Banking activities in and from Panama are mainly regulated by Law Decree No. 9 of 1998, as amended (the “Banking Law”).1 The Superintendency of Banks of Panama (hereinafter, the “Superintendency”) is responsible for supervising and regulating banks and/or such other entities that are engaged in the banking business within the country. The banking business is defined as the taking of resources from the public and/or from financial institutions to grant loans, make investments, or engage in such other transactions that the Superintendency may choose to regulate from time to time.2
As a corollary, only such persons who have obtained a valid banking license from the Superintendency may engage in the banking business in and/or from Panama. Furthermore, only duly licensed banks may use the word “Bank” or any such other word, image, etc. in their corporate or company name that may induce the general public to think suchperson is engaged in or dedicated to the banking business in and/or from Panama.
The Superintendency is authorized to issue only three types of banking licenses:
- General Banking License, granted to banks which shall be dedicated to any and/or all forms of the banking business in Panama and/or abroad;
- International Banking License, granted to banks which exclusively direct, from an office in Panama, transactions that are completed, consummated, or have effects abroad; and
- Representative Office License, granted to banks which are organized pursuant to a foreign legislation, that only intend to establish representative offices in Panama.
Regulation No. 3-2001 (Acuerdo No. 3-2001) issued by the Superintendency outlines the requirements for requesting each of the three types of banking licenses. Pertinent rules and regulations (including the Banking Law) are available on the Superintendency’s website (www.superbancos.gob.pa), in both English and Spanish. For reference purposes only, the following is a non-exhaustive sampling of the standard documentation requested of prospective applicants by the Superintendency:
- applicant’s Articles of Incorporation;
- curriculums and references (banking and personal) of its directors and officers;
- a minimum capital requirement of US$3 million for an International Banking License and of US$10 million for a General Banking License;
- general information of its shareholders;
- personal financial statements for its directors, officers, and principal shareholders;
- its audited consolidated financial statements and commercial/banking references;
- a feasibility study; and
- procedures, policy manuals, and other risk management documentation (e.g., credit, operational, liquidity, corporate governance, and other forms of risk).
All banks operating in Panama are subject to “know your customer” and other due diligence requirements. In addition, banks have a duty to report suspicious transactions and/or activities to the Financial Analysis Unit for the Prevention of Capital Laundering Crimes.
Once a banking license has been issued, a bank must begin operating within six (6) months of the date said license was granted (i.e., as of the date when the Superintendency issues a resolution authorizing a banking license).
Despite a global economic slowdown, Panama has continued to enjoy an unprecedented period of growth and prosperity. As evidenced by the number of international banks that have established operations in and/or from Panama, the Banking Law continues to provide global and domestic financial institutions with a sophisticated, consistent and transparent alternative to the increasingly complex regulatory frameworks offered by other leading financial centers.