Panama Implements System To Protect The Private Information Of Final Beneficiaries Of Legal Entities

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

The law approved the transfer of the custody of the information on the identity of the Final Beneficiaries of legal entities to the Superintendence of Non-Financial Subjects, who will be responsible for the administration of the new system. The Resident Agents’ obligation to identify the final beneficiaries of all the entities for which they provided their services was already in place before the law was adopted.

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

Who is a beneficial owner?

The law defines the Final Beneficiary of an entity, in general terms, as the person or individuals who: 

• directly or indirectly own or control 25% or more of the shares or voting rights in a legal entity,

• whoever owns, controls and/or exercises significant influence over the account relationship, contractual and/or business relationship, or

• the natural person in whose name or benefit a transaction is made, which also includes natural persons who exercise final control over a legal entity. 

 What information will be held on beneficial owners? 

 Resident Agents must file with the Superintendence the following minimum information on the Final Beneficiaries, which they must have collected during their due diligence process and which they must keep in their files along with updates:

1.full name

 

2.passport or personal identification document number,

 

3.date of birth

 

4.nationality,

 

5.address,

 

6.date as of having the condition of Final Beneficiary of the entity, and

 

7.main activity. 

This information must be filed into the system within 30 business days following the constitution of the entity, its establishment in Panama, or since the change in the previously registered information occurred. The Resident Agent is obliged to resign if the client does not provide the information required to complete its due diligence process and from which the Resident Agent shall obtain the information with which the Superintendence database must be fed.

How long will information be kept? 

The information provided by the Resident Agent shall remain in the system for the existence of the legal entity, and it must be retained for five years following the entity’s dissolution at the Public Registry of Panama.

Who may request a search of the system? 

A search may be formally requested to the Superintendence only by the following Panamanian public investigation entities: 

• the Financial Analysis Unit,

   

• the Public Ministry,

   

• the Ministry of Economy and Finance,

   

• the Superintendence of Banks, or

   

• the Superintendence of the Securities Market,

and must relate to specific cases within investigative processes on money laundering, terrorism financing and weapons of mass destruction, or of assistance under treaties or international agreements signed by Panama.

In addition, the law prohibits the adoption of precautionary or discovery measures in cases of judicial proceedings between individuals, so that a third party may not have access or obtain such information as a result of legal disputes. 

Security and confidentiality

The Superintendence will keep the information in a restricted-access database and shall only exercise custody, conservation, and access functions of the information it receives from the Resident Agents. It is not allowed to carry out investigative functions, nor will it allow third parties to have access to said information. 

Resident Agents and persons designated by the Superintendence may only access the data maintained on the database. 

Obligations of the Resident Agent 

The system is designed so that the Resident Agents directly file the information in the Superintendence database. The Registered Agent is responsible for submitting the information and maintaining the database updated and must carry out due updates within 30 days of receiving information on applicable changes. 

The Resident Agents must have completed the filings of all their clients in the database within six months from the date on which the Superintendence has informed them that the database is enabled for 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 corporate trends providing an adequate balance between the duty to know the identification information while avoiding abuses of the corporate system and maintaining a high degree of confidentiality for those who use legal persons for commercial, inheritance and estate planning purposes that are not contrary to the law.

By Icaza, González-Ruiz & Alemán, Panama, a Transatlantic Law International Affiliated Firm.