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Financial licenses in Panama, everything you need to know

calendar 7/8/2020 8:00:00 AM
author Armando Lawyer

Panama has built a solid reputation as a financial destination in Latin America. This small Central American country is one of the best banking, financial, and corporate centers in the whole world.

Its unique banking system and the presence of the Canal has turned Panama into a financial hub and a country that's also a cultural and geographical crossroads. It connects South America with Central America, and a mix of cultures such as the African, indigenous, Colombian, North American, and its own culture.

When you go to Panama City, you’ll notice it seems like a smaller version of both Manhattan and Miami. Dozens of skyscrapers with financial companies and business centers, while the beautiful Panamanian beaches are just a few minutes away.

Panamanian banks offer high levels of asset protection and confidentiality, which makes it a reliable jurisdiction for financial and banking services.

Moreover, Panamanian banks welcome with open arms reputable brokers and investors from all over the world. In Mundo, we can help you open personal, corporate, brokerage, and merchant accounts remotely.

If you want to know more about our banking services in Panama, please check out our article

If you're a financial investor, Panama must be at the top of your list.

Moreover, Panama is also a pioneer in telecommunications, which are vital for financial investors today. It is the crossroads of almost all main lines of optic fiber cables on the planet.

High-net worth individuals usually seek asset protection and tax planning strategies through asset diversification investing and keeping their money in banks in different jurisdictions.

This is a solid strategy as long asthat investor chooses the adequate jurisdictions, and Panama is one of the best.

Furthermore, if you combine a financial company with a FTZ company, (whether it’s in Colon, Panama Pacific, or other of the dozens of FTZs in Panama) where it will pay virtually no taxes, you have one of the best available asset diversification combinations.

Do you want to know more about our corporate services in Panama? Please check out our article.

That means it's a top destination for you to establish a financial business as you’ll always have family offices, investors and high net worth individuals looking for diversification and asset protection strategies.

To wrap it up, we recommend Panama because it offers:

  • The best banking system in Latin America and a top three in the world.
  • A territorial tax system with plenty of flexibility.
  • A thriving economy and a stable democracy.
  • You can use our own financial company and we can help you open a personal, corporate, or brokerage bank account.
  • Reputable and strong licensing systems that will allow your company to operate within a solid legal environment.


About Panama

Panama is one of the most stable democracies in Latin America and has a pro-business government that promotes a liberal economic policy to encourage FDI.

This has been Panama's reality since the early 90s. The results are clear: a modern country that is the economy with the greatest potential in the region, with cutting-edge financial services, a lively business sector and has lifted thousands of people out of poverty and unemployment.

The financial services sector covers about 10% of Panama's GDP, and most of it is provided by the banking sector, which remains one of the pillars of the Panamanian economy. The industry is known to be the second-best in the world, only behind Switzerland, and meets the highest international standards through top-notch audit regulations and security systems.

The government knows the financial industry is one of the pillars of the economy. Hence, they are interested in allowing the market to develop, to the point is likely the best in Latin America and one of the top in the whole world.


Five reasons to obtain a financial license in Panama

Reputable licenses

There are certain jurisdictions where applying and being approved for a financial license is generally simple. However, most of these jurisdictions are blacklisted. Many investors don't want to have anything to do with them. It's quite a risk to get involved in the financial service industry without an appropriate license.

That won't be an issue with a Panamanian license, which has one of the best reputations in the financial world. If you have a Panama license, potential partners will know your business is legit and trustworthy.

Enhanced flexibility

The Panamanian tax system has one main benefit: it's territorial. That means it provides you with plenty of flexibility if you work with foreign structures. You can outsource services in tax-efficient jurisdictions because Panama only taxes locally sourced income, and you can also set up your financial company in an even more reputable jurisdiction.

Political and economic stability

Panama is one of the most stable democracies of the region. Large protests or strikes are almost non-existent. The country's economy relies heavily on its robust business sector, and especially on its financial services.

A top banking system

The Panamanian banking system is not only the best in Latin America, but it's also on the same level as Switzerland and the United States. Panama has a strong regulatory authority that ensures high levels of compliance. The country has top private banks that are used to dealing with foreigners and have staff with experience in Swiss and American banks to assist their international clients.

This means you'll have your money and the money you handle safely and will be able to provide your clients with the security that their assets are in one of the safest jurisdictions on the planet.

