Morgan & Morgan

Introduction Most readers will know that the origin of this topic, like many others, related to changes in anti–money laundering, counter‑terrorist financing and counter‑proliferation regimes is found in the FATF Recommendations, also known as the “International Standards.” The FATF Recommendations, first issued in 1990, have undergone numerous modifications. Some revisions have been broad and substantive, while others have resulted only in targeted adjustments. This is the case with Recommendation 24, “Transparency and beneficial ownership of legal persons” and its Interpretive Note, both of which were amended and adopted at the October 2024 FATF Plenary following a complex consultation process involving countries, organizations and even private‑sector stakeholders. Recommendation 24 was revised, among other aspects, to include an obligation for countries to adopt effective measures ensuring that shareholders and directors acting as nominees are not misused for money laundering or terrorist financing purposes. Likewise, the Interpretive Note incorporated three mechanisms suggested by FATF to safeguard against the misuse of nominee services: Transparency Mechanism This mechanism requires any person acting as a nominee to disclose their status, as well as their own information and that of the person who appoints them (nominator), to the company and to any relevant registry so that such information can be officially recorded. Depending on the system adopted by each country under Recommendation 24, the “registry” may include the share register, the Companies Register, or the Beneficial Ownership Register, where such a register exists. The registry must maintain this information, and the nominee status must be made public, for example, through a label or asterisk placed next to the nominee’s name. Licensing Mechanism Under this approach, nominees must obtain a license or belong to a licensed and regulated profession under AML laws. The country must therefore establish a formal licensing and regulatory system. In addition, the Transparency requirements described under the first mechanism must also be met. Prohibition A country may opt to partially or fully prohibit the use of nominee shareholders and/or nominee directors, eliminating the figure entirely or allowing it only under strict conditions. Following these changes, various jurisdictions have begun reviewing and updating their legal frameworks to align with the new standards of Recommendation 24. Country Case Studies Panama — Transparency Requirement Panama follows the Transparency Requirement. Through Agreement JD‑02‑2022, controls were established over the provision of nominee services. The Agreement imposes strict obligations on annual risk assessments, enhanced due diligence, detailed documentation, traceability and risk mitigation, all within the framework of Law 23 and its risk‑based approach. Additionally, the Agreement requires resident agents to submit annual declarations indicating (i) the number of companies with nominee relationships, and (ii) information regarding nominees and their nominators. British Virgin Islands — Transparency Requirement The British Virgin Islands has also adopted the Transparency Requirement. Beginning January 2nd, 2025, the BVI Business Companies (Amendment) Act, 2024 and the related Beneficial Ownership and Companies Regulations 2024 entered into force, introducing major transparency obligations directly affecting the use of nominee shareholders and nominee/professional directors. Companies must now file specific information with the Registrar whenever a shareholder acts in a nominee capacity, including the nominator’s identity and the dates on which nominee relationships begin or end. In addition, companies must file their Register of Members (capturing any nominee status) with the Registrar on a non‑public basis. With respect to directors, the BVI does not formally prohibit nominee directorships but has introduced new filing requirements. These obligations expand regulatory oversight and transparency for individuals offering nominee director services, complementing the broader reforms to beneficial ownership reporting and member register filings. As a result, nominee directors are now more visible to authorities. Bermuda — Prohibition Requirement Bermuda has opted for the Prohibition Requirement. On 21 November 2025, the Companies (Prohibition of Bearer Shares and Nominee Directors) Amendment Act 2025 was passed and came fully into force on 10 December 2025. This Act amends the Companies Act 1981 and the Limited Liability Company Act 2016 with respect to bearer shares, nominee directors, alternate directors and beneficial ownership record‑keeping. Under the amendments, the appointment of nominee directors is expressly prohibited. Although the legislation does not define “nominee,” Bermuda relied on the definitions included in the FATF Standards. Bahamas — Mixed Regime (Transparency + Prohibition) Bahamas presents a mixed regime, fully permissible under Recommendation 24, combining the Prohibition Requirement (for nominee directors) and the Transparency Requirement (for nominee shareholders). The International Business Companies (Amendment) Act, 2025, published in the Official Gazette of 19 June 2025, introduces major amendments to the Companies Act (Ch. 308) and the IBC Act (Ch. 309). The most relevant changes include: Explicit Prohibition of Nominee Directors Through the insertion of Section 41A, “Prohibition of Nominee Directors,” the Act prohibits individuals acting under the instructions of a third party (such as a beneficial owner) from serving as directors of an IBC in The Bahamas. Transparency Requirement for Nominee Shareholders When a shareholder acts as a nominee: this must be explicitly indicated in the Memorandum and the Register, a declaration of trust identifying the beneficiary must be executed and kept at the company’s registered office, and the nominee shareholder must disclose the identity and relevant particulars of the person on whose behalf they act, in compliance with the Register of Beneficial Ownership Act 2018. The Act includes a six‑month transitional period for companies to replace nominee directors and update their records and beneficial ownership documentation. Belize — Licensing Requirement Belize adopted the Licensing Requirement with the issuance of the Financial Services Commission (Nominee Shareholders and Directors) Regulations, 2025 (SI No. 158 of 2025). This regulation transforms the provision of nominee services into a regulated activity requiring prior licensing or authorization from the FSC to the service provider, fit and proper test to the proposed nominees