Buying your Real Estate in Panama

Acquiring Real Estate in Panama

By Alvaro Aguilar,* 2001

- Ownership and Holding of Properties by Foreigners

Panama is one of several Latin American countries that welcome foreign investment into real estate, by allowing full ownership of property by citizens of any country. Added to other advantages such as use of the U.S. dollar as legal tender, a legal system for accurate registration of property titles and a cadre of U.S.-trained engineers and architects, Panama City has become the destination of investments into real estate as seen in its urban skyline. Rural properties are also of interest for foreigners, since the American Association of Retired Persons named Boquete in Western Panama as the 4th best foreign location for living by U.S. retirees.

The Panama Constitution guarantees the right to ownership of property, as well as equality between nationals and foreign residents before the law. However, special restrictions can be enacted for immigration and health purposes. Ownership of property by foreigners is not allowed in the areas up to 10 km away from the borders, which are covered by inaccesible rainforest thereby leaving the best lands open to foreign investment. The seas, lakes, rivers and the Panama Canal waterway are non-transferrable public domain, while owners of beaches and islands must grant a public right-of-way to the sea.

The Constitution forbids confiscation of properties as a penalty, although property acquired under money laundering schemes is subject to forfeiture. Expropiation is allowed for emergency public interest purposes, but only after a hearing with the owner and payment by the Government of fair, adequate and prompt compensation under international standards. Bilateral investment treaties with the U.S., France, United Kingdom and most European countries further ensure protection of investments from citizens of said countries.

Possesion rights may be requested from the Government over public lands available for agricultural purposes. However, possession rights are not clearly registered and do not grant as many rights as property rights.

Leases on property are also available. A non-interest bearing, refundable deposit with the Ministry of Housing is required as well as registration of the contract with said Ministry. Lease agreements with terms above 3 years must be registered at the Public Registry.

- How is property transferred

Unlike the U.S., where each county has court clerks for registration of title deeds, Panama has a single, centralized, computerized, national Public Registry where ownership and encumbrances of Property, Condominiums (called Horizontal Property), Airplanes and Ships are registered. Property-related transactions are not valid before the public until recorded at the Public Registry. The centralized system allows a title search at the Public Registry to reveal in a single day the measurements, coordinates, mortgages, encumbrances, judicial actions, restrictions, rights-of-way of each property, which is assigned a "finca" number for identification purposes.

The Civil Law requires that the buyer and seller appear in person before a Notary Public to close the sale. However, parties located abroad can grant a power of attorney before their local Notary Public and Panama Consul to appoint an attorney-in-fact to conduct said formality in Panama. The Notary Public drafts a Public Deed, a true copy of which is registered at the Public Registry in 1 or 2 weeks. Transfers of property are subject to a registration duty of US$2.50 for every US$1,000 of the transaction price (usually paid by the buyer), as well as a Capital Gains Tax of 2n the assesed value of the property (levied on the seller) increased at a 5r 10nnual rate from the previous sale price.

Properties that are not being used actively are subject to adverse possesion claims by residents without title that live there for 15 continuous years without opposition from the owner. This is not a problem in real estate markets of Panama City and other urban areas, but is a potential source of disputes in large, remote, rural properties. A physical inspection and a search of the plat at the Property Surveyor's Office ("Catastro") is a must before purchasing such rural properties. Local insurers do not provide title insurance but some U.S. buyers have sought coverage from specialized insurers abroad.

Condominiums and gated communities may be subject to a special Horizontal Property regime. This regime allows individual housing or office units to be separately sold, while their current and future owners remain subject to use restrictions in the By-laws of the complex. The permanent nature of these privately-enacted restrictions make this regime an efficient tool for developers interested in preserving the special nature of large residential and commercial developments.

- Financing of real estate

With almost a hundred general-license banks, Panama has no shortage of financial institutions willing to lend credit-worthy buyers of urban properties, subject to a mortgage on the land or a pledge of funds as collateral. The use of the U.S. dollar as currency and the lack of exchange restrictions allow banks to grant 25-year mortgages at rates between 7 and 11Àwhich are among the most favorable lending conditions in Latin America. After their purchase, urban properties with high resale value can serve as collateral to finance an ongoing business activity of the property owner.