Dynamic business environment

Thanks to the Canal, Panama is a top business jurisdiction. Companies all over the world are present in Panama, and its top banking and financial services have turned it into a must for financial investors.

This, the reputation of Panama as a financial jurisdiction, and the friendly business environmentturned Panama into a dynamic place to do business where thousands of businesspeople require top investing, financial, and banking services.

And we can help you give that to them.

Financial licenses in Panama

Panama is a reputable financial licensing jurisdiction. The setup and maintenance costs are reasonable, and the advantageous tax system makes it more appealing.

A Panama Financial Company is an attractive way to borrow money from your own funds, asking collaterals as guarantees, and other services such as factoring.

To name a practical example. Many offshore financial companies establish a company in Panama to offer factoring services mainly to SMEs, to buy the invoices of a company, so they can receive the money immediately and then repay it later. In a jurisdiction such as Panama, these services come with low costs, good reputation, while keeping the entity quite unregulated. Also, similar companies can use the financial license to establish a company in Panama and use to outsource services because Panama doesn’t tax foreign-sourced profits.

We can offer you two options for offering financial services in Panama.

 

Option 1: Use our financial company

This is the easiest and most straightforward path towards doing investing and financial business in Panama. We can help you onboard your clients, using an existing structure and AML procedures to quickly launch your business idea. A member of our team will be the legal representative of such structure and, if you decide to go further with this option, he'll have veto powers over certain transactions. But as long as you strict AML policies and the KYC of new clients show no records of any wrongdoings, the veto power will be kept at a minimum.

These are some important particularities you must know about using our company as an umbrella for your operations:

The initial setup fee (contact us for more information) will cover the creation of the new business strategy and all the necessary adjustments to the business plan, AML process, client contracts, Terms and conditions, etc. All these changes need to be approved by the regulator, and it can take around one month, after which you can begin your operation.

You will keep your business running independently and all the profits generated by it will be 100% yours to keep.

The company will need to cover for disbursement costs. This will be represented by a commission in each granted loan upon disbursement to a client.

The company will demand a monthly fee to cover running costs, such as AML officers, onboarding staff, handling all reports, and auditing from the regulator.

Our legal representative will hold the power of veto for suspicious activities and client onboarding.

 

Option 2: Create your own financial company in Panama

Now, if you want more freedom to operate your business and you don't mind about the minimum balance fees, government fees, and taking a few months to start operating your business, then this may be the best option for you.

The main steps and phases to start the business are the following:

  • Phase 1: Create a new company in Panama
  • Phase 2: Obtain the financial license in Panama
  • Phase 3: Operate the business

We also recommend obtaining Panamanian Residency. This is not a necessary step; however, it will:

  • Provide you with greater credibility with the authorities in obtaining the license (commitment).
  • Allow you to take official positions on the board of the operating company.
  • Facilitate the opening of the bank account (higher acceptance rate with banks).
  • Allow you to be a signatory on the bank account.
  • If you want to know more about our residency services in Panama, please visit our country focus.

Let's walk you through each phase of the process:

Phase 1: Create a new Company in Panama

Incorporation of your business in Panama. You'll need professional nominee directors and a Panamanian legal representative. Thus, in this step,we'll help you:

Search for Panamanian Directors who meet the requirements (including Compliance Officer), secretary, treasurer, and staff and preparation of contracts and legal documents.

Phase 2: Obtaining the Financial License in Panama

Here, we'll help you with the license processing, including:

Preparation of the application and presentation to the MICI (Ministry of Commerce and Industry) and follow-up until obtaining the license in different entities.

Review and adaptation to the Panamanian jurisdiction of:

  • Service contracts.
  • Anti-Money Laundering Manual.
  • KYC Policies.
  • Description of the company's economic and financial objectives and projections.

External expenses: Government fees for the application and the first operational year, notary, adaptation of the business plan by an experienced economist.

For this process, you must provide our legal team with a power of attorney because the legal representative of the financial company must be Panamanian.

During this phase, to apply for the license, the following documents are required:

  • Police record of all shareholders and directors.
  • Description of the company's economic and financial objectives and projections (signed by a Panamanian economist).
  • Paid-up capital of USD 500k certified by a CPA.
  • Certified ID documents for all directors and shareholders.
  • Incorporation documents.

