Agreement No. 006-2022 Modifying Articles 13, 14, 15, and 16 of Agreement No. 010-2015 on Prevention of Misuse of Banking and Fiduciary Services

Republic of Panama
Superintendence of Banks
AGREEMENT No. 006-2022
(June 14, 2022)
"By which Articles 13, 14, 15, and 16 of Agreement No. 010-2015 on the prevention of the misuse of banking and fiduciary services are modified"

THE BOARD OF DIRECTORS
In exercise of its legal powers, and

CONSIDERING:

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

That Article 36 of Law No. 1 of January 5, 1984 establishes that the Superintendence of Banks shall supervise and ensure the proper functioning of the trust business;

That in accordance with numeral 1 of Article 5 of the Banking Law, it is an objective of the Superintendence of Banks to ensure the solidity and efficiency of the banking system;

That in accordance with numeral 2 of Article 5 of the Banking Law, it is an 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 have the obligation to establish policies, procedures, and internal control structures to prevent their services from being used improperly for the crime of money laundering, terrorist financing, and other related or similar 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 crimes or of similar nature or origin, currently in force in the Republic of Panama. It also indicates that they shall be obligated to provide such information to the Superintendence when it so requires;

That in accordance with what is established in Article 114 of the Banking Law, banks and other supervised entities shall adopt policies, practices, and procedures that allow them to know and identify their clients and employees with the greatest certainty possible, with the Superintendence retaining the authority to develop pertinent norms that adjust to the policies and norms currently in force in the country;

That by means of Law No. 41 of October 2, 2000, modified by Law No. 1 of January 5, 2004, a Chapter titled "On Money Laundering" was added to Title XII of the Penal Code, in whose Article 1 the crime of money laundering is typified;

Agreement No. 006-2022

That by means of Law No. 50 of July 2, 2003, acts of terrorism and their financing are typified as an autonomous crime in the Penal Code and the respective sanctions are established;

That by means of 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 Article 19 of Law No. 23 of 2015 establishes as a supervisory body, among others, the Superintendence of Banks;

That Article 20 numeral 7 of Law No. 23 of 2015 establishes, among the powers of the supervisory bodies, to issue guidance and feedback norms to financial obligated subjects, non-financial obligated subjects, and activities performed by supervised professionals for their application, as well as procedures for the identification of beneficial owners, of legal persons, and other legal structures;

That in accordance with 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, the banks; the trust companies and any other activity they carry out; the financial companies; the financial leasing companies; the factoring companies; the issuers or processors of debit, credit, and pre-paid cards, whether natural or legal persons, and the entities issuing payment means and electronic money;

That as established in Law No. 23 of 2015 on the prevention of money laundering, terrorist financing, and financing of the proliferation of weapons of mass destruction, the Superintendence of Banks will be responsible for supervising and regulating in matters of prevention of money laundering, other obligated subjects, in addition to the banks and trust companies that were already under its supervision;

That as part of the compliance with the Action Plan that Panama is advancing with the aim of exiting the grey list of the Financial Action Task Force (FATF), the Sectoral Risk Assessment of Legal Persons and Trusts was developed, with the cooperation of the World Bank, through which gaps related to each sector were identified.

That as a result of the Sectoral Risk Assessment of Legal Persons and Trusts, a matrix was established containing the strategies in which the Superintendence of Banks must focus to close the identified gaps with respect to trusts, among which is the updating of the legal framework in matters of prevention of money laundering and terrorist financing, in order to include new controls that allow mitigating the referred gaps.

That in working sessions of this Board of Directors, the need and convenience of updating the prevention measures for the misuse of banking and fiduciary services contemplated in Agreement No. 10-2015 has been manifested, with the aim of complying with the mitigation strategy adopted by the Superintendence of Banks to remedy the gaps identified through the Sectoral Risk Assessment of Legal Persons and Trusts as part of compliance with the Action Plan before the Financial Action Task Force.

AGREES:

ARTICLE 1. Article 13 of Agreement No. 010-2015 is hereby amended as follows:

"ARTICLE 13. MINIMUM CRITERIA OR VARIABLES FOR THE ANALYSIS AND DESCRIPTION OF THE CLIENT'S RISK PROFILE. For the analysis and description of the risk profile of each client, obligated subjects must include as a minimum the following criteria or variables, without being limited to these:

1. Nationality.
2. Country of birth or country of incorporation.
3. Country of domicile.
4. Profession or trade.
5. Geographic zone of the client's business activities.
6. Economic and financial activity of the client.
7. Type of legal structure used, where applicable.
8. Type, amount, and frequency of transactions (sent and received, national and international).
9. Origin of resources (national and international).
10. Politically Exposed Persons (PEPs).
11. Products, services, and channels used by the client.
    The criteria or variables used for the analysis and description of the client's risk profile must be described in the methodology for the classification of client risk that the bank uses."

