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In the week following the New Year holidays, Panama adopted Law 124 (2020). This law introduces a new independent office of the Superintendence of non-financial institutions. This new superintendence supervises non-financial institutions. These include real estate agents, companies in the free trade zone, lawyers who act as registered agents, financing companies, and similar entities.
You may remember an Intendence of non-financial institutions established as part of the Ministry of Economy and Finance. Nonetheless, in response to black-listing by France and other OECD nations, Panama has changed the structure once again for compliance.
This new superintendence has as its primary objective to put into place the policies, mechanisms, and procedures of internal control. These controls are to prevent money-laundering, the financing of terrorism and financing of weapons of mass destruction. The Superintendence will be able to request from its subjects any information that it deems expedient.
The Superintendence adopts regulations to ensure compliance with CRS and information exchange.
Composition of the new superintendence
The members of the Board of Directors of the new Superintendence are:
- The Minister of Economy and Finance, or his/her representative
- The Minister of Commerce and Industry, or his/her representative
- One member designated by the Council of Financial Coordination
- Two representatives of the private sector chosen by the President, as proposed to him by the National Congress of Private Enterprise and by the Chamber of Commerce & Industry.
Additionally, a superintendent and a deputy will be appointed by the President, each serving a five-year term.
Further information regarding how the new superintendence will operate can be found in the new legislation.
Competence and supervision
The superintendent oversees the following companies and institutions:
- Free zone companies – Colon Free Trade Zone, Panama Pacífico, Zona Franca del Baru, and any other free zones which have or may be established
- Casinos, betting agencies, online gaming and other types of wagers
- Developers, realtors and real estate agents, engaged in the transfers of real estate
- Construction companies, general contractors and sub-contractors
- Security companies for high-value transfer of goods
- Pawnshops
- Sale of precious metals
- National Lottery
- Mail Service
- New and used car sales
- Lawyers and accountants, who in the name or on behalf of a client do any of the following activities:
- sale & purchase of properties
- administration of money, investments or other client activities
- administration of bank or investment accounts
- organization of the contributions or capitalization of companies
- Creation, operation or administration of corporate entities, like foundations, corporations, trusts or any others
- Sale & purchase of companies or legal entities
- Nominee services – directors, officers or shareholders; provision of foundation council or other position in a foundation or trust
- Provision of registered office, virtual office, physical space or domicile for a company or entity that is not it’s own
- Registered agent services
- Notaries
- Any other sector which is subject to the new superintendence as well as any other entities which may, by the activities which they undertake, fall under this supervision.
Powers and registration of new superintendence
All of the above businesses will need to register with the new superintendence, using the forms and procedures which are established for this purpose. It can request from any of these the following:
- documentation which backs up how they run their business, activities, products, services;
- procedural manuals to counter money-laundering
- any other documents which may be needed to ensure that the companies are fully compliant with anti-money laundering, terrorism, and weapons of mass destruction legislation in Panama.
The law recognizes the right to legal professional privilege, but specifically excepts lawyers and accountants from this privilege when requested to deliver pertinent information to the superintendence in compliance with these provisions.
Now that this law is in effect, the Intendence of Supervision and Regulation of non-financial subjects is replaced by this new superintendence. All documentation and references in other legislation to the intendence shall now be understood to refer to the Superintendence.
A transition period of twelve months has been established.
Further legislation coming
Nonetheless, this is only a small piece of the changes which Panama has implemented. We await legislation similar to the BOSS legislation in the British Virgin. This establishes online access by the new superintendence of the beneficial owner records of all registered agents.
Registered agents will be required to have software, firewalls, and systems in place which allow the superintendence access to their records (securely) at any time to respond to requests for exchange of information.
A summary of this proposed legislation will be available shortly, and if adopted, will be provide an update with the final version of the new regulations.
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If you are concerned about how these changes might affect your corporation or foundation, please contact our office.