which need to be employed by the registered agent with management position or if not provided by the registered agent, be nominated only once directly by the Beneficial owner and be physically present in Belize during the period appointment. This regime is accompanied by continued transparency obligations, including disclosure of nominee status and nominator identity to registries and authorities, are fully consistent with the second mechanism permitted under Recommendation 24. The regulations also impose strengthened obligations on registered agents, who must identify, document and report all nominee relationships and must submit a declaration to the authority within six (6) months of the regulation’s entry into force, detailing: the measures adopted to identify nominee relationships, the compliance status of all companies under administration, and a list of non‑compliant companies, with reasons or justifications. In summary, Belize professionalizes and subject’s nominee service providers to prior supervision while preserving the transparency sub‑requirements established by FATF. Nevis — Licensing Requirement Nevis meets FATF expectations for beneficial ownership transparency through a simple but effective model centered on its system of licensed Registered Agents. Legislation requires that beneficial ownership information of Nevis legal persons be obtained and maintained by these agents, who must keep such information adequate, accurate and up‑to‑date, in accordance with the obligations imposed on trust and corporate service providers. This information is kept in the Registered Agent’s records (separate from the internal registers of members or directors that companies must maintain) ensuring that authorities can access verified ownership and control data when necessary while preserving the jurisdiction’s longstanding confidentiality framework. With respect to nominee arrangements, Nevis adds an additional compliance layer through its licensing regime under the Nevis Trust and Corporate Service Providers Ordinance, 2021. Applicants seeking a Class I or Class IV license, both of which authorize the provision or arrangement of nominee directors or nominee shareholders, must expressly indicate that they will provide nominee services and must submit full due‑diligence information on the individuals who will act as nominees as part of the regulator’s fit‑and‑proper assessment process. This mechanism preserves confidentiality, since nominee identities are not publicly disclosed, while ensuring that the Regulator has complete visibility over who is acting as a nominee within Nevis incorporated entities. As a result, Nevis complies with international standards by guaranteeing regulatory access to verified beneficial ownership and nominee information, yet maintains the non‑public, privacy‑protective structure characteristic of the jurisdiction. Cross-Cutting Observations Across all jurisdictions examined, regardless of the mechanism chosen to mitigate misuse of nominee services, there are sanctioning frameworks applicable both to companies and to providers of nominee services. Whether through enhanced transparency, licensing requirements or outright prohibition, each regime incorporates administrative and/or monetary penalties for failures to comply with disclosure, registration, verification or authorization obligations, ensuring that nominee arrangements remain subject to effective controls and an enforcement structure consistent with FATF standards. Among the approaches reviewed, licensing emerges as the most balanced and comprehensive mechanism for managing nominee arrangements. In addition to ensuring that the identities of both nominee and nominator are formally recorded, thus capturing all the benefits of transparency‑based models, licensing places these actors within a regulated perimeter. By requiring nominee service providers to operate as licensed persons or entities, jurisdictions introduce a further layer of institutional control: one that empowers competent authorities to supervise, monitor and enforce compliance on an ongoing basis. This supervisory oversight strengthens the integrity of nominee services, aligns market practices with FATF expectations, and enhances the overall reliability of corporate transparency frameworks by ensuring that nominee activities are not only disclosed, but also subject to continuous regulatory scrutiny. By contrast, an outright prohibition of nominee arrangements represents the most restrictive and arguably the least proportionate approach. International organizations, including the World Bank and the FATF, acknowledge that properly regulated nominee arrangements can serve legitimate and sometimes necessary purposes within corporate governance systems. These include compliance with local laws requiring a minimum number of directors, the need for companies to access specialized managerial expertise, or situations in which a shareholder may require a trusted individual to exercise representation on their behalf in the conduct of corporate affairs. Blanket bans on such arrangements overlook these legitimate use cases and risk infringing upon individual rights protected under national constitutions or human rights frameworks, particularly where the freedom to choose representatives or structure corporate governance is recognized. Consequently, prohibition may compromise both proportionality and legal soundness, making it a far less balanced option compared to licensing or enhanced‑transparency models. Conclusion The reforms undertaken by various jurisdictions to mitigate the misuse of nominee services represent a significant advancement toward the transparency and traceability objectives required under FATF Recommendation 24. Although countries have adopted different mechanisms, all converge on the need to ensure that nominee services are not used to obscure beneficial ownership or facilitate money laundering or terrorist financing. However, it is essential to emphasize that choosing the appropriate mechanism requires more than meeting formal requirements. Countries must be particularly careful when determining which model to implement and how to design it, ensuring full alignment with FATF’s technical definitions of nominator, nominee, nominee director and nominee shareholder. These definitions are not merely conceptual, they provide the necessary foundation to avoid regulatory gaps, ensure coherence, and guarantee that disclosure, registration and control obligations effectively reach the individuals who truly own or control legal persons. Eyra Michelle Perdomo Ballesteros Attorney Private Wealth Law & Corporate Services team Morgan & Morgan Email: [email protected]

