Porter's Panamanian lawyer had said Thursday he would attempt to have Porter released on bond before such a transfer could take place, but it appears those efforts came too late.
CBC's Catherine Cullen reported Friday that Porter is being held in a special unit for foreigners which houses about 400 prisoners. Porter's lawyer said conditions are better there than in those provided for the general prison population, however they are still difficult.
The lawyer said he would seek bail for Porter and, failing that, might try to persuade his client to proceed with extradition to avoid a long stay at the La Joya penitentiary.
With a prisoner population of over 7,000, the La Joya prison complex is the largest in Panama, and overcrowding is a serious problem.
Prison conditions in Panama are harsh and in some cases life threatening, according to U.S. human rights reports, which also say that abuse by prison guards is a recurrent problem, and prisoners are often not separated according to the type of crime they have committed.
According to a Bradt Travel Guide for Panama, the nation's prisons have been described as "medieval" and "degrading." It also says food shortages are common, and drinking water is often only sporadically throughout the day.
Porter was arrested earlier this week at an airport hotel in Panama City. Porter's wife Pamela was arrested at the airport, upon entering the country.
Porter was wanted on an international warrant issued in February. He is facing charges of fraud and laundering the proceeds of crime, as well as other allegations.
Porter, who was once Canada's top spy watchdog, is accused of being at the heart of a fraud scandal involving the $1.3-billion MUHC superhospital project in Montreal, the largest construction project of its kind in Canada.