Agreement No. 12 (2018) - Modifying Article 8 of Agreement No. 9-2009

Republic of Panama
Banking Superintendence
AGREEMENT No. 009-2009
(October 22, 2009)
"By which the provisions on Fixed-Term Deposits and Local Savings Deposits are compiled, adapted, and updated."

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

CONSIDERING

That following the issuance of Decree-Law 2 of February 22, 2008, the Executive Branch prepared a systematic ordering in the form of a Single Text of Decree-Law 9 of 1998 and all its modifications, which was approved by Executive Decree 52 of April 30, 2008, hereinafter referred to as the Banking Law;

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

That in accordance with numeral 5 of Article 11 of the Banking Law, it corresponds to this Superintendence to establish, within the administrative sphere, the interpretation and scope of legal or regulatory provisions in banking matters;

That Article 1 of Agreement No. 1-85 of November 20, 1985, modified by Agreement No. 10-90 of July 5, 1990, establishes the amount and term by which Local Fixed-Term Deposits must be agreed upon, restricting early withdrawal or early reduction thereof.

That the National Assembly has issued regulations regarding immigrant visas that impose the obligation to agree upon a fixed-term deposit contract, a requirement that does not guarantee the granting of the visa;

That in cases where the visa is denied, the depositor must be able to withdraw their funds from the bank, if they so desire;

That in working sessions of this Board of Directors, the convenience of compiling, adapting, and updating the provisions on Fixed-Term Deposits and Local Savings Deposits has been highlighted.

AGREES:

ARTICLE 1: LOCAL FIXED-TERM DEPOSITS. Except as provided in this Agreement, Local Fixed-Term Deposits must be agreed upon for an amount no less than TEN THOUSAND BALBOAS (B/. 10,000.00) and for a term no shorter than 30 days, and may not be withdrawn, reduced, or increased before the expiration of the agreed term.

ARTICLE 2: EXCEPTION. Notwithstanding the provisions of the previous article, Local Fixed-Term Deposits may be increased before their maturity date by agreement between the parties, only when the agreed term is equal to or greater than one (1) year, through the capitalization of interest or new contributions to the original sum.

ARTICLE 3: LOCAL FIXED-TERM DEPOSITS OPENED FOR IMMIGRATION PROCEDURES. In the case of Fixed-Term Deposits opened by foreigners and classified as Local Deposits, whose sole purpose is to meet the requirements established by Executive Decree No. 320 of August 8, 2008, to apply for immigrant visas that require the opening of a Fixed-Term Deposit, they may be withdrawn early if the account holder desists from the immigration procedure, or when the requested visa is denied or cancelled. For confirmation of the foregoing, the holder must provide the bank with the note of desistance from the immigration procedure duly stamped by the National Migration Service or the respective resolution issued by the National Migration Service, as applicable. This is without prejudice to the penalties for early reduction that the bank may establish for such purposes, which shall be stipulated in the Fixed-Term Deposit contract signed.

ARTICLE 4: CLOSURE OF FIXED-TERM DEPOSITS AFTER NOTIFICATION TO THE FINANCIAL ANALYSIS UNIT FOR THE PREVENTION OF MONEY LAUNDERING AND FINANCING OF TERRORISM (UAF). In cases of notification of suspicious operations to the Financial Analysis Unit for the Prevention of Money Laundering and Financing of Terrorism (UAF), in the manner provided in Agreement No. 12-2005, banks may, at their discretion, cancel Local or External Fixed-Term Deposits early, of any natural or legal person, provided that the holder(s) of the fixed-term deposit is directly or indirectly linked to the suspicious operation that is the subject of the report submitted to the UAF.

ARTICLE 5: PLEDGED DEPOSITS. In the case of Local or External Fixed-Term Deposits pledged in favor of a bank, which must be executed in whole or in part to satisfy the guaranteed obligation, the bank may extinguish the deposit in total or in part, and consequently, remove it from its books in the corresponding proportion.

ARTICLE 6: OVERNIGHT DEPOSITS. Local Deposits commonly known as "Overnight" may not be agreed upon for a term shorter than TWENTY-FOUR (24) hours, nor for an amount lower than ONE HUNDRED THOUSAND BALBOAS (B/. 100,000.00).

