Published and draft legislation - Panama

Money laundering prevention

Resolution 005/2015, 26th May

The main regulations brought in under this resolution, adopted by the banking watchdog of the Republic of Panama on 26th May, supplementing Law 23 for the Prevention of Money Laundering, the Financing of Terrorism and the Financing of Proliferation of Weapons of Mass Destruction, adopted by the National Assembly of Panama on 27th April 2015, were already analysed in the third issue of Progreso.

The resolution includes various provisions regarding the due diligence that must be carried out on customers before granting credit; the mandatory identification of the ultimate beneficiary of the transaction; and the identification of Politically Exposed Persons (a new concept in Panamanian law). It sets forth details about how these entities’ compliance departments must work, and how the chief compliance officer must liaise with the Unidad de Análisis Financiero. Entities must maintain appropriate confidentiality and protection for employees who perform this task. Entities are obliged to keep their KYC Policy Manuals up to date at all times. Such manuals, by ensuring financial institutions know their customers and know the final beneficiary of transactions, are vital tools in managing regulatory compliance.

It will be a challenge for regulated financial and non- financial entities to adapt to the new legal framework. However, the legal certainty brought in by having controls based on industry-wide practices and consistent legal standards can only strengthen the financial system and the country's image.