Panama, January 7, 2026. Morgan & Morgan advised Banistmo Investment Corporation, S.A. in its role as: (i) trustee of the guarantee trust for financing and (ii) trustee of the trust required under applicable regulations for the Eastern Pan-American Highway Rehabilitation Project. This Project is one of the most important public infrastructure projects currently underway in the Republic of Panama, and the first project in the country developed under the Public-Private Partnership (PPP) model. The financial closing, presented by the PPP Contractor APP Ruta del Este de ISA Vías for an amount exceeding US$281,000,000.00, represents the most important “Project Finance” transaction in the region and an unprecedented achievement for Panama. This milestone confirms that the project has a solid financial structure that ensures its execution and completion and reaffirms the role of the Ministry of Public Works (MOP) as the contracting entity representing the Panamanian State and the main promoter of this mega project, aimed at modernizing and strengthening the national road network—marking a turning point in public infrastructure investment in the country. This mega project, which stretches from the corregimiento of Las Garzas in the district of Panama to Yaviza in Darién, covering 246.2 kilometers, currently shows a physical progress of 9.4%. This progress has been made possible thanks to the coordinated participation of a broad group of international and local banking institutions, as well as specialized financial, technical, and legal advisors, whose involvement provided support and strength to an operation structured under the highest standards of the PPP investment model. Partner Kharla Aizpurua O. and associate Miguel Arias M. advised Banistmo Investment Corporation, S.A. in this transaction. For full details, you can access the complete official press release here.

Panama, December 5, 2025. Morgan & Morgan represented Electron Investment, S.A. (“EISA”) in structuring and negotiating a bridge financing granted by BAC International Bank, Inc., the proceeds of which were used for the early redemption of corporate bonds issued in 2020 through the Latin American Stock Exchange (Latinex). Once the existing bonds were canceled, Morgan & Morgan led the expedited registration process before the Superintendency of the Securities Market for a public offering of corporate bonds of up to US$175,000,000, as well as the placement of the first series of secured bonds, intended to repay the bridge loan and ensure the continuity of the company’s strategic operations. The new secured bonds are backed by a comprehensive security package that includes a guaranty trust, a pledge over shares, mortgages on fixed assets and chattel, unconditional assignment of rights under power purchase agreements, and conditional assignment of material agreements. EISA is a leading Panamanian company in the energy sector, specializing in hydroelectric power generation. It is the developer of the Pando and Monte Lirio hydroelectric projects, located in the upper-middle basin of the Chiriquí Viejo River in the province of Chiriquí. Monte Lirio has an installed capacity of 51.6 MW, while Pando adds an additional installed capacity of 32.6 MW. This complex financing reaffirms EISA’s strength and Morgan & Morgan’s commitment to transactions that promote sustainability and growth in the energy sector. Partner Ana Carolina Castillo, and associates Miguel Arias M., Eduardo Oteiza and Ariana Linares advised EISA in this transaction.

