5. Other Relevant Matters

Anti-money Laundering

Executive Decree No. 213 of RD 3rd October, 2000 gave powers to the Superintendence of Banks to carry out inspections of trust companies. Superintendence of Banks’ Circular Letter FID No. 3–2000 of TH 4th December, 2000 (Law No. 42 of 2000) requires trust companies to comply with the ‘Know your Client’ rules set forth by the Superintendence of Banks. During the latter part of year 2000, the Superintendence of Banks created the Specialised Fiduciary Unit to undertake inspections of trust activities. The Fiduciary Unit performs onsite examinations of trust activities. Executive Decree No. 16 of 3rd October, 1984 as amended provides powers to the Superintendence to issue fines up to USD50,000 for violations, to order corrective actions, and to suspend or cancel a trust licence depending on the severity of the violations. Law No. 42 of 2000 and the Superintendence of Banks’ Agreement No. 09-2000 (as amended) require trustees to obtain complete information on beneficial owners, including letters of reference and proof of domicile. Information on clients must be kept confidential, unless a formal capital laundering, drug trafficking or terrorism investigation is in process. Every trust transaction in cash for USD10,000 or more and any suspicious transactions must be reported to the Superintendence of Banks, which in turn reports it to the Financial Intelligence Unit (FIU). An existing trust must have all reporting requirements on file. Licensed trustees taking over previously constituted trusts must be able to rely upon the information in such files. Periodical due diligence verification procedures must be undertaken. Licensed trustees administering private foundations’ assets must also report such administrative activities to the Superintendence of Banks.

With respect to the international requirements for more transparency, the Republic of Panama recently enacted Law No. 2 of 1 February 2011, which enhances the ‘know your customer’ (KYC) measures that must be implemented by resident agents of entities in existence in accordance with the laws of Panama. The scope of the new KYC rules covers all types of entities for which Panamanian lawyers act as resident agent, including inter alia, corporations, limited liability companies and private interest foundations, as well as trusts.

Under Law No. 2 of 2011, the resident agent has an obligation to make available to any local competent authority any information/documentation gathered in compliance with the new KYC rules not only to cooperate with the investigation of criminal activities, but also to effectively comply with the international commitments of the Republic of Panama in terms of the exchange of tax information.

The general rule under Law No. 2 of 2011 is that resident agents are required to identify their clients and persons with a substantial beneficial ownership interest in a Panamanian entity (any and all persons with more than a 25 per cent interest in the entity). As an exception to this general rule, resident agents are not required to keep information on the beneficial owners when the resident agent acts for an institution or professional body (such as banks, trust companies, law firms, insurance companies and securities firms), whose practices require them to adopt and maintain KYC information on the beneficial owners of the relevant entities. In those cases, the resident agent must secure confirmation from its client that (i) it maintains a business relationship with the beneficial owner of the relevant entity and (ii) it is prepared to make available the information regarding the beneficial owners of the relevant entity (in accordance with the requirements and procedures established by the laws of the jurisdiction where it conducts its operations), if so required by the resident agent.


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