ARTICLE 2. Numeral 5 of Article 14 of Agreement No. 010-2015 is hereby amended as follows:

"ARTICLE 14. CLIENT PROFILE FOR NATURAL PERSONS.
When dealing with natural persons, banks and trust companies must prepare a client profile which will include a form designed by the entity containing written information, as well as the documents supporting such information. The client profile must contain, as a minimum, the following information and documentation, which must be obtained before initiating the commercial relationship with the client:

1. ...
2. ...
3. ...
4. ...
5. Other additional aspects to consider:
   a. In cases where the client is acting as an intermediary for another person who is the ultimate beneficiary or usufructuary of the operation, banks and trust companies must conduct due diligence on said beneficial owner. b. Banks and trust companies must understand and, where appropriate, obtain information about the purpose and nature intended for the commercial or professional relationship.
   c. Every new account or contract relationship must comply with an evaluation of the client's financial profile and transactional profile, in order to measure the risk of the products or services offered.
   d. Banks and trust companies must document in the respective file all due diligence performed to adequately identify their client and/or beneficial owner. e. Any service resulting from a relationship between a bank or trust company with a foreign client will be subject to due diligence measures, which must be consistent with the risk level it represents, with international parameters and standards, and with the internal control policies and procedures established by the entity. f. Trust companies must identify the beneficial owner or owners of the trust, that is, the natural persons who receive or will receive the benefit of the trust. All information required in this article must be consolidated in a single file, whether physical or digital."

ARTICLE 3. Numeral 3 of Article 15 of Agreement No. 010-2015 is hereby amended as follows:

"ARTICLE 15. CLIENT PROFILE FOR LEGAL PERSONS.
When dealing with legal persons, banks and trust companies must prepare a client profile which will include a form designed by the entity containing written information, as well as the documents supporting such information. The client profile must contain, as a minimum, the following information and documentation:

1. ...
2. ...
3. Identification of dignitaries, directors, attorneys-in-fact, and legal representatives: Banks and trust companies must identify the dignitaries, directors, attorneys-in-fact, and legal representatives of legal persons. For these purposes, only a copy of the personal identity document of the president and/or legal representative, as applicable, secretary, persons designated as signatories, and legal attorneys-in-fact of the legal person will be required. In the case of trust companies, the protector, advisors, or other persons, if any, who make decisions regarding the trust's assets and their distribution must be identified. In the case where the settlor is a legal person, the trust company must ensure it knows the beneficial owner of said legal person, down to the natural person.
   Furthermore, obligated subjects must identify if the legal person has members provided by a resident agent, whether nominal directors or dignitaries, as applicable for each of the different legal structures.
   …"

ARTICLE 4. Numeral 1 of Article 16 of Agreement No. 010-2015 is hereby amended as follows:

"ARTICLE 16. IDENTIFICATION OF BENEFICIAL OWNER IN ANONYMOUS COMPANIES. For the purposes of what is established in Article 15, numeral 5, with respect to identifying shareholders who own a percentage equal to or greater than ten percent (10%) of the issued shares of a company, banks and fiduciaries must request the documents that evidence the name of the natural person identified as the beneficial owner and holder of the shares of the anonymous company, whether registered or bearer.

1. In the case of companies with registered shares, banks and fiduciaries must request at least one of the following documents:
   a. Copy of the share certificate evidencing the name of the owner of the registered shares, in the event that shares have been issued. b. Sworn Declaration indicating the information of the owners of the registered shares, as well as the share percentage, signed by the president or secretary.
   c. Copy of the share register.
   d. Certification from the resident agent indicating the natural persons or beneficial owners who are owners of the registered shares, as well as the share percentage.
   …"

ARTICLE 5. VALIDITY. This Agreement shall enter into force from its promulgation.

Given in the city of Panama, on the fourteenth (14) day of the month of June of two thousand twenty-two (2022).

LET IT BE COMMUNICATED, PUBLISHED, AND COMPLIED WITH.

THE PRESIDENT, THE SECRETARY,
Rafael Guardia Pérez Felipe Echandi Lacayo