The Ultimate Beneficial Owners Registry: A Step Forward in Transparency and the Fight Against Money Laundering in Panama.

As part of the fight against money laundering and terrorist financing, Panama's Superintendencia de Sujetos No Financieros (SSNF, Superintendency of Non-Financial Entities) has implemented the Registro Único de Beneficiarios Finales (RUBF, Ultimate Beneficial Owners Registry). This registry is a key instrument for ensuring transparency in the operation of companies and financial entities, and for preventing the use of financial structures to conceal the true identity of the beneficiaries of financial transactions.

What is the Ultimate Beneficial Owners Registry (RUBF)?

Through Law 129 of 2020 (Official Digital Gazette No. 28985-C, of March 20, 2020), Panama created the Unique and Private System of Ultimate Beneficial Owners of Legal Entities. The main objective of this system is to facilitate access to information on the ultimate beneficial owners of legal entities represented by Resident Agents in Panama, in the fight against money laundering, terrorist financing and the proliferation of weapons of mass destruction.

The Law defines several key concepts to understand its scope. Among other things, it seeks to have lawyers who provide services as Resident Agents furnish information on the legal entities they represent.

Resident Agent

This is a lawyer holding a license issued by the Fourth Chamber of General Business of the Supreme Court of Justice of the Republic of Panama, or a law firm appointed by a legal entity incorporated or registered under the laws of the Republic of Panama. This agent or law firm has the responsibility of exercising the powers and complying with the obligations that Panamanian legislation requires of those who provide this service.

This information must be made available to the national authorities, which may request a periodic update or additional information at their discretion whenever the legal entity so requires:

Competent Authority

The competent authority, according to the description provided, includes several Panamanian government entities with jurisdiction over the prevention of money laundering, terrorist financing and financing of the proliferation of weapons of mass destruction and their predicate offenses. These entities are:

1. Superintendencia de Sujetos No Financieros (Superintendency of Non-Financial Entities): Supervises and regulates non-financial entities to prevent illicit activities such as money laundering.
2. Unidad de Análisis Financiero (Financial Analysis Unit): Specialized in the prevention of money laundering and terrorist financing, this unit analyzes and processes information related to possible illicit financial activities.
3. Ministerio Público (Procuraduría General de la Nación) (Public Prosecutor's Office / Attorney General's Office): Responsible for the investigation and prosecution of crimes, including those related to money laundering and terrorist financing.
4. Ministerio de Economía y Finanzas (Ministry of Economy and Finance), and the Dirección General de Ingresos (DGI, the General Directorate of Revenue) within it: These entities manage and oversee economic and fiscal matters, including the implementation of measures against money laundering.
5. Any other institution or agency of the National Government granted jurisdiction in these areas.

Ultimate Beneficial Owner

The Ultimate Beneficial Owner is the person about whom information is being requested, in which case different criteria exist to assess and respond to the competent authority as to who, in the judgment of the Resident Agent, is considered the true beneficiary of the activity of a legal entity.

The concept of "ultimate beneficial owner" refers to the natural person or persons who, ultimately, own or control an entity or have the ability to significantly influence the decisions of a company or transaction. This term is especially relevant in legal, financial and regulatory compliance contexts, such as the prevention of money laundering and terrorist financing. The ultimate beneficial owner may be someone who:

1. Holds a significant interest: This generally refers to someone who owns more than a certain percentage of a company's capital or voting rights, commonly 25% or more.
2. Controls the entity: Includes persons who can influence the company's key decisions, even if they do not hold a large equity stake. This may include directors, managers or even persons who have contractual arrangements giving them control over the entity.
3. Beneficiaries of transactions: Persons for whom a specific transaction is carried out, such as the transfer of funds or the award of a contract.

Transparency in the identification of these beneficiaries helps to avoid the anonymity that can facilitate money laundering and other forms of financial corruption.

Objectives of the Ultimate Beneficial Owners Registry

The main objective of the RUBF is to ensure that companies and financial entities operate transparently and are not used to conceal the true identity of the beneficiaries of financial transactions. This helps prevent money laundering, terrorist financing, and tax evasion. In addition, the RUBF also seeks to:

1. Improve international cooperation: By providing detailed information on ultimate beneficial owners, Panama can collaborate more effectively with other jurisdictions to combat money laundering and terrorist financing.
2. Increase confidence in the Panamanian economy: By being more transparent about who is behind companies and financial entities, the RUBF helps foster confidence in the Panamanian economy and attract legitimate investment.
3. Reduce complexity in the management of companies: By having a single, up-to-date registry of ultimate beneficial owners, companies and financial entities can manage their operations more efficiently and reduce the complexity of managing their financial structures.

Basic information required by the Ultimate Beneficial Owners Registry

To register their ultimate beneficial owners, companies and financial entities must provide detailed information on each beneficiary, including:

1. Name and address: The name and address of each beneficiary.
2. Nationality and identification number: The nationality and identification number (if any) of each beneficiary.
3. Interest in the company: The nature and percentage of interest that each beneficiary holds in the company or financial entity.
4. Ultimate beneficial owner: This must be determined in accordance with the criteria established in the Law.

Companies and financial entities must periodically update their registry of ultimate beneficial owners to ensure that the information is accurate and current.