Agreement No. 1 (2025) Adopting an Enunciative Guide for the Catalog of Positions of Politically Exposed Persons

Republic of Panama
Superintendence of Banks of Panama
AGREEMENT No. 1-2025
(February 11, 2025)

"Adopting an Enunciative Guide for the Catalog of Positions of Politically Exposed Persons"

THE BOARD OF DIRECTORS,

In exercise of its legal powers, and

CONSIDERING:

That following the issuance of Decree-Law No. 2 of February 22, 2008, the Executive Branch prepared a systematic organization in the form of a Single Text of Decree-Law No. 9 of February 26, 1998, and all its modifications, which was approved through Executive Decree No. 52 of April 30, 2008, hereinafter referred to as the Banking Law;

That in accordance with Article 4 of the Banking Law, the Superintendence of Banks shall have exclusive competence to regulate and supervise banks, banking business, and other entities and activities assigned to it by other laws;

That in accordance with numeral 2 of Article 5 of the Banking Law, it is the objective of the Superintendence of Banks to strengthen and foster favorable conditions for the development of the Republic of Panama as an International Financial Center;

That Article 112 of the Banking Law establishes that banks and other supervised entities shall be obligated to establish policies, procedures, and internal control structures to prevent their services from being improperly used for the crime of money laundering, terrorist financing, and other related or similar nature crimes;

That the Banking Law establishes in its Article 113 that banks and other supervised entities shall provide the information required by laws, decrees, and other regulations for the prevention of money laundering, terrorist financing, and other related or similar nature or origin crimes, currently in force in the Republic of Panama. It also indicates that they shall be obligated to provide such information to the Superintendence when so required;

That Recommendation 12 of the Financial Action Task Force indicates that financial institutions must be required, regarding the treatment of politically exposed persons, to carry out activities additional to regular due diligence measures, such as having appropriate risk management systems to determine if the client is a politically exposed person; obtaining senior management approval to establish or continue commercial relationships with said client; adopting reasonable measures to establish the source of wealth and the source of the client's funds; and carrying out continuous enhanced monitoring of the commercial relationship;

That through Law No. 23 of April 27, 2015, measures are adopted to prevent money laundering, terrorist financing, and the financing of the proliferation of weapons of mass destruction;

That in accordance with what is established in numeral 1 of Article 22 of Law No. 23 of 2015, it corresponds to the Superintendence of Banks to supervise, in matters of prevention of money laundering, terrorist financing, and financing of the proliferation of weapons of mass destruction, banks, trust companies, and other obligated subjects.

That Law No. 23 of 2015 in its Article 4, numeral 18, defines politically exposed persons as nationals or foreigners who perform prominent public functions of high level or with command and jurisdiction in a State as, but not limited to, heads of State or government, high-profile politicians, high-ranking government, judicial, or military officials, high executives of state-owned companies or corporations, public officials holding elected positions, among others, who exercise decision-making in public entities; as well as persons who perform or have been entrusted with important functions by an international organization, such as senior management members (e.g., directors, deputy directors, and board members or equivalent functions);

That Agreement No. 10-2015 of June 27, 2015, and its modifications, establishes parameters for the prevention of the improper use of banking and fiduciary services;

That Agreement No. 10-2015 establishes a definition of politically exposed person aligned with that developed in Law No. 23 of 2015 and indicates that banks and trust companies shall adopt extended or reinforced due diligence of the client and/or ultimate beneficiary when dealing with persons classified as politically exposed, whether national or foreign, and pay special attention, as well as take appropriate measures for such clients;

That in working sessions of this Superintendence, the need has been manifested to adopt the Enunciative Guide for the Catalog of Positions of Politically Exposed Persons, in order to illustrate to banks and trust companies the necessary methodology to establish their adequate control.

AGREES:

ARTICLE 1. OBJECTIVE. This Agreement aims to adopt an exemplary guide of positions that, due to their sensitive nature in matters of prevention of money laundering, terrorist financing, and financing of the proliferation of weapons of mass destruction, are considered prominent functions, so that banks and trust companies have an enunciative, but not limiting, guide of positions held by clients who could be classified as Politically Exposed Persons (PEP). Likewise, obligated subjects in matters of prevention of money laundering shall ensure that the risk assessment methodology implemented for client identification is effective and consequently, has the necessary mechanisms to identify politically exposed persons.