Phase 3: Operate the business

This is something you can do on your own, but we can help you find and acquire the following:

  • Core software
  • AML software
  • Office space

We can help you open a business bank account at a partner bank in Panama. Also, We strongly recommend opening a second backup bank account.

If you want to know more about the process of opening a corporate bank account in Panama and our services, please check out our Panama banking article.

 

 

Which activities are covered by a Panamanian financial license?

Many countries tend to fit many different financial services under one single license. This simplifies the process, but also leads certain potential partners and investors to run away from those jurisdictions because they think they don’t hold enough compliance standards.

But that’s not the case with Panama. The financial license has two main purposes and that’s it. That means for other services you may need additional licenses, but also means you can rest easy that you’re working on a reputable jurisdiction.

According to the Panamanian law, a Panama financial company is a non-bank company that can be used for:

  • Factoring
  • Borrowing money from own funds
  • However, we don’t stop there. We only offer the best of the best, which means we can also assist you with:
  • Banking license
  • Insurance license
  • Trust license
  • Let’s explain what you need for each one of them.


 


Banking license

Its name is pretty self-explanatory. It will allow you to have your own bank and conduct all regular banking activities. It comes with two types:

  • General license: It authorizes the bank to conduct banking activities in the Panamanian territory and abroad and any other activity authorized by Panama’s banking authority.
  • International license: It authorizes the bank to conduct banking activities out of the Panamanian territory from an office located in Panama.

What do you need to submit to receive the license?

  • Statutes of the company.
  • Board authorization.
  • Detailed information about shareholders, directors, and promoters including CV of the main leaders of banking activity.
  • Personal banking record of directors and main shareholders.
  • Economic group of the registered bank (if applicable).
  • Activities of the economic group.
  • Substantial investments of shareholders.
  • Distribution of the capital.
  • Minimum capital ($3m for an international license, $10m for a general license).
  • Audited financial record and registry of the auditor.
  • Annual reports.
  • Business plan and viability report.
  • Banking risk management.

For banks registered abroad that want to operate in Panama certain requirements may change. For detailed information please contact us directly.

 

Trust license

Panama is a growing trust jurisdiction that has recently become more popular. To apply for a license,you’ll need the following documents:

  • Power of attorney (again, the legal representative must be Panamanian, we’ll provide that for you).
  • Statutes.
  • Board authorization.
  • Certification of competent authorities.
  • General information of the solicitant.
  • CV of directors and promoters.
  • Distribution of the capital.
  • Guarantee.
  • Financial records.
  • Business plans and viability report.

 

Insurance license

Thanks to its reputable business environment, insurance companies are ever-growing in Panama. To obtain an insurance license, an application must be submitted with the Superintendent of Insurance with the following documents:

  • Power of attorney.
  • Copy of partnership agreement/articles of incorporation.
  • Certification from shareholders or partners.
  • Composition of the board of directors.
  • If it´s a foreign company branch, a certificate from the corresponding authority proving that the company is properly established in the country and has full solvency for the past five years.
  • Policy and insurance plans.
  • Reinsurance program with which the company will start operations.
  • Viability study and business plan.
  • Minimum capital ($2m).

 

Who are we, and what can we do for you?

In Mundo, along with NTL, we have 25 years of experience offering unmatched financial, investment, immigration, and corporate services for investors and high net worth individuals across the world.

Panama is one of our main headquarters. We truly believe it's one of the best jurisdictions for businesspeople and financial investors on the whole planet, and we believe it to the point we've decided to base our business there.

In all these years of experience, we've built an unparalleled network of experts, including a top team in Panama to offer only the best corporate, banking, investment, immigration, and financial services in Panama.

We can help you obtain a financial license in Panama. And we can also help you with all the attached needs for such a process.

In detail, our team of experts can help you to:

  • Establish and incorporate a company in Panama.
  • Prepare and submit the application for a financial license.
  • Revise and adapt all documents and company policies to Panamanian regulations.
  • Search for Panamanian directors and staff.
  • Search for an adequate office space.
  • Create a corporate and a backup bank account for you.

Panama is one of our favorite financial jurisdictions in the world. Not only it offers a swift process for a reputable financial license, but it also comes with terrific added benefits: a sound banking system, a reliable business environment, and fantastic tax planning opportunities.

Establishing your financial business in Panama comes with great opportunities. All you need to do is contact us right now and get in touch with our experts.

 

Contact us now

 

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