In practice, a prospective buyer requests a letter from the bank financing the purchase, stating that payment will be made once the transfer of title and the mortgage are simultaneously registered at the Public Registry. This serves as an escrow service which provides an additional guarantee for both the bank and the buyer. Valid mortgages must be granted before a Notary Public and recorded at the Public Registry. Applicable registration duties are of US$0.25 for every US$100 of the mortgage amount.

- Tax incentives

Real estate with an appraised value above US$30,000 is subject to yearly property taxes between 1.4nd 2.1ænbsp; However, the Panama Government provides incentives to the construction of buildings and ownership of residences, which encourage investments by locals interested in a secure tax shelter. The fact that construction provides needed employment to unskilled labor and addresses a chronic housing shortage, has prompted the Government to provide the following tax incentives:
1) 20-year exemption of property tax on the value of buildings and improvements, (in force until 2006, after which the maximum will be of 15 years.)
2) Exemption of Capital Gains Tax on the first sale of residences,
3) Banks granting residential mortgages for new residences below US$62,500 receive a negotiable tax credit equivalent to interest reduced in 2 to 4 points below the prevailing rate,
4) Buyers of residences can deduct from their taxable income the amounts paid as interest for mortgages without the tax credits listed in 3),
5) Developers can deduct up to $1,000 on taxable income from the sale of low-income housing with a price of less than US$14,000,
6) Developers can declare as non-taxable income the profits from sale of real estate that are re-invested in the construction of new residences, as long as the value of the new building is below US$62,500 and equivalent to four times the amount of the profits realized.

Foreign investors should seek the advice of competent tax counsel in their country of residence to determine their applicable fiscal compliance requirements and liabilities.

- Special zones of interest

The XVIII- and XIX- century buildings of the Old Panama City (called "Casco Viejo") represent a historical district of interest, for which special incentives have been enacted. Only residential, commercial, tourist and cultural projects that preserve the architecture of the district are allowed, after being reviewed by the a government board. In addition to normal tax incentives, banks granting mortgages Casco Viejo projects receive a negotiable tax credit equivalent to interest reduced in 2 to 4 points below the prevailing rate.

The largest real estate transaction in the Americas is the ongoing sale or lease of 300,000 acres of land and buildings of the former Panama Canal Zone turned over by the U.S. to Panama in 1999. The Autoridad de la Región Interoceánica (ARI) a government entity in charge of attracting investors interested in converting these facilities into economically-viable businesses. Business opportunities are grouped into:
1) Maritime activities: container ports, ship chandling and repair, salvage operations),
2) Industrial parks: maquiladoras, information technology and other environmentally-sound industries,
3) Tourism: retirement communities, hotels and eco-tourism, and
4) Education: higher education and research.

Parcels available for commercial or residential development are listed in the local media and the ARI Internet website. Also available for sale are 3,000 housing units already built in suburban areas.

Non-residential parcels or pre-existing facilities are offered by ARI for lease or concession for a renewable period of up to 25 years. Private investors can also submit project proposals with the respective feasibility and environmental studies to ARI, which if approved will then be open to public offering. Said contracts are granted under a public bid procedure. In the case of mega-projects where only a few qualified operators exist worldwide, an exemption from the public bid procedure may be exceptionally granted that allows direct contracting. Housing units are offered for sale by ARI and sold to the offeror paying the highest price above the base price listed in the media.

Additional incentives for real estate developers are described in the Export Processing Zones, Tourism and Reforestation sections.

For publication in Amcham Panama "ABC of Investing in Panama 2001-2002"

Pictures from info-panama used for non-commercial purposes

Getting your resident visa in Panama

RESIDENCE REQUIREMENTS IN PANAMA

Permanent Residency ("I-" visas) is granted to foreigners:

1) Investing US$40,000 in a Panama non-retail business and effectively employing 3 Panamanians,

2) Holding a US$200,000 CD time deposit (plazo fijo) account in a Panama bank for at least 2 years,

3) Owning a fully-paid house for US$80,000, a timed deposit for at least 2 years, for at least US$120,000 and "provide evidence of the source and amount of income used to cover his/her general expenses",

4) Married to a Panamanian spouse, subject to an interview to verify if it is a bona fide marriage.

