Regulatory Changes In Panama: What You Need To Know

• Published date: 22 June 2022
• Subject Matter: Accounting and Audit, Finance and Banking, Corporate/Commercial Law, Compliance, Accounting Standards, Financial Services, Corporate and Company Law
• Law Firm: TMF Group BV
• Author: Sofía Bonilla Sanabria

Obligations to disclose and maintain financial information and capital structures are becoming increasingly common in Panama, not only to maximise tax and financial transparency, but also to comply with the standards and recommendations of international organisations including the Organization for Economic Cooperation and Development (OECD) and the Financial Action Task Force (FATF).

In this article, we will focus on two specific regulatory changes that were recently adopted: the registration of beneficial owners; and the extensive due diligence records of resident agents.

Beneficial owner registration

The registration of beneficial owners is a new obligation arising from Law No. 129 enacted on 7 March 2020, which brought about the adoption of the 'Private and Unique System of Registration of Beneficial Owners of Legal Entities' (Sistema Privado y Único de Registro de Beneficiarios Finales de Personas Jurídicas).

Through this online system, legal entities registered in the country must, via their registered agents, report on their shareholders and beneficial owners. These are defined in the second article of Law No. 129 and are determined by:

1. Participation: this is the natural person who ultimately owns or controls directly or indirectly 25% or more of the shares or voting rights of the company.
2. Control: for business entities, this standard covers individuals who are responsible for the management of the company.

The deadline to report varies according to the status of the entity:

• For new entities, 30 business days counted from their incorporation.
• For existing entities, 30 business days counted from any modification in the reported information.

On 20 April 2022, the Ministry of Economy and Finance (MEF), together with the Superintendence of Non-Financial Subjects (SSNF), made the first presentation of the Private and Unique System of Registration of Beneficial Owners of Legal Entities to demonstrate how it will operate. Registration to the system is being be done in phases, by invitation to resident agents.

Entities that fail to comply with this obligation are liable to penalties, including:

• Suspension of corporate rights
• Non-registration of documents in the Public Registry
• Monetary fines.

Due diligence for resident agents

Other measures adopted by local government include the implementation of extensive due diligence registers for resident agents, by means of Law No. 254 enacted on 11 November 2021. The law introduced adjustments in the areas of...