Money Remittance Licenses in Panama

About the Money Remittances Licenses in Panama

According to the World Bank estimates, money remittance worldwide has amounted to USD $573 billion in 2019. Commonly, an operation exclusive to banks and money remittance operators. With globalization and digitalization, web money remittance started to arise over a decade ago, and, more recently, mobile money remittance and electronic money processors and wallets, being the most relevant in European jurisdictions.

In Panama, Money Remittance Operators (MRO) activities are regulated by the Directorate of Financial Companies of the Ministry of Commerce and Industries as determined by Law 48 of June 23rd of 2003 and Resolution 328 of August 9th of 2004. Therefore, modern money remittance activities such as Electronic Money Institutions (EMI), Payment Institutions (PI) and Payment Service Providers (PSP) licenses are not yet regulated in the country, neither expressly prohibited.

Below, the basic requirements and regulations to apply for and obtain a Panamanian Money Remittance Operator (MRO) license, which we recommend for local and international money remittance, including any liquid assets such as non-regulated digital currency, via physical or digital platforms.

Requirements

Any company that wishes to establish a MRO in the Republic of Panamá has to provide the following documents:

  1. Copy of the public deed of protocolization of the social pact and of the reforms, if any, duly registered in the Public Registry.
  2. Certificate of the Public Registry issued within thirty days prior to the date of the presentation of the application, stating the validity and registration data of the company, its share capital and the name of its directors, dignitaries, and legal representative.
  3. Certification issued by an authorized public accountant stating that the minimum initial paid-in capital stock is fifty thousand balboas (B/.50,000.00). The corresponding shares must be fully subscribed, paid and released.
  4. Certified or cashier’s check issued to the Ministry of Commerce and Industries for the issuance fee for the sum of one thousand balboas (B/.1,000.00).
  5. Authenticated photocopy of the personal identity card of its directors, dignitaries, and Legal representative.
  6. Description of the company’s economic and financial objectives and projections.

Additionally, there is an annual rate for inspection services of five hundred balboas (B/.500.00). All natural or legal persons who wish to operate a MRO must establish and maintain in favor of the National Treasury a fee of fifty thousand balboas (B/.50,000.00), to respond for the amount of the losses resulting from negligent or willful action with the funds they manage.

Once the application is submitted, the Ministry will issue a Resolution granting or denying it within a period of 30 business days.

Know your Client

The MRO has the obligation to identify their clients in regarding:

  1. Full name of the natural or legal person, personal identity card, passport, and RUC.
  2. Residential and commercial location.
  3. Home and office phone numbers, PO box and email.
  4. Delivery of declaration reports to the Directorate of Financial Companies, for the Financial Analysis Unit

As per local KYC/AML laws, strict controls and reports are required to be followed with the local regulators.

The UAF should also be informed in case of:

  1. All transfers sent and received in cash, greater than B /.10,000.00, made by the same client. Transfers sent and received in cash, carried out successively, by the same client, within the same working week, even though they are transactions lower than B/.10,000.00 individually considered, collectively they can add up to a total of B/.10,000.00 or more.
  2. Any transfer sent and received in cash greater than B/.10,000.00 made by the company to the same client. Transfers sent and received in cash, carried out successively and made by the company to the same client, within the same working week, even though they are transactions lower than B/.10,000.00 individually considered, totaling B/.10,000.00 or more.

Infractions

Due to the inherent risks of the activity, the Law provides a list of behaviors that can be subject to infractions:

  1. Careless handling of your records, files and other documents, when this prevents or hinders the inspection of your operations.
  2. Failure to comply with the instructions given by the Directorate of Financial Companies of the Ministry of Commerce and Industries.
  3. Presentation of information that does not fit the reality of the company.
  4. False statements, duly verified to the Directorate of Financial Companies of the Ministry of Commerce and Industries, by the directors, officers, representatives, managers and other officials, about the operations or businesses of the company.
  5. Misrepresenting information.
  6. Ignorance of the place of origin and destination of the funds remitted.
  7. Carrying out any other act or conduct in violation of the Law and Common Values.

These behaviors will be addressed in the following manner:

  1. Written warning in case of the first offense.
  2. A fine of one thousand balboas (B/.1,000.00) to fifty thousand balboas (B/.50,000.00) if the offense is repetitive.
  3. Cancellation of the MRO License in the event that they commit the same offense for the third time.

Send us a note to info@kraemerlaw.com and our team at Kraemer & Kraemer will be glad to assist you with the process.

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