Residents earning income from Panama sources (except bank accounts in Panama or securities from Panama public companies) must pay Panama income taxes on said income.

"I-" visa holders can apply also for a permanent residence "cedula" card.

Pensioner Visas are granted to foreigners:

1) Holding a US$125,000 CD in the Panama National Bank yielding US$750.00 monthly for 5 years as Retiree ("Rentista"),

2) Earning a pension from a social security or any foreign government pension authority above US$500.00 monthly as Pensioner ("Pensionado").

Other residence categories exist that are applicable to foreigners sponsored by local employers or educational institutions as part of a foreign worker quota of no more than 10% per company.

In addition to specific documents depending on the type of visa requested, all applicants (except for Married to a Panamanian spouse Visa and Pensioners) must provide, at least:

1) Police Record or Certificate of Disposition from the Town Court of the applicant, authenticated by Panama Consul or with Apostille from the Department of State of origin (except for Pensioners),

2) Medical exam by a Panamanian doctor

Information is valid as to 2/6/2005 and is subject to changes at the discretion of the Directorate of Immigration in Panama City.

Use of Panama Entities Increases Despite Changes to Tax Rules

Contributed by Lombardi Aguilar Group

April 15 2005


Introduction

Despite increases in maintenance costs, incorporations in Panama have increased by 30%. According to official statistics, in the first 11 months of 2004 23,138 corporations were formed, compared with 17,755 in 2003. This represents an increase of 30.3% even without the whole of 2004 being considered.

Panamanian corporations provide the following advantages:

• Fast incorporation procedures are available (subject to legal formalities);
• No paid-in capital is required;
• Shares may be issued in bearer form, or the charter may be drafted to allow only registered shares;
• Shares may be issued in US dollars or any other currency;
• The shareholders, directors and officers may be of any nationality and may be residents of any country;
• Directors, officers and/or shareholders may be either corporate entities or individuals; and
• Shareholders and/or directors may hold their meetings in any country and may attend such meetings by proxy, telephone or other means of communication.

With regard to private interest foundations, 2,734 foundations were formed up to November 2004, as opposed to 1,902 in 2003 - an increase of 40%. Panamanian private foundations are separate entities that hold assets for later distributions to beneficiaries in a similar way to trustees holding assets in trust.

All Panamanian entities which have no income from operations in Panama are exempt from Panamanian income and withholding taxes.

New Measures for Annual Corporate Tax

The Panamanian legislature has approved Law 6/2005, which enacts changes to the Tax Code. After much opposition from the Panama Bar Association and other legal profession groups to a proposed 40% increase, the annual tax for Panama private foundations and corporations was set at the current rate of $250 for the first year. After the first year the flat tax will increase to $300 per year, which is equal to the rate currently in force in the British Virgin Islands, the Turks & Caicos Islands and Vanuatu.

The first annual tax of $250 is now payable in advance upon incorporation instead of the normal due date. Corporations and foundations formed in the first half of the year have until July 15 to pay their tax; those formed in the second half have until January 15 of the following year. Late payments are penalized with a surcharge of $50.

Entities existing at the time of enactment of Law 6/2005 will pay the $300 tax when it falls due after January 1 2006.

Penalties for Non-payment

Lack of payment will result in the non-registration of any minutes or documents related to the corporation or foundation. After two years without payment, a fine of $300 is levied and the entity is registered in the Public Register as owing taxes. Once the outstanding taxes and fines are paid, the entity will be returned to its good standing.

Lack of payment for 10 consecutive years will result in the corporation or foundation being permanently deleted from the Public Registry. As a consequence, the entity will be held as dissolved for all legal purposes.

Annual tax payments must be made through the resident agent of the corporation or foundation. If a resident agent delays forwarding annual taxes to the government, it will be fined between five and 10 times the unpaid amount.

Relief from Government Errors

As a relief from administrative delays resulting from errors in the receipt of annual taxes by the government, payments appearing in official receipts dated before December 31 2004 are considered to have been paid even if the funds did not enter the Treasury due to causes unrelated to the taxpayer, its legal representative or resident agent. Surcharges for late payment are not applicable when official receipts kept by the taxpayer show that payment was made but the government entered the data incorrectly.

