PANAMA CREATED A RESIDENT AGENT REGISTRY AND LEGAL ENTITIES BENEFICIAL OWNER REGISTRY

Panama enacted Law 129 of March 17, 2020, on beneficial owner register for legal entities aiming to prevent money laundering, the financing of terrorism, and the proliferation of massive weapons. Law 129 was published on the National Gazette 28985-C.

The Law created the Non-Public Registry System for Beneficial Owners of legal entities and established a regulatory framework for the creation of the Registry. Resident Agents are obliged to file information on the beneficial owner of all legal entities incorporated in Panama for which they are the registered agent. In this article, we will answer some of the most frequently asked questions regarding this bill.

Who are the beneficial owners?

The Law defined beneficial owners as any individual who directly or indirectly owns or controls or has a significant influence on the corporate business, contracts, and/or on corporate accounts. Also, beneficial owners can be any individual benefitting from a transaction, including individuals who ultimately control the legal entity's decisions. The Law established the criteria for determining possession, control, or influence over a legal entity.

What is the Resident Agent Registry?

The Law created a Resident Agent Registry managed by the Superintendence of Non-Financial Subjects. In this Registry, any lawyer or law firm that provides professional services as a resident agent for one or more entities incorporated in the Republic of Panama must be registered. A registration code will be assigned to registered lawyers and law firms.

Who assigned the Resident Agent Registration Code?

The Superintendence will assign the Resident Agents a unique non-transferable registration code to access the beneficial owner registry and complete the information regarding the beneficial owners.

What is the beneficial owner's Registry?

The beneficial owner's Registry is a free and private registry system with limited access to security controls and technological protection. The system will ensure the integrity, confidentiality, traceability and computer security of the data stored under the highest international standards on personal data protection.

Who will have access to the beneficial owner's Registry?

Access to the registry system will be strictly limited to the resident agent of the legal entities to which the agent provides services and two officials assigned by the Superintendence of Non-Financial Subjects.

The officials may access the registry system to make the required information available to the competent authorities, in accordance with the provisions of Law 23 of 2015, its amendments and regulations. The information may be used to prevent money laundering, the financing of terrorism and the proliferation of massive weapons, and for compliance with Panamanian laws and international cooperation obligations established in treaties or conventions ratified by Panama.

Also, personas non-authorized by the Law, will not be able to access the registry system's information by bringing judicial or administrative actions, or another type of legal actions.

Which are the Resident Agent's obligations?

The resident agent must carry out due diligence to comply with the provisions of this Law. However, the Resident Agent will not be responsible for the truthfulness or accuracy of the information if there is evidence that due diligence was carried out.

What happened if the Resident Agent resigned?

In case of resignation of the resident agent, the resident agent must notify the Superintendence of Non-Financial Institutions, within 30 business days of the date the resignation is registered with the Public Registry of Panama. Then, access to the information provided about an entity will be restricted to that Resident Agent. However, the data will remain in the Registry, and the competent authorities will be able to access that information.

Who are the competent authorities?

As per the Law, the competent authorities include:

1) The Superintendence of Non-Financial Institutions,

2) the Financial Analysis Unit for the prevention of money laundering and terrorism financing crimes,

3) The Public Ministry,

4) The Ministry of Economy and Finance, and

5) any other governmental institution, which competence in the prevention of money laundering, the financing of terrorism, and the proliferation of massive weapons.

Is the Superintendence liable for the information provided?

The Superintendence of Non-Financial Institutions, in its capacity as custodian and administrator of the information contained in the registry system, will not be liable for the veracity and inaccuracy of the information provided by the Resident Agent. Therefore, the Superintendence cannot be sued or subject to injunctions for data contained in the registry system.

Are there any non-compliance sanctions?

The Law will suspend the corporate rights for legal entities whose resident agents do not comply with the registration obligation. Consequently, the suspended legal entity will not be able to file any document or agreement with the Panamanian Public Registry. Legal entities will be allowed to change resident agents to comply with the provisions of the Law without paying any registration fees.

The Law establishes sanctions for resident agents, including fines of USD 1,000 to USD 5,000 for each legal entity whose information is not registered or updated in the beneficial owner register. For each day, the registration or update is not completed, the Law imposes progressive fines on 10% of the fine previously imposed fine, up to a maximum of six months.

If false information is provided or filed in the beneficial owner register, the Law imposes additional sanctions.

Is there a prescription time to register the information of the final beneficiary?

Resident agents will have six months from the notification of the Superintendence of Non-Financial Institutions to register with the Superintendence and to perform due diligence on the legal entities

Resident agents that are unable to update the information on the legal entity's beneficial owner will be required to resign as the entity's resident agent before the Panamanian Public Registry, without any costs.

For information about the law or our Resident Agent Services, please email us to lill@kerycruz.com