Panama was removed from the Financial Action Task Force on Money Laundering 's (FATF) gray list last February, but the Panama Papers scandal has led to scrutiny of the country.
The leaked financial report, which contains 11.5 million encrypted documents from Panamanian law firm Mossack Fonseca, exposes politicians and celebrities who own offshore shell companies and property. While many of the activity isn't illegal, some of the documents shed light on hidden businesses and wealth.
Still, the country has not broken any laws, according to Frank De Lima, a former Panamanian economy and finance minster. He told CNBC on Thursday that Panama has made great strides to rid of its bank secrecy reputation and has vigorously fought against money laundering, terrorism and tax evasion.
"The truth is that most of the corporations that were used by these high-profile clients weren't Panamanian," he said during an interview with "Power Lunch." "The money that these individuals or corporations are hiding is not in Panama, it's in other banking centers. "