The government of Panama enacted Law 254, which introduces adjustments in matters of fiscal transparency and prevention of money laundering. This law is divided into three main points: Accounting Records, Due Diligence, and the Non-public platform of register of beneficial owner.
Then, we will detail the changes regarding the measures and reinforcement of the due diligence requirements that we must maintain as lawyers and registered agents of companies and foundations:
Accounting records
Legal entities shall be obliged to provide the resident agent annually, as of April 30, with the accounting records or a copy of the accounting records relating to the fiscal period that ended on December 31st of the immediately preceding year. In the cases in which the accounting records are kept outside the offices of the resident agent, inside or outside of Panama, legal entities will be obliged to inform, annually and in writing, the resident agent the name and contact information of the person who maintains the accounting records and supporting documentation in their custody and the physical address where they are kept.
In the case of legal entities incorporated before the entry into force of this law, they will have a period of six months to provide the accounting records or copies of these to the resident agent, that is, until May 11th, 2022.
The obligation to keep accounting records was established by Law 52 of October 2016.
Reactivation, change of registered agent and dissolution of legal entities
In the cases of legal persons that are suspended in the Public Registry of Panama, to be reactivated, they must provide their registered agent with the accounting records or a copy of these.
In cases of change of registered agent, the legal entity must provide the new agent, prior to the registration of their appointment, the accounting records and supporting documentation or copies thereof.
In the event of dissolution, all legal entities must provide the resident agent with the accounting records and supporting documentation or copies thereof, which must be kept for a period of five years from the registration of the dissolution.
Know the nature of the client's business.
Registered agents (also known as “obliged subjects”) must collect information from their clients to know the nature of their professional or business activity. The supervisory bodies will regulate this matter, taking into consideration the type of activity to be carried out by the obliged subject.
The registered agents must monitor the operations carried out to ensure that they coincide with the professional profile or business activity, financial or transactional profile of the client. It must also carry out monitoring processes periodically in order to ensure that the data and information obtained as a result of due diligence are up-to-date.
Non-public platform of register of beneficial owner
Through Law 129 of March 2020, Panama implemented a system to safeguard the information of the beneficial owners (UBO) of Panamanian legal entities. Once the platform is created, resident agents must register the information of the beneficial owners. We will be informing you in a timely manner when said platform is created.
Sanctions
The Superintendency will order the Public Registry to suspend the corporate rights of the legal person that fails to comply with the obligations established in this law or its regulations. The Superintendency of Non-financial Subjects is empowered to order the Public Registry of Panama the forced liquidation of the legal entity.
In case of non-compliance, the competent authority will apply fines to the legal entities or registered agents. The sanctions will be applicable when non-compliance with the established obligations is detected in the supervision processes and in cases where the private source discloses or shares confidential information with an unrelated third party.
This law is being regulated by the Government of Panama, who will establish the parameters for the presentation of accounting records and for compliance with the other provisions established.