Income Tax Rules Applicable to Panama-Source Income

Article 684 of the Tax Code is the cornerstone of the Panamanian taxation system. It provides that income earned by Panamanian corporations or individuals from activities taking place outside Panama is not subject to Panamanian taxation. This provision is intended to attract foreign investment by multinationals, which would then generate jobs in handling of merchandise outside Panama.

However, Law 6/2005 introduces exceptions in order to prevent abuse of these facilities by Panamanian individuals or expatriates based outside Panama. Under a new paragraph, income from professions both in and outside Panama will be considered to be earned from Panamanian sources if the taxpayer is in Panama for at least 70% of the working days in the calendar year.

If the services provided are not economically related to the taxable activities of the individual, the income will be considered as foreign-source income. Therefore, it is not taxable. As a concession to individuals acting on behalf of overseas subsidiaries of Panama-based insurance and banking companies, individuals who occasionally serve as consultants or deliver presentations or conferences abroad are exempt from the 70% rule, even when they stay outside Panama for less than 30% of the working year.

Income received by individuals or entities domiciled outside Panama will be considered as Panama-source income and taxable if it is earned from activities that benefit taxpayers in Panama. These activities include royalties from copyright, patents, software, know-how and other commercial secrets, as well as any commissions from the sale of services in Panama. By the term 'benefit' the provision specifically refers to taxpayers in Panama who deduct the licence as an expense for the production of Panama-source income. Fifty percent of the gross payments made to beneficiaries abroad will be subject to withholding by the payor in Panama at the regular tax rates.

An additional provision further clarifies that taxpayers who, by reason of their international business activities, carry out operations outside of the national territory which are required for the generation of income reported as taxable in Panama will not be subject to the withholding on payments for goods and services financed, agreed or performed entirely outside of Panama, which will not be considered as taxable income.

Deductible Expenses

Expenses incurred for the production of local-source income are deductible. The 2005 tax reform modified several deductions as follows:

• Deductibility of donations to government-approved charities is limited to a maximum of 1% of the taxable income of donor entities, or up to $50,000 of donor individuals;
• Company earnings distributed among employees are deductible by the company, with a limit of one month's salary for employees who own more than 15% of the company shares and their relatives; and
  
• Thirty percent of the amount invested in agricultural and ranching activities is no longer deductible.

Alternative Minimum Tax

In order to levy tax from taxpayers experiencing recurrent losses, the 2005 tax reform requires these taxpayers to pay whichever is the greater of the tax under the normal rates and an alternative minimum tax (AMT) rate. Initial fears of a global taxation system vanished when the tax reform was enacted with an AMT solely on 4.67% of Panama-source income.

Entities will be taxed at 30% of the greater of the net taxable income under normal tax rules (Panama-source income minus deductible expenses) and the net taxable income minus 95.33% of said income.

Companies selling goods subject to the gas tax and the selective consumption tax (similar to a luxury tax) may also deduct those taxes from the income subject to AMT. Small enterprises with less than $150,000 in annual sales are exempt from AMT.

If, after payment of the income tax, the company makes a loss or has an effective tax rate above 30%, it may request in writing an exemption from the AMT. However, the tax authority is not compelled to grant this exemption and may audit the taxpayer making the request.

In order to validate the tax returns, the taxpayer must submit certified financial statements under the International Financial Reporting Standards. Taxpayers may also request an exemption from this requirement - this exemption is meant for small enterprises.

Professional partnerships are also given a third option of having the partners pay a 6% tax on the taxable earnings of the partnership under a flow-through taxation method.

Income tax rates for individuals are subject to a lower number of tax brackets and individuals with a gross annual income above $60,000 will have to pay the greater of the normal tax rate or a 6% AMT on Panama-source gross income. However, individuals holding business licences because of their mercantile activity are subject to AMT under the corporate tax rates.

Rules for Special Industries

Foreign distributors of movies for radio and television broadcast through any means have their 10% tax rate automatically reduced to 6%.

