We will try to present you with articles from time to time that we feel are of merit written by some of the best attorneys and law firms in Panama. Here is an article that is a good follow up to the previous post on bearer shares. It discusses the Client-Attoney relationship and was sent to me by the people at Mossack Fonceca , several of whom I know personally and they are truly a “stand out” group of lawyers with international relationships.
Mossack Fonseca is a well known firm doing business here in Panama as well as in 44 offices worldwide specializing in international trust and corporate services. This is a good read and clarifies a lot of the confusion regarding bearer share corporations and Client – Attorney relationships.
While I am often asked by banks and attorneys about personal and business relationships as part of the required “Know Your Client” disclosure, many foreign investors need to spend time looking into competent counsel before proceeding in business or investment. One must understand that Panama does not have a Bar Association, nor are attorneys here required to take a Bar Exam. It is therefore extremely important as I would say in the business, “KYA” Know Your Attorney. More on that later.
KYC for Attorneys-at-law: MYTHS AND REALITIES
Mrs. Sara Montenegro Perez
Associate | smontenegro@mossfon.com
Mossack Fonseca staff member since 1991. Education: Santa Maria La Antigua University, School of Law (LL.B., 1998); University of Houston (LL.M. International Law & Business, 2000); Latin University of Panama, Tax Management Certificate (2006).
As part of the efforts of Panama’s government to secure the deletion of our country from the so-called “gray list” of the Organization for Economic Cooperation and Development (OECD), in early 2010 our authorities expressed a strong interest in promoting an initiative to provide greater legal certainty regarding the ownership of bearer shares. This with the purpose of facilitating the negotiation of Agreements to avoid Double Taxation between the Republic of Panama and other countries of the world, in order to achieve the so wished deletion.
Fortunately, our professional association was successful in demonstrating to authorities that far from generating greater legal certainly, eliminating bearer shares would reduce competitiveness at a time when great uncertainly and mistrust prevail in relation to the future of offshore matters. This in addition to the fact that its immobilization or removal is not a mandatory requirement for the negotiation and adoption of such Agreements. In fact, countries appearing on the OECD’s “white list”, as is the case of Switzerland, have bearer shares, as such shares are mostly used for purposes other than tax related ones, i.e., personal security, estate planning and privacy, among many others.
Far from amending our current legislation regarding bearer shares, what we needed was to ensure that any attorneys acting as resident agents for Panamanian companies know and record their clients’ identities, in order to be able to collaborate in the international fight against organized crime. We attorneys have always had this obligation, but there was a need for legislation to update or redefine such obligation and establish direct penalties.