Panama, December 1, 2025. Morgan & Morgan acted as legal counsel to Banco Davivienda Panamá in the successful closing of a landmark transaction involving the integration of Scotiabank Panamá’s operations (The Bank of Nova Scotia) into Banco Davivienda Panamá. This transaction extends beyond Panama, as Scotiabank’s operations in Costa Rica and Colombia will also be integrated into Grupo Davivienda in those countries. It is a transaction of significant regional impact, strengthening the financial position of two leading banking groups in Latin America. The integration across these three markets represents more than $60 billion in assets and a customer base exceeding 29.6 million, positioning the combined entity as one of the largest banking conglomerates in the region. The legal team was led by partner Roberto Vidal, alongside partners Ana Carolina Castillo, Jose Rafael Reyes, and Sophia Lee; senior associate Maria Eugenia Brenes; and associates Ariana Linares, Angélica Ortiz, David Ramos, Katia Pallares, Arantxa Fernandez, and Perla Piña, who played a key role in advising Banco Davivienda Panamá throughout the transaction.     Morgan & Morgan is recognized as Pro Bono Leading Lights 2025. Panama, December 1, 2025. For thirteen consecutive years, Morgan & Morgan has received the “Leading Lights” recognition in Latin America for the firm´s Pro Bono program. Only Morgan & Morgan achieved this status in Panama, sharing honors with leading regional firms. This distinction is granted annually by Latin Lawyer, who, together with the Cyrus R. Vance Center for International Justice, investigates the institutionalization of the practice within the firms and the participation of their legal team. In 2025, Morgan & Morgan reaffirms its commitment to offer legal advice to more than 25 non-for-profit organizations (NGOs), highlighting the advice provided to Banco de Alimentos Panama and Marea Verde, two foundations that play a crucial role in their respective areas of work. Moreover, the firm continues to support adjustments to bills related to the maritime and corporate sector in Panama and provides regular advice to Trust Law, Vance Center, and Red Pro Bono, attending legal research on matters with social impact. We are very proud of the more than 40 lawyers of the firm who participated in this program in 2025, contributing their expertise and time to pro bono legal services.     Morgan & Morgan advised Grupo Estrella on the acquisition of Cemex Panama. Panama, October 3, 2025. Morgan & Morgan acted as legal counsel to Grupo Estrella in the acquisition of Cemex Panama’s assets, a transaction valued at over US$200 million. The deal included the Cemento Bayano plant, located in Calzada Larga, Chilibre, with two integrated production lines, as well as cement, ready-mix concrete, and aggregates operations. Grupo Estrella, an industrial conglomerate headquartered in the Dominican Republic, has maintained a presence in Panama for over 12 years through major infrastructure and energy projects. “We are very pleased to strengthen our presence in Panama and be part of its growth and development. This investment will allow us to offer comprehensive solutions for the local and regional markets,” said Giuseppe Maniscalco, President of Grupo Estrella’s Industrial Division and President of the Board of Directors of Cemento Bayano. Morgan & Morgan worked with a multidisciplinary team for this complex transaction, led by partner Kharla Aizpurúa O., with the support of partners José Rafael Reyes, Milagros Caballero, José Carrizo, and Raúl Bermúdez. The team also included senior associates Mónica Moreno, María Eugenia Brenes, Rodolfo Palma and Allen Candanedo, and associates Eduardo Oteiza, Arantxa Fernández, Katia Pallares, Angélica Ortíz, María Alejandra Rodríguez, Miguel Rodríguez, Yaneth Barrera, and David Ramos.  

Panama, September 11, 2025. Morgan & Morgan acted as legal advisor to Inversiones Cuscatlán Centroamérica, S.A. (Inversiones Cuscatlán), as purchaser, in the closing of the transaction for the acquisition of 100% of the shares of La Hipotecaria (Holding), Inc., the holding company of Banco La Hipotecaria, S.A. and other operations in Colombia, El Salvador, and the Turks and Caicos Islands. Inversiones Cuscatlán, parent company of Banco Cuscatlán, is a Salvadoran financial conglomerate founded in 1972 and one of the leading financial institutions in the Central American region. Banco La Hipotecaria has operated in Panama since 1997 and is one of the country’s main providers of mortgage loans for middle and lower-middle income clients. This strategic transaction strengthens Inversiones Cuscatlán’s presence in El Salvador and expands its operations in Panama and Colombia, while enhancing its ability to offer broader and more robust financial solutions to its clients. Partner Roberto Vidal, and associate Ariana Linares, participated in this transaction.

Panama, July 30, 2025. Morgan & Morgan advised Mercantil Bank (Schweiz) AG, a Swiss entity specializing in private banking and wealth management, throughout the process of obtaining its Representative Banking License from the Superintendency of Banks of Panama (SBP). This license enables the bank to establish a representative office in Panama and carry out activities authorized by the SBP in accordance with current banking regulations. Mercantil Bank (Schweiz) AG, headquartered in Zurich, is part of the international financial group of Mercantil Banco, which has a presence across the Americas and Europe. The bank operates under the supervision of the Swiss Financial Market Supervisory Authority (FINMA) and focuses on delivering tailored private banking solutions to international clients. This milestone not only marks a strategic step in the international expansion of the Mercantil Group but also reinforces Panama’s position as a premier international banking center, attracting global financial institutions seeking to operate in a robust, transparent, and competitive regulatory environment. Partner Roberto Vidal, international associate Miguel Arias M., and associate Katia Pallares, supported the client through all stages of the process—from legal structuring to the formal granting of the license.