Commissions and fees received from warehousing, renting of warehouses, repackaging, invoicing and other activities carried out in the free trade zones are considered as taxable, unless they are carried out for merchandise which is re-exported outside Panama.

Gains from the sale of shares from an initial public offering of a publicly held corporation are no longer exempt from taxation. Only gains from the sale of shares, bonds and other securities of publicly held corporations conducted through a Panama stock exchange, or from a merger or reorganization, continue to be exempt from taxation. This incentive makes the use of Panamanian special purpose vehicles an attractive way of raising funds for Latin American operating companies.

Payments of interest, commissions and other charges from loans or financing, the funds from which are used outside Panama, continue to be exempt from Panamanian taxation. However, when such funds are used in Panama, payments to foreign creditors are subject to withholding of the normal tax rate (30% for corporate creditors) on half of the gross payments made.

The benefit of exempting charterers from tax on leasing of international services ships has been extended to leasing of aircraft.

Several incentives are reduced in reforestation, tourism and construction, as well as credits for improvements in industries and infrastructure. Taxpayers hoping to use tax credits must report them before August 3 2005.

Property Tax

Properties with a value below $30,000 are exempt from property tax. Additional benefits were enacted for:

• parcels with assessed value below $150,000 used for agriculture, which are tax exempt;
• private schools and hospitals, which can credit to their property tax liability the amounts spent in teaching or caring for indigent users; and
• landowners submitting updated assessments of their property values, who may be granted a 40% to 50% discount in their tax liability for five years (at the discretion of the tax authority).

The 20-year property tax exemption is maintained for improvements with building permits granted before September 1 2005. Other improvements will remain with five to 15-year property tax holidays.

Taxes Abolished

Several taxes, the collection of which became an administrative burden, were abolished. These are:

• 12% tax on long-distance calls, intended to promote the establishment of call centres in Panama;
• $1.50 per hectare tax on unused lands above 500 hectares;
• tax on sugar production;
• tax on theatre tickets; and
• tax of up to $25,000 on assets of insurers with local risks.

For further information on this topic please contact Alvaro Aguilar at Lombardi Aguilar Group by telephone (+507 340 6447) or by fax (+507 340 6446) or by email (aaguilar @nysbar.com). further information on this topic.

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New World Trends to Enforce Access to Banking Information with Tax Purposes

7/12/2000
COMENTS ON THE NEW WORLD TRENDS TO ENFORCE ACCESS TO BANKING INFORMATION WITH TAX PURPOSES.

Introduction

Free access to banking information is a major issue in those countries like Panama, were the legal structure is constructed on the basis of confidentiality

Panama has always developed it legal framework based on the attraction of foreign investments. It “anonymous society” corporation law, it maritime flag registry law, it baking law, it captive insurance law, for example, as well as it concept of territorial source of income for taxation purposes, are characterized by it flexibility, allowing the growing of a Panamanian services and financial industry, which contributes with more than 70% of the total Gross Domestic Product (GDP) of the country.

As countries compete with each other and at the same time become more dependent from each other, total independence result impossible. Domestic problems become international problems and many countries share the same issues. To address those issues, countries enact rules to prevent those practices considered to be dangerous or against the new global world order (e.g. drug traffic, arms traffic, money laundering activities, etc.).

As part of these new rulings, financial institutions has always been on the spot for constant regulation and vigilance, in order to avoid it use to legitimize the money produced by these practices.

Since “off-shore” or “tax heaven jurisdictions” are services oriented, they have enacted and developed their legal frameworks on the base of confidentiality, therefore, are more likely to be used by individuals to legitimize the funds obtained by these practices.

Taking this in mind and due to international pressure, since the mid 80´s and more important in the 90´s, off-shore jurisdictions had implemented strong control measures designed to avoid their use and abuse by criminals who utilize these centers as a refuge to their crimes.

Panama, as well as other “off-shore” centers, had implemented through the years; new rules to avoid being used to money launder the funds obtained by these illegal activities.

In the case of Panama, we had not only enacted legislation, but at the same time: we had created a high level presidential commission against money laundering; we had created the Financial Operations Analysis Unit (UAF), as a branch of the Presidency; we had become a member of the “Edmont Group” with it head office in Canada; we had implemented “Know Your Client” (KYC) policies and rules; and had participated in the regional organization of the Financial Action Task Force, the Caribbean Financial Action Task Force.

