Key Notes:

  • Limited reorganization activities are now authorized relating to Balboa Bank & Trust and Balboa Securities, Corp., including payments on loans prior to May 5, 2016.
  • Separate licenses are required for closing or finalizing transactions or the exchange of assets.

On July 21, 2016, the U.S. Department of Treasury’s Office of Foreign Assets Control (OFAC) published two Kingpin Act general licenses related to Panama, General Licenses No. 5B and 6B, which focus on activities related to Balboa Bank & Trust and Balboa Securities, Corp. Previously, General Licenses No. 5A and 6A authorized certain limited activities and transactions relating to “the analysis of and recommendations regarding the financial viability of Balboa Bank & Trust” (pursuant to 5A) and “determining the inventory, assets, and liabilities as well as producing a final report” on Balboa Securities, Corp. (pursuant to 6A).

Now, General License No. 5B allows transactions and activities that are necessary for the reorganization of Balboa Bank & Trust by the Superintendency of Banking of Panama. In addition to prior authorizations under 5A, 5B authorizes:

Transactions and activities related to payments on loans and other obligations, in effect prior to May 5, 2016, by any non-designated Balboa Bank customers to Balboa Bank, provided such payments are remitted to the account established at Banco Nacional de Panama by the Superintendency.

While 5B is nearly identical to 5A in what it does not authorize, it adds “[a]ny transactions or activities to finalize or close, or exchange assets or any other thing of value related to the sale, disposition, or transfer to Balboa Bank” to the list of unauthorized activities that will require a separate license from OFAC.

General License No. 6B similarly focuses on reorganization activities, but those relating to Balboa Securities, Corp. It does not authorize additional transactions compared to the prior list, but like 5B, makes the identical additional note to unauthorized activity. Specifically, that “any transactions or activities to finalize, close, or exchange assets or any other thing of value related to the sale, disposition, or transfer to Balboa Securities” are unauthorized unless a separate license is obtained from OFAC.

The Kingpin Act (short for the Foreign Narcotics Kingpin Designation Act), passed in 1999, is intended to deny significant foreign narcotics traffickers, operatives and their related businesses access the U.S. financial system. It prohibits all trade and transactions between the traffickers and U.S. companies and individuals. Criminal violations of the Kingpin Act can result in up to 10 years in prison and fines for individuals, and fines up to $10 million for companies. Agents of any company in violation of the Act can also face criminal penalties of up to 30 years in prison or a $5 million fine. Civil penalties are also enforced – up to $1.075 million against either individuals or entities. This underscores the importance of complying with restrictions or obtaining the necessary licenses.