Panama, June 11, 2025. Morgan & Morgan acted as legal counsel to Sojitz Corporation in the acquisition of 100% of the shares of Petroautos, S.A., the exclusive distributor of the Hyundai brand in Panama. With over 30 years of experience, Petroautos has established itself as one of the leading players in the Panamanian automotive sector, operating a network of nine dealerships nationwide and offering comprehensive services ranging from vehicle importation and sales to after-sales service and spare parts. According to a statement from Sojitz Corporation, this transaction represents a strategic step for the Japanese conglomerate, which has over 50 years of experience in automotive distribution across more than 50 countries. In Panama, Sojitz is already actively involved in the automotive sector through its subsidiary Sílaba Motors, the authorized distributor of KIA, MAZDA, OMODA, JAECOO, KARRY, and NIU. With the addition of Petroautos, Sojitz Corporation significantly strengthens its presence in the country and expands its portfolio of leading automotive brands in the local market, reinforcing Sojitz’s commitment to long-term investment in Panama. The legal team from Morgan & Morgan was led by partners Inocencio Galindo and Roberto Vidal, along with international associate Miguel Arias, with the support of José Rafael Reyes, partner at the firm’s tax department, who provided tax advisory services for the transaction. As a key part of the process, Morgan & Morgan also conducted a thorough legal due diligence of Petroautos and its operations. This work was led by partners Inocencio Galindo and Roberto Vidal, together with international associate Miguel Arias, and supported by partner Milagros Caballeros, senior associate Allen Candanedo, associates Arantxa Fernández, Ariana Linares, Katia Pallares, and associate David Ramos.

Panama, April 2, 2025. Morgan & Morgan advised the shareholders of Aguafuerte, S.A. and Aquavoltaic, S.A. (the “Companies”) on the sale of their shares to Cox Energy. Cox Energy is a leading company in the development and promotion of energy solutions in America, Europe, Africa, and the Middle East. The Companies operate two solar plants of 12 MW each —Solar Pro I and Solar Pro II— both located in the Province of Chiriqui and in operation since early 2025. The acquisition of Solar Pro supports the energy diversification of Panama, where more than 60% of the current electricity generation comes from hydro sources. Enrique Riquelme, CEO of Cox Energy, highlighted in a statement that this operation reflects the company's commitment to energy transition and sustainable prosperity in the regions where it operates. Solar Pro I and Solar Pro II represent a boost to the country's development by generating employment and contributing to the advancement towards a greener and more resilient economy. Partner Ana Carolina Castillo and international associate Miguel Arias participated in this transaction.

Panama, April 8, 2025. Morgan & Morgan acted as legal counsel to Bank of China Limited, Panama Branch, in the issuance of US$500,000,000 Floating Rate Notes due 2028, under the U.S.$40,000,000,000 Medium Term Note Programme established and updated by Bank of China Limited (a joint stock company incorporated in the People’s Republic of China). The proceeds will be used for general corporate purposes. Fitch Ratings assigned the notes a final rating of 'A'. The Bank of New York Mellon, London Branch, acted as Trustee and Paying Agent and The Bank of New York Mellon NA/SV, Luxembourg Branch, acted as Registrar and Transfer Agent. Application will be made for the listing of the Notes on the Chongwa (Macao) Financial Asset Exchange Co., Ltd. (“MOX”). The Floating Notes were issued and subsequently settled through Euroclear Bank SA/NV and Clearstream Banking S.A., which are two of the largest international central securities depositaries (ICSDs) in the world. Partner Ricardo Arias, and associate Ariana Linares, participated in this transaction.

Morgan & Morgan advised Banco Davivienda Panamá in connection with the execution of an agreement seeking the integration of the operations of Scotiabank Panamá (the Bank of Nova Scotia) into Banco Davivienda Panamá. Panama, January 6, 2025. Morgan & Morgan acted as legal counsel to Banco Davivienda Panamá in connection with the execution of an agreement seeking the integration of the operations of Scotiabank Panamá (the Bank of Nova Scotia) into Banco Davivienda Panamá. In addition to the integration of Scotiabank Panama's operations into Banco Davivienda Panama, Scotiabank's operations in Costa Rica and Colombia will also be integrated into the