In spite of these efforts, a new concern, regarding a related issue has been raised.

The “Improving Access to Bank Information for Tax Purposes” report.

Recently, developed countries (OECD members), disturbed about the off-shore shopping of their citizens and the economic effect of such practices, are starting to consider tax evasion as a money laundering activity, although, as in Panama, tax evasion is not considered to be a crime as in many countries around the world.

This change, is the direct consequence of a March 2000, OECD Committee on Fiscal Affairs report titled “Improving Access to Bank Information for Tax Purposes”.

The report was aimed to explore ways to improve international co-operation with respect to the exchange of information in the possession of banks and other financial institutions for tax purposes in OECD countries. However, it conclusions changed radically the way OECD members are treating and will treat countries that has banking secrecy rules or laws, mostly “tax heavens jurisdictions” as we explained before.

Basically the report states that “banking secrecy” is the biggest problem in combating international financial crimes, mainly tax evasion.

In this regard, the report distinguished between “legitimate banking confidentiality” and “excessive secrecy” that obstructs international investigations, defined to be “secrecy provisions related to financial activities and professions, notably banking secrecy, which can be invoked against, but not lifted by competent authorities in the context of inquiries concerning money laundering”.

The report also pointed out the need of an international agreement for the exchange of information and the need of an harmonization of law structures around the world, were tax evasion becomes an international crime as drug traffic or money laundering itself.

Most important, the report make special mention to “tax heavens” jurisdiction were “...financial institutions do not have to reveal information regarding it clients, based on local secrecy laws”, implying and recommending sanction to those countries.

The Financial Action Task Force on Money Laundering “Black List”.

Due to this report, on June 26, 2000, the Financial Action Task Force on Money Laundering (FATF) of the OECD issued a “Black List” of countries considered non-cooperative jurisdictions.

The list divided three categories of countries, depending on the degree of non-cooperation of each jurisdiction.

The criteria used in the FATF classification is based on the review of the country existence of: (i) secrecy laws; (ii) inadequate rules for licensing and creation of financial institutions; (iii) inadequate customer identification requirements; (iv) anonymous accounts; (v) inadequate commercial law requirements for the registration of business and legal entities; (vi) identification of the beneficial owner of legal and business entities and (vii) the refusal to cooperate in cases involving tax evasion.

Panama has been included in that Black List, as a Class 3 county, it means a country that does not cooperate with tax authorities of OECD countries.

Consequences for Panama.

The effect for Panama of been included in this list, is that the OECD countries may impose sanctions to the listed countries, including the prohibition for their financial institutions to perform any kind of business with any institution located in a listed country.

Panama has been traditionally an off-shore center, who has responded to international movements adopted in the pass for the prevention and use of it financial institutions for money laundering activities linked to drug traffic, as we have seen before.

Panama has never addressed the issue of considering tax evasion as a crime and including it as money laundering activity, however, the new currents seems to take us inevitably to that scenario.

The current government, through the High Level Presidential Commission Against Money Laundering, has the primary responsibility of analyzing the international events that are affecting the condition of Panama as a place for international business, and in particular, the initiatives of the OECD, which can cause a negative impact in our capability of attracting foreign investment.

We consider that some of the immediate actions that our country should undertake are:

1. To disclose to international organisms, such as OECD, FATF, US IRS, and other, all the measures that Panama has putted in execution to avoid that our financial and bank center is used for activities related to drug traffic and money laundry;
2. To identify our weakness and propose the correctives that should be imposed in order to clean our international image;
3. To develop the corresponding legislation, for it wide domestic discussion and consequent approval;
4. To get ready for the discussion of double taxation treaties in which our concept of territorial source of income is respected;
5. To prepare a negotiation team that obtains the widest terms in the negotiations with the industrialized countries that have included Panama in the different “black lists”; and
6. To observe and monitor the position of other countries that are facing the same problem as Panama, in order to, eventually, make international lobby to achieve the relaxation of the position of the international organizations with regard to Panama.

