Law 254 of November, 2021, and the revisions made to the Panama System for the Registration of Final Beneficiaries
On November 11, 2021, the government of Panama enacted Law 254, which introduced adjustments in fiscal transparency and the prevention of money laundering.
This law is divided into three main points: Accounting Records, Due Diligence, and the System for the Registration of Final Beneficiaries. This article will focus on the changes regarding the System for the Registration of Final Beneficiaries, which had already been approved by law 129 of 2020, and now some revisions have been made.
We also consider it relevant to clarify that this system is not yet in operation; a legal framework has been created for its operation; however, the system itself is still in a period of improvement and testing before being formally launched.
–
Definitions:
Final Beneficiary: Person who ultimately, directly, or indirectly owns, controls, and exerts influence over the client or the person on whose behalf or benefit a transaction is made. It includes the person who exercises effective control over a legal person or structure.
Legal entity / legal person: Refers to the company or foundation.
Resident Agent: The lawyer or the law firm that exercises the obligatory role of agent of the company or foundation, which functions as a link between the client and the authorities of Panama and is considered an obligated subject to maintaining the due diligence and other requirements required by law for the entities it administers.
–
The system.
The Superintendence of Non-financial Subjects will create a system for the registration of final beneficiaries of legal entities (companies and foundations), and the resident agents shall be obliged to record in this system the data of the final beneficiaries of the entities under their administration.
_____________________________________
Strict confidentiality and restricted access.
Regarding the information and documentation provided to the Superintendence, the information collected will be kept under strict confidentiality and considered restricted access. It may only be disclosed to the Panama Public Prosecutor’s Office, Panama agents with criminal investigation functions, the UAF (Financial Analysis Unit), the Panama jurisdictional authorities, and foreign counterparts under the established channels for the request for information to Panama.
_____________________________________
Information to be entered into the system.
The resident agent shall provide the following information to the system of final beneficiaries.
About the Legal Entity:
a. Name
b. Folio (registration number)
c. Date of Incorporation
d. Main Activity
e. The jurisdiction where it operates (if its a business operation)
About the Final Beneficiary:
a. Full name
b. ID number or passport number
c. Date of birth
d. Nationality
e. Address
f. Date on which the status of beneficiary of the legal person was acquired.
_____________________________________
Registration term.
Must be perfected within a maximum period of fifteen working days following the date of constitution or registration of the legal entity or the appointment of a new resident agent.
_____________________________________
Updates obligations.
The resident agent must keep updated all the information of the legal entities that he has registered in the system.
Any legal entity is obliged to provide the information to the resident agent to identify the final beneficiary and notify of any change within a maximum period of 15 working days following the date of the change so that the resident agent makes the due update within a maximum period of 5 working days following the date on which he received the information.
_____________________________________
Resident Agent resignation.
In case of resignation of a resident agent, he must notify the Superintendence within a maximum term of ten business days following the date of registration of the resignation before the Public Registry, to be removed from the respective legal entity and consequently, block its access to the information provided, this is without prejudice to the information remaining in the system for access by the competent authority.
_____________________________________
Resident Agent new designations.
In the same approach, in case of appointment of a new resident agent, the new agent must notify such fact to the Superintendence within a maximum term of fifteen working days following the date of appointment of the new resident agent before the Public Registry who will link him to his corresponding code, to enter all the information required of the legal person of whom he has assumed such function. The new Resident Agent will not have access to information previously registered by another resident agent.
The Superintendence shall regulate the procedure for issuing certifications and coordinate with the Public Registry the measures necessary for the faithful fulfillment of these provisions.
Sanctions
Sanctions on the Registration of Beneficiaries.
When the Superintendence becomes aware of the non-compliance or violation by a resident agent, a legal person, or an assigned official, it will impose the administrative sanctions established by law. Against such sanctions, the appeals for reconsideration and appeal specified in the applicable regulations may be submitted.
Penalties: Resident Agents.
Fines from USD 1000 up to 50,000 for each legal entity whose information is not registered or updated under the provisions of this law. Penalties depend on the severity of the offense, the degree of recidivism, the magnitude of the damage, and the size of the resident agent when the information is not recorded or updated with the provisions of the law. In addition, The Superintendence may impose daily progressive fines equivalent to USD 500 until the non-compliance is remedied for a maximum period of six months. Effective from the day following the notification of the reasoned decision establishing it. This is without prejudice to the obligation of the resident agent to provide the information of the final beneficiary or final beneficiaries at the request of the competent authority.
Penalties: Legal Entities.
The Superintendence will order the Public Registry to suspend the corporate rights of legal entities that have not been registered or updated in the Single System by their Resident agent.
As long as the suspension persists, no act, document, or agreement may be registered, nor may certificates relating to the legal person be issued. The provisions of Article 318-A of the Tax Code shall apply to the reactivation, expiration and termination, and dissolution of suspended legal entities. The Superintendence is empowered to order the Public Registry of Panama to liquidate the legal entity forcibly. To reactivate the legal entity, the infringement must be corrected; in this case, this refers to the correct registration of the entity under the Final Beneficiaries Registration System. A reactivation fine of US$1000 must be paid, and the request for formal reactivation must be made.
As we mentioned at the beginning of this article, the final beneficiary registration system is still in a development stage.
We will keep you informed when it is finally in operation, as well as if any other relevant regulations are issued. In the meantime, please send us any questions about Panama’s final beneficiary registration system and how to comply with these new regulations by your company or foundation.