ARTICLE 2. SCOPE OF APPLICATION. In accordance with what is provided by Article 22 of Law No. 23 of April 27, 2015, which adopts measures to prevent money laundering, terrorist financing, and financing of the proliferation of weapons of mass destruction, this guide is directed to the following obligated subjects:

a. Banks and banking groups as defined by the Superintendence of Banks. b. Trust companies.

ARTICLE 3. DEFINITION OF POLITICALLY EXPOSED PERSON. In accordance with what is established in numeral 18 of Article 4 of Law No. 23 of 2015 and in attention to what is provided in Article 22 of Agreement No. 10-2015, politically exposed persons (PEP) shall be considered nationals or foreigners who perform prominent public functions of high level or with command and jurisdiction in a State, as (but not limited to) Heads of State or government, high-profile politicians, high-ranking government, judicial, or military officials, high executives of state-owned companies or corporations, public officials holding elected positions, among others, who exercise decision-making in public entities; persons who perform or have been entrusted with important functions by an international organization, such as senior management members, that is, directors, deputy directors, and board members or equivalent functions.

In compliance with Article 23 of Agreement No. 10-2015, all clients classified as politically exposed persons shall be considered high-risk clients.

ARTICLE 4. CRITERIA FOR THE EVALUATION OF THE METHODOLOGY THAT IDENTIFIES POLITICALLY EXPOSED PERSONS. Obligated subjects in matters of prevention of money laundering shall ensure that the methodology for identifying politically exposed persons includes the following elements:

a. Determination of how they will keep updated the catalog of positions contemplated in Annex No. 1 of this Agreement, without prejudice to including any other position that in the judgment of the obligated subject is considered as such. Likewise, it must identify the name of the persons holding the positions included in the catalog of Annex No. 1. These elements must be integrated into processes, technological tools, or automated systems demonstrating that they are applied effectively at the beginning of the relationship with the client or when their internal processes determine it in compliance with what is established in Law 23 of 2015. The search for natural persons, their names, and/or positions must be carried out guaranteeing that at least in the search, those found in the catalog of positions of Annex No. 1 are identified.

b. Have evidence that the process, tool, or automated system has mechanisms that allow:

i. Guarantee that the catalog of positions and names is updated,
ii. Have controls to determine the degree of match of client searches.
iii. Have logs or digital records of updates of the data that the supervised subject has integrated to comply with this Agreement.
iv. Guarantee that a phonetic search is performed and not only with exact similarity, this with the intention of avoiding identification errors.
v. Have the function that allows adding and removing names and positions in the process, technological tool, or automated system established.
vi. Guarantee that the process, technological tool, or automated system allows performing individual or global searches of the clients of the obligated subject.

c. The identification of clients identified with at least the positions included in the catalog of Annex No. 1 will result in the assignment of the high-risk level.

ARTICLE 5. ENUNCIATIVE GUIDE OF THE CATALOG OF POSITIONS CONSIDERED POLITICALLY EXPOSED PERSONS. The Enunciative Guide for the catalog of positions considered politically exposed in the Republic of Panama is adopted, as established in Annex No. 1 of this Agreement.

PARAGRAPH. After carrying out the due diligence process and analyzing the information of each client, obligated subjects may classify as a Politically Exposed Person any client whose position coincides with the parameters and guidelines established in numeral 18 of Article 4 of Law 23 of 2015, even if the position held does not appear in the list of positions contained in the catalog of positions established in Annex No. 1 of this Agreement.

ARTICLE 6. TERM. A person shall be considered a PEP from the moment of their appointment until their separation from the position and for a subsequent period of two (2) years from the moment they cease in the exercise of the functions and obligations for which they were qualified as a PEP.

ARTICLE 7. VALIDITY. This Agreement shall enter into force from its promulgation.

Given in the city of Panama, on the eleven (11) days of the month of February of two thousand twenty-five (2025).

NOTIFY, PUBLISH, AND COMPLY.