1 Main laws and rulings approved by Panama against money laundering and drug traffic:

Law 64 of February 4, 1963. (1961 Drug Convention).
Cabinet Decree No.54 of March 2, 1972. (1971 Convention on Psychotropic Substances).
Law 20, July 22, 1991. (Bilateral Assistance Treaty between Panama and the United States of America in Criminal Matters.)
Law 20 of December 7, 1993. (United Nations Convention against the Traffic of Drugs and Psychotropic Substances – The Vienna Convention)
Law 11 of July 7, 1994. (Treaty for Bilateral Legal Assistance (TALM) Regarding Drug Traffic between Panama and the United Kingdom of Great Britain and North Ireland)
Law 30 of June 28, 1995. (Article of Agreement of the Permanent Central American Commission against the production, traffic, consumption and illicit use of narcotics and psychotropic substances).
Law 39 of July 13, 1995. (TALM in Penal Themes among Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and Panama).
Law 40 of July 13, 1995. (Agreement between Panama and Colombia to impede the deviation of precursory chemical and essential substances).
Law 42 of July 14, 1995. (Agreement on Legal Attendance and Mutual Judicial Cooperation between Panama and Colombia).
Cabinet Decree No.41 of February 13, 1990. (Prevention and sanction of banking operations with funds coming from illicit activities related with drugs).
- Agreements 4-90 of March 19, 1990 and 1-91 of January 15, 1991 of the National Bank Commission. (They require knowledge of the client (KYC rules) and declaration of operations superior to $US.10, 000 in cash or it equivalent).
- Agreement No. 2-97 of 27 February 1997 of the National Bank Commission modifies Agreements Nos. 5-90 and 1-91. (Declaration of successive operations in cash and it equivalent).
Cabinet Decree No.10 of March 9, 1994. (It requires declaration of travelers who carry money in cash).
- Executive Decree No.16 of March 9, 1994 (fixed in $US.10, 000.00 or more the minimal quantity to declare)
- Resolution No.704-04-624 of November 5, 1997 of the Ministry of Finance and Treasure. (By which a new “Sworn Declaration of Travelers” forms is approved).
Executive Decree No.468 of September 19 of 1994. (Regarding the responsibility of resident agents of anonymous societies “sociedades anónimas”).
Executive Decree No.125 of March 27 of 1995. Which creates a high-level presidential commission against money laundry from drug traffic as a permanent consultative council).
Executive Decree No.136 of June 9 of 1995. Which creates the Unit of Financial Analysis (UAF) for the prevention of money laundry from drug traffic).
Resolution No.1446 of September 13, 1991 and No.94 of April 12, 1995 of the Ministry of Government and Justice. (Bu which the National Direction for the Execution of the TALM´s is organized).

Resolution J.D. No.2/95 of March 10, 1995 of the Cooperative Autonomous Panamanian Institute. (Requiring declaration of operations superior to US$5,000 for cooperative deposits or transactions.) (Res. J.D. No. 6/95 of July 28, 1995 modifies the Res. J.D. 2/95 by increasing the amount to US$.10,000).
Agreement No.17 of September 11, 1984 of the Panamanian Banking Association, modified in 1985 and 1986. (Code of Conduct for banking operations).
Agreement No.28 of March 10, 1993 of the Panamanian Banking Association. (Rules and procedures for the endorsements of checks).
Agreement No.29 of the Panamanian Banking Association. 1993. (Rules and procedures for the use of foreign negotiable instruments and it transfer).
Code of Conduct (January 1, 1995). Colon Free Zone Users Association (AU).
Agreement No.33 of June 28, 1995 of the Panamanian Banking Association. (Rules and procedures in the handling of transfers of funds, in order to prevent it illegal use).
Agreement No.34 of September 27, 1995 of the Panamanian Banking Association. (Rules to prevent the illegal use of the Panamanian banking services).
Law No.46 of November 17, 1995. (By which the Cabinet Decree No.41 of February 13, of 1990 is modified – Rules for the prevention and sanction of operations performed by banks and other financial institutions, with funds from illicit activities related with drugs - Communication of Suspicious Operations).
2 Organization for Economic Cooperation and Development.

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