Until last year, companies in Panamá could issue bearer shares, i.e., shares are held by the person whose name is on the share certificate and no record of such information is recorded thus hiding the identification of the person. The use of bearer shares in effect caused Panama to enter into the gray list of countries proving that they lacked control regarding compliance and prevention against money laundering of the Financial Action Task Force (“FATF”). Based on the need to get out of said list and demonstrate its greatest interest on improving the financial transparency within its jurisdiction, on August 06, 2013, Panama enacted Law 47 that modified the bearer shares regime. In this new regime every owner of bearer shares must designate an authorized custodian to maintain the certificates of such shares in custody.
According to the mentioned law, the terms for this disposition to enter into force, as well as the delivery of the certificates and the information related to them were set as follows:
Likewise, in accordance with Law 47, the Authorized Custodians may be local or foreigners. In this sense, the Authorized Local Custodians may be banks with a general license and trustees, brokerage firms and central securities depositaries established in the Republic of Panama and regulated by the Banking Supervisory Authority of Panama and the Stock Market Supervisory Authority of Panama, respectively; as well as lawyers who are registered in the record for the custody of bearer shares certificates of the Fourth Chamber of General Affairs of the Supreme Court of Justice. On the other hand, the Authorized Foreign Custodians may be banks, trustees and financial intermediaries with license to exercise their activities in countries members of the FATF or its associated members that are registered in the Banking Supervisory Authority of Panama.
Now, regardless of the enactment of Law 47, Panama kept on having strong international pressure in order to improve its financial transparency regime to be removed from the gray list of FATF.
On April 23, 2015, it enacted Law 18, where the terms established in Law 47 were amended as follows:
In addition to the commented reforms, Panama enacted a law to prevent money laundering, the financing of terrorism and the proliferation of massive destruction arms, all this in order to follow the policies of FATF.
Such efforts from Panama to achieve financial transparency that can be compared to international standards caused the plenary Session of FATF held by the end of 2015 to acknowledge its compliance and to approve a site visit in January 2016. The result of said visit was that Panama was finally excluded from the gray list in February 2016.
Image: Unsplash – Stefan Kunze
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