THE PRESIDENT, THE SECRETARY,
Rafael Guardia Adriana Raquel Carles

Agreement No. 1-2025

ANNEX No. 1
ENUNCIATIVE GUIDE OF THE CATALOG OF POSITIONS CONSIDERED POLITICALLY EXPOSED

As an exemplary, but not limiting, guide, the following shall be considered Politically Exposed Persons in the Republic of Panama, who occupy or have occupied, according to the terms established in the money laundering prevention regime and without distinction of their nationality or territory in which they exercise their functions, any of the positions indicated in the following enunciative list:

1. Presidents, Prime Ministers, Heads of State or Government or positions of a similar nature, as well as Vice Presidents or substitutes or their equivalents.
2. Ministers of State or Secretaries of State, Minister Counselors, Deputy Ministers, General Secretaries, Executive Secretaries, and General Administrators of entities of the Central Government or high-profile government officials holding positions of a similar nature.
3. Members of Board of Directors of entities of the Central Government or their equivalents.
4. General Directors, Deputy General Directors, General Secretaries of autonomous and semi-autonomous entities or high-profile government officials holding positions of a similar nature.
5. Director and Deputy Director of the Financial Analysis Unit for the Prevention of Money Laundering, Terrorist Financing, and Financing of the Proliferation of Weapons of Mass Destruction.
6. Members of Board of Directors of autonomous and semi-autonomous entities or similar.
7. Mayors and Deputy Mayors of Districts or equivalent regional authorities.
8. Provincial Governors or similar regional authorities.
9. Corregimiento Representatives and regional administrative authorities or of a similar nature, as well as their substitutes.
10. Councilors of the Municipal Council, as well as their respective substitutes, or equivalent figures.
11. Magistrates of the Supreme Court of Justice, Supreme Courts or equivalents, including their substitutes.
12. Magistrates of Superior Courts of Appeals or similar.
13. Circuit Judges or similar, regardless of jurisdiction (e.g., civil, criminal, administrative, among others), including their substitutes.
14. Municipal Judges or of a similar nature, regardless of jurisdiction (e.g., civil, criminal, administrative, among others), including their substitutes.
15. Guarantee Judges, Compliance Judges, and similar who exercise similar functions in the criminal jurisdiction, including their substitutes.

Agreement No. 1-2025

16. General Electoral Prosecutor and Electoral Prosecutors.
17. Magistrates of the Electoral Tribunal or their equivalents, including their substitutes.
18. Comptroller General and substitute.
19. Magistrates of the Court of Accounts or similar, including their substitutes.
20. Magistrates of the Administrative Tax Tribunal or similar, and their respective substitutes.
21. Magistrates of the Administrative Tribunal of Public Function, including their substitutes.
22. The Attorney General of the Nation, Attorney for the Administration, Senior and Circuit Prosecutors, as well as any other officials who exercise similar functions.
23. Deputies of the National Assembly, congressmen or positions of a similar nature, including their substitutes.
24. Deputies of the Central American Parliament and their respective substitutes.
25. Ambassadors, consuls (without distinction between titular or honorary consuls) or officials holding similar positions of a State.
26. Highest authorities of international organizations, executives or similar.
27. General Director of the Public Procurement Directorate or institutions of similar nature.
28. Magistrates of the Administrative Tribunal of Public Procurement, including their substitutes.
29. The Comptroller and Deputy Comptroller of the Republic or their equivalents.
30. The Ombudsman or similar.
31. Rectors, Vice-Rectors, General Secretaries, and General Directors of state universities.
32. General Director and Deputy Directors of the National Police or similar security branches.
33. General Director and Deputy Director of the National Migration Service.
34. General Director and Deputy General Director of the National Border Service.
35. General Director and Deputy General Director of the National Aeronaval Service.
36. General Directors, members of Board of Directors, and general secretaries of state-owned companies or mixed-capital companies where the State holds a 51% participation or similar.
37. Superintendent of Banks, Superintendent of the Securities Market, Superintendent of Insurance and Reinsurance, and their General Secretaries, as well as similar figures who exercise their functions in supervision and regulation bodies of the financial sector.

Agreement No. 1-2025

38. Superintendent of Non-Financial Subjects and their General Secretaries, as well as similar figures who exercise their functions in supervision and regulation bodies of the non-financial sector.
39. Director, Deputy Director, and General Secretary of the Panamanian Autonomous Cooperative Institute.
40. Members of Board of Directors or similar who exercise their functions in supervision and regulation bodies of the financial and non-financial sectors.
41. General Managers, Deputy General Managers, as well as Governors and Vice Governors of state-owned banking entities or central banks.
42. Members of Board of Directors or similar of state-owned banking entities or central banks.
43. High-profile politicians who are members of the Board of Directors of Political Parties or other governing bodies of a similar nature.