ARTICLE 7: LOCAL SAVINGS DEPOSITS. The following provisions shall apply to local savings deposits:

1. Banks may freely set the interest rates for Local Savings Deposits. However, they must indicate the rate of such deposits in their clients' account statements.

2. The method and modality for calculating and the timing of payment of interest on these deposits shall be freely contracted between the parties. In no case shall the timing of capitalizing interest be later than the expiration of the quarter.

3. The charging of any fee for low or no activity, inactivity, balances below minimum balances, or maintenance is prohibited.

4. The promotion of raffles, gifts, trips, prizes, or other incentives in favor of these deposits requires prior authorization from this Banking Superintendence. Interested banks will submit the respective plans and programs with due opportunity for the appropriate considerations. the Superintendent of Banks will review and decide on the requests made regarding this matter, in accordance with the regulatory instructions established by the Superintendence.

ARTICLE 8: CHRISTMAS, SCHOOL, OR EDUCATIONAL SAVINGS DEPOSITS. Deposits maintained in the so-called "Christmas Savings Accounts," "School Savings Accounts," or "Educational Savings Accounts" are considered "Socio-Educational Deposits" whose purpose is the formation of the saving habit in the various sectors of the population. The maximum authorized remuneration for these deposits will consist of a sum in the form of interest payable in a single lump sum at the end of the year, at the time of withdrawal.

ARTICLE 9: SPECIAL SAVINGS DEPOSITS. In order to encourage saving and promote better returns through savings accounts, banking entities may establish special savings deposits, in which the parties may agree that the depository may not make withdrawals during a specified period of time.

ARTICLE 10: POWERS OF THE SUPERINTENDENCE. The Banking Superintendence is empowered to modify the minimum amounts and terms and the maximum rates established in this Agreement.

ARTICLE 11: SANCTIONS. Violations of the provisions of this Agreement will be sanctioned in accordance with Title IV of the Banking Law.

ARTICLE 12: REPEAL. This Agreement repeals Agreements No. 1-85 of November 20, 1985, No. 1-86 of April 1, 1986, No. 38-88 of December 19, 1988, No. 4-89 of March 16, 1989, No. 10-90 of July 5, 1990, No. 4-2000 of April 12, 2000, and No. 10-2005 of November 11, 2005.

ARTICLE 13: VALIDITY. This Agreement shall enter into force from its promulgation.

Given in the city of Panama, on the twenty-second (22) day of the month of October of two thousand nine (2009).

PUBLISH AND COMPLY.
THE PRESIDENT, THE SECRETARY,
Nicolás Ardito Barletta Jorge W. Altamirano-Duque

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MODIFICATION TO AGREEMENT NO. 009-2009

ARTICLE 1: The Banking Superintendence of Panama, in exercise of its legal powers and considering the need to update the regulatory framework for savings products, hereby modifies Article 8 of Agreement No. 009-2009 of October 22, 2009, "By which the provisions on Fixed-Term Deposits and Local Savings Deposits are compiled, adapted, and updated."

ARTICLE 2: Article 8 of Agreement No. 009-2009 is hereby replaced by the following text:

"ARTICLE 8: CHRISTMAS, SCHOOL, OR EDUCATIONAL SAVINGS DEPOSITS. Deposits maintained in the so-called 'Christmas Savings Accounts,' 'School Savings Accounts,' or 'Educational Savings Accounts' are considered 'Socio-Educational Deposits' whose purpose is the formation of the saving habit in the various sectors of the population. The maximum authorized remuneration for these deposits will consist of a sum in the form of interest payable in a single lump sum at the end of the year, at the time of withdrawal. Banks may establish specific conditions for these accounts, provided they do not violate the principles of this Agreement and are approved by the Superintendence."

ARTICLE 3: This Agreement shall enter into force upon its publication in the Official Gazette.

Given in the city of Panama, on the twenty-fourth (24) day of the month of October of two thousand eighteen (2018).

PUBLISH AND COMPLY.
THE PRESIDENT, THE SECRETARY,
Nicolás Ardito Barletta Jorge W. Altamirano-Duque