Panama implements Private and Unique System of Final Beneficiaries of Legal Entities

On March 20, 2020, Panama enacted Law No. 129, which creates the Private and Unique System of Final Beneficiaries of Legal Entities.

The law approved the transfer of the custody of information on the identity of the final beneficiaries of existing legal entities to the Superintendency of Non-Financial Entities, who will be responsible for the administration of the new system. Before the Law was adopted, Resident Agents were already required to identify the Final Beneficiaries of all entities for which they provided their services.

Below you will find a summary of the obligations and actions required to comply with the new regulations.

 

Who is the ultimate beneficiary?

The Law defines as Final Beneficiary of an entity, in general terms, the natural person or persons who:

• directly or indirectly, own or control 25% or more of the shares or voting rights in the legal entity,
• who owns, controls and/or exercises significant influence over the account relationship, contractual and/or business relationship, or
• the natural person on whose behalf or for whose benefit a transaction is carried out, which also includes natural persons who exercise ultimate control over a legal entity.

 

What information will be recorded about beneficial owners?

Resident Agents must register in the system the following minimum information on the Final Beneficiaries, which they must collect during their due diligence process and which they must keep in their files, as well as update it:

• full name,
• personal identification document number,
• birthdate,
• nationality,
• address,
• date from which the status of Final Beneficiary of the entity is held, and
• main activity of the legal entity.

This information must be entered into the system within a maximum period of 30 business days following the incorporation of the legal entity, the appointment of a new resident agent, or from the time any change occurs in the information previously registered. The Resident Agent is obliged to resign if the client does not provide the information required to complete the due diligence within the aforementioned period.

 

How long will the information be kept in the system?

The information provided by the Resident Agent will remain in the system for the duration of the legal entity and for no less than five years after the registration of its dissolution in the Public Registry of Panama.

 

Who can request a search in the system?

Only Panamanian public research entities expressly authorized by law, namely,

• the Financial Analysis Unit,
• the Public Prosecutor’s Office,
• the Ministry of Economy and Finance,
• the Superintendency of Banks, and
• the Securities Market Superintendency,

They may request the Superintendency to know the information on the Final Beneficiaries whenever a formal request is submitted for specific cases in investigation processes of money laundering crimes, financing of terrorism and weapons of mass destruction, or assistance by virtue of treaties or international agreements signed by Panama.

Furthermore, the Law prohibits the adoption of precautionary measures or exhibitory proceedings in cases of legal proceedings between private parties, so that a third party will not be able to access or obtain such information as a result of legal disputes.

 

Security and confidentiality

The Superintendency will keep the information in a restricted access database, and will only exercise the function of custody, conservation and access to the information it receives from the Resident Agents, so that it does not perform investigation functions, nor will it allow third parties to have access to said information.

Only Resident Agents and designated officials will be able to access the information in the database.

 

Resident Agent Obligations

The system is designed so that Resident Agents are the ones who directly feed the information into the Superintendency’s database. The Resident Agent is responsible for registering the information in the Single System and for keeping all the information registered up to date. Likewise, he/she must carry out the necessary updates within a maximum period of thirty business days following the date on which he/she received the information.

 

From the promulgation of the Law, Resident Agents will have a period of 6 months from the date on which the Superintendency communicates that the database is enabled for their access.

 

With the adoption of this legislation, Panama implements a technological platform already used and tested by other competing countries, which puts us at the forefront of new trends in corporate transparency that provide an adequate balance between the duty to know and avoiding abuses of the corporate system, maintaining a high degree of confidentiality for those who use legal entities for commercial, succession or estate planning purposes that are not illegal.

 

If you have any questions about this new law, please contact your attorney or email us at igranet@stagingcd.com .