PANAMA Law and Practice Contributed by: Kharla Aizpurua O., Roberto Vidal and Miguel Arias, Morgan & Morgan
Banking The main legal source for this vertical is Execu - tive Decree 52 of 2008 (the Single Text of the Banking Law (the “Banking Law” )), and the sec - tor is supervised and regulated by the Superin - tendency of Banks (the “SBP” ). The SBP over - sees banks, trust companies, and exchange houses; thus, any business model that carries out activities within the referred scope will be subject to either registration or licensing require - ments from the SBP. Securities The main legal source for this vertical is Decree Law 1 of 1999 on the Securities Market in the Republic of Panama and the Superintendence of the Securities Market (the “Securities Law” ). The sector is supervised and regulated by the Super - intendency of the Securities Market (the “SMV” ), which oversees brokerage houses, investment advisers, stock exchanges, fund administra - tors, clearing houses, and credit rating agencies, among others. Thus, any business model that carries out activities within the referred scope will be subject to licensing requirements from the SMV. Additionally, the SMV supervises issu - ers and the registration of public offerings of securities. Financial Companies This vertical, which encompasses lending com - panies, pawn shops, money remittance hous - es, and movable goods leasing companies, has various legal sources. It is supervised and regulated by the Directorate of Financial Com - panies attached to the Ministry of Commerce and Industry ( “MICI” ). Lending companies are entities that engage in lending activities without deposit-taking activities.
As stated above, depending on the scope of the business model, a company may be subject to one or more of the regulations detailed above. 2.3 Compensation Models Companies normally charge their customers directly, having clearly communicated pricing and payment terms. However, depending on the specific business model and the regulatory vertical in which the company operates, there may be additional standards or specific informa - tion that must be included in the disclosures. For example: • whenever a brokerage house has a conflict of interest, a separate and independent disclo - sure must be made to the customer; and • lending companies must include specific information (interest, term, number of pay - ments, etc) in their contracts. In general, local law requires companies to pro - vide full disclosure to their clients regarding the compensation models of their business. Further - more, whenever a specific service is devoid of a legal framework in Panama, it is advisable that end customers be informed that all transactions carried out are at their own risk and are not regu - lated by the SMV or SBP for local purposes. 2.4 Variations Between the Regulation of Fintech and Legacy Players Currently, the regulations applicable to fintech industry participants do not differ from those applicable to legacy players. This is due to Panama’s regulatory framework’s lack of for - mal recognition of newer business models and more innovative enterprises. In other words, the regulatory landscape has not caught up with the emergence of fintech. Local laws and regulations have been made and implemented around tra - ditional financial institutions, and these regula -
596 CHAMBERS.COM
Powered by FlippingBook