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Severe sanctions for ignoring the Money Laundering Law

Companies that fail to comply with the provisions of Law 23 of April 27, 2015 against money laundering and other related laws are subject to severe administrative penalties that could reach up to one million balboas.

Some companies ignore that going against the provisions of Law 23 -or those set forth by the supervisory organisms of each economic, financial or professional activity for which no specific sanction is established- implies a penalty ranging from five thousand balboas (B /.5,000.00) to one million balboas (B /. 1,000, 000.00).

The amount of the sanction is set forth by the supervisory organizations of each activity or by request of the Financial Analysis Unit for the prevention of money laundering, according to the severity of the offense and the degree of recidivism.

Who are liable?

The Law was enacted to prevent money laundering, financing of terrorism and financing of the proliferation of prohibited weapons. Its level of compliance is especially important in Panama due to its service-centered economy.

The Law, enacted in order to facilitate Panama’s international cooperation, sets liabilities to financial subjects supervised by the Superintendency of Banks, the Securities Market, and Insurance and Reinsurance, as well as the Panamanian Autonomous Cooperative Institute.

Among the supervised financial sectors are banks, fiduciary companies, financial companies, leasing and factoring companies, payment method and electronic money issuers, issuers or processors of debit, credit and pre-paid cards.

Other regulated entities are brokerage firms, investment fund managers, pension and unemployment fund administrators, investment companies, investment advisors, insurance and reinsurance companies, cooperative credit and savings insurance brokers.

It also includes non-financial liable parties such as companies operating in the Colon Free Zone and the Panama-Pacific Special Economic Area, free zones, developers, real estate agents, construction companies, companies dedicated to buying and selling new and used cars, among others.

In addition, activities carried out by professionals such as lawyers, authorized public accountants and notaries are subject to review when – as part of their professional activity and on behalf of a client- carry out activities such as real estate purchase, money management, securities or other assets, administration of bank accounts, creation, operation or administration of legal persons or legal structures.

 What are the liabilities?

Among the main liabilities set forth by the Law, there is the designation of a person to serve as liaison with the Financial Analysis Unit (UAF) and the corresponding supervisory body.

In addition, anyone under supervision is required to:

  • Design policies and procedures that allow a reasonable knowledge of the client, identification of the final beneficiary and the understanding of the commercial or transactional nature of the client.
  • Design and establish controls for the application of preventive measures with a risk-based approach.
  • Establish policies for identifying employees.
  • Design a training program for employees so they are informed of the different types, cases and regulations of money laundering, financing of terrorism and financing of the proliferation of weapons of mass destruction.
  • Report Cash Transactions and Suspicious Transactions to the UAF within the period established by the regulations.
  • Proceed with a preventive freezing once the lists issued by the Security Council of the United Nations have been received.
  • Safeguard and update information applied to customers.

The supervisory and regulatory organizations have available for the liable parties the guidelines for the correct application of legal regulations.

It is important to bear in mind that administrative sanctions are applicable for the sole fact of omitting the information requested. Do not expose yourself or your company for omitting the law; Candanedo Correa is here to help you. Our law firm offers high quality services by providing deep and experienced legal advice.

We work under the principles of responsibility and professional ethics and the values ​​of enthusiasm, honesty and transparency. Let us help you, contact us.