Due diligence requirements
On November 11, 2021, the government of Panama enacted Law 254, which introduced adjustments in fiscal transparency and the prevention of money laundering. The said law brings stricter reinforcement and requirements for due diligence that we must maintain as lawyers and resident agents of companies and foundations.
Obligated subjects: It refers to all subjects supervised by the Superintendence of non-financial subjects; this includes many types of companies, including lawyers/resident agents.
Legal entity: Refers to the company or foundation.
Resident Agent: The lawyer or the law firm that exercises the obligatory role of the 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.
It is essential to be clear before starting the relationship with our firm. The client must provide us with the following documentation and information immediately when required and must assume the commitment to keep it updated.
As resident agents, we are required by law to maintain in operation due diligence and care conducive to preventing operations from being carried out with funds or on funds from illicit activities. We also must ensure that the documents, data, or information collected within the due diligence process are kept up to date.
Know the nature of the client’s business.
As resident agents, we must collect information from clients to know the nature of their professional or business activity. Our firm will record the activity declared by the client at the beginning of the business relationship.
Risk assessment and transactional profile.
Resident agents shall take the necessary measures to identify, evaluate, and understand their risks of money laundering, terrorist financing, and the proliferation of weapons of mass destruction related to clients, their countries, or geographical areas and their products, services, transactions, or distribution or marketing channels. There is also the obligation to obtain information and documentation related to clients’ financial and transactional profiles according to the identified risk.
Continuous monitoring of the business relationship.
The obligated subjects shall conduct monitoring processes periodically to ensure that the data and information obtained from due diligence are up to date. Also is required to monitor operations carried by the clients to ensure that they coincide with the client’s professional profile or business activity, financial or transactional profile.
It is our responsibility to inform of the following sanctions to which legal entities are exposed if they do not comply with the above obligations.
The Superintendence will order the Public Registry to suspend the corporate rights of the legal entity related to the breach of the Resident Agent of any of the established obligations. The Superintendency of Non-Financial Subjects is empowered to order the Public Registry of Panama to liquidate the legal entity forcibly.
The competent authority will apply sanctions to the private source that does not comply with delivering, within the period granted, the documentation and information that is requested by request for information, under the provisions of the law and its regulations:
– Fines from USD 5,000 up to 100,000 when the person fails to deliver all the information and documentation required for reasons attributable to it within the period granted.
– Fine of USD 500 for each elapsed day, after the deadline granted for delivering the required information or documentation, when the legal entity does not comply with the delivery of the documentation or information requested.
Sanctions to third parties involved. The sanctions will be applicable not only to the obligated subjects o legal entity, but also to those who allow or non-compliance with the provisions established in the law or those dictated for its application by the supervisory body.
Likewise, the established sanctions will be applicable when non-compliance with the established obligations is detected in a supervisory process.