'Panama Papers' leak showed vulnerability of system: President Juan Carlos Varela

He further added that countries need to improve transparency and information sharing

The scandal triggered by the Panama Papers leak of information on how and where the world's wealthy stash funds to avoid detection or taxes underscored many countries' vulnerabilities, President Juan Carlos Varela has said.

Speaking at the State Department in Washington yesterday, the Panamanian president said the documents "reveal a worldwide problem, that involves many countries with legal and financial institutions" vulnerable to actions "that are not in the public interest."

To that end, countries need to improve transparency and information sharing, Varela argued.

"We urge the international community to maintain a respectful dialogue through diplomatic channels," he added.

Panama and the United States last week signed an agreement on sharing of bank account information in a step Panama's finance minister hailed as proof of his country's cooperation in fighting tax evasion.

The bilateral agreement comes weeks after the Panama Papers, a series of reports around the world revealing how one Panamanian law firm set up offshore entities to help the world's wealthy stash their assets.

Following the revelations, Panama has come under intense international pressure to open its financial sector to greater transparency or risk being put back on a global "tax haven" blacklist.

While the government has long said it is committed to that goal and has made some reforms in that direction, it has so far not signed up to an international standard on automatic sharing of tax information set by the Organisation for Economic Cooperation and Development.