The Panamanian National Assembly has approved a bill that would create a free register of beneficial owners of legal entities.
The entities would need to be incorporated in Panama and their resident agent, who would either be a lawyer or law firm appointed by them, will be tasked with the filing and updating of ownership information.
The bill defines beneficial ownership as “any individual who directly or indirectly owns or controls, or has a significant influence on, the business or individual benefitting from a transaction, including individuals who ultimately control the legal entity’s decisions”, according to auditing firm EY.
It also outlines ownership criteria according to shareholding or control over the legal entity.
Anyone with direct or indirect ownership of at least 25% of shares or voting rights and anyone with special provisions for civil entities or entities in administration and trusts will be subject to the legislation.
“It will apply to all Panamanian corporations, whether the ultimate beneficial owner is a resident or not, or whether they have assets in Panama or not,” Gisela Porras, country managing partner for Panama at law firm Dentons, told International Adviser.
The fine print
A date for the bill to come into force has not been decided yet, as it is still subject to approval from the executive branch of government.
But when it comes into effect, resident agents will have 30 business days to file and/or update information on beneficial owners.
The information must include: name, ID number, date of birth, nationality, address, and the date when they became a beneficial owner.
Data on the legal entity would need to show its name, registration number in the Panamanian Public Registry, date of registration, address, and main business activity.
Financial incentives
Those who do not comply within the 30-day window will face penalties.
Financial sanctions can range between $1,000 to $5,000 (£3,823, €4,500) for each entity.
Additionally, the bill provides a progressive fining system of 10% of the previous penalty for each day the registration or update is incomplete, for a maximum of six months.
Any entity that has not registered or updated its information will be suspended; and if they do not do so within two years, they will be removed from the public registry.
The bill sets out that beneficial ownership information will be confidential, which means that those who don’t keep data private will face a $200,000 fine.
Anyone who accesses the register without authorisation faces a $500,000 penalty.
The move is intended to tighten oversight of money laundering and related risks, especially after the country was rocked by the 2016 Panama Papers scandal.
