Nearly four years after the country was revealed at the centre of the probably the biggest ever offshore scandal when 11.5 million documents were leaked from law firm Mossack Fonseca, Panama is edging towards establishing a free register of beneficial owners of legal entities.  

The Panamanian National Assembly has approved a bill that would require resident agents to file relevant information on all Panama-incorporated entities for which they are acting.

The beneficial ownership register will not be made public and while there are moderate fines for owners that fail to comply with the regulations, there are hefty fines for anyone who accesses the register without permission.

Lawyers required

The bill requires all Panama-incorporated entities to appoint a Panamanian lawyer or law firm as their resident agent. The agent would be responsible for filing and updating ownership information.

A beneficial owner is defined 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.

Non-resident details

In a clear effort to prevent a repeat of the 2016 Panama Papers scandal, the bill would apply to all Panama incorporated entities, regardless of whether beneficial owners are residents or not.

A beneficial owner is defined as anyone who holds at least 25 per cent of shares or voting rights while anyone with special provisions for civil entities or entities in administration and trusts will also be subject to the legislation.

Fines and penalties

Owners who do not submit the required information within a 30-day window will face an initial fine of between US$1,000 to US$5,000, plus an additional 10 per cent of the initial fine for each day the information is not submitted for a maximum of six months.

The beneficial ownership register would be confidential. Unauthorised persons who disclose information obtained from the register face a fine of US$200,000 while those who access the register without authorisation face a US$500,000 penalty.

Categories: Trade Based Financial crimes News