamanian women and children trafficked within the country into the sex trade; rural children in Panama may be trafficked internally to urban areas for labor exploitation
tier rating: Tier 2 Watch List - Panama is on the Tier 2 Watch List for failing to show evidence of increasing efforts to combat human trafficking, particularly with respect to prosecuting, convicting, and sentencing human traffickers for their crimes, and for failing to provide adequate victim assistance (2008)

Illicit drugs:
major cocaine transshipment point and primary money-laundering center for narcotics revenue; money-laundering activity is especially heavy in the Colon Free Zone; offshore financial center; negligible signs of coca cultivation; monitoring of financial transactions is improving; official corruption remains a major problem