Panama Green Lights Beneficial Owner Register Legislation

In early January, Panama’s National Assembly approved Bill No. 169 permitting the creation of a register of beneficial owners for legal entities operating in the jurisdiction. No effective date has yet been announced as it will be subject to approval from Panama’s executive, but the law is effectively in place.

Bill 169 In Brief

Once the law comes into effect, two things must happen:

• Panamanian resident agents must file information on any and all legal entities on behalf of whom they are acting
• All entities incorporated in Panama are required to appoint a lawyer in Panama to act as a resident agent

A Process Begun in 2015

In April 2015 when Law 23 came into effect, it required resident agents acting on behalf of such entities to perform due diligence on recorded beneficial owners. Now, nearly five years later, this information will be placed into the register. It will be administered by the Superintendence of Non-Financial Institutions.

What is the Purpose of Bill 169?

The main reason for Panama voting through Bill 169 to combat money laundering and other related activities. FATF (Financial Action Task Force) put Panama back on its grey list in June 2019. This means that Panama was once again subject to international monitoring. FATF cited multiple concerns including deficiencies in its anti-money laundering measures. Panama immediately agreed to put legislation in place to ensure compliance with FATF's recommendations:

• Requiring obliged entities to ensure adequate verification and update information on beneficial ownership of entities
• Put in place an effective framework for monitoring offshore entities’ activities
• Assessment of the risks of misusing legal persons in Panama, and defining and implementing any necessary measures to prevent misuse
• Improving access and speed of access to information concerning beneficial ownership

Bill 169 in Detail

Resident agents have 30 days after incorporation and appointment of its agent to register with the Superintendence and submit the specified information. Bill 169 has a grandfathering clause. This grants pre-existing agents of companies registered in Panama, 6 months to complete registry and collect the information now required by law. Failure to do this will require the agent to re-sign. Further, any legal entity with an unregistered resident agent is subject to suspension from the Panamanian Public Register. After two years of non-compliance, they will be removed from the Registry. Any changes must be registered within 30 days. Resident agents may receive a fine of anything between $1,000-5,000 (USD) for every unregistered legal entity. These fines will increase daily; further fines apply for falsely filed information

What Information Does the Register Require?

Information required for the register includes:

• Name of the beneficial owner(s) and their Date(s) of Birth
• Relevant ID numbers
• Nationalities and registered addresses
• As well as this personal information, the registry also requires the date that the individual became the beneficial owner

This information will never be made available to the public. Only certain people and groups will be permitted to access it. This include resident agents and their registered legal entities, along with a maximum of two designated officers granted certain technical and secure safeguards. If the information is not kept confidential, the person responsible could be liable for fines up to $200,000 (USD). Any person gaining unauthorised registry access could face a maximum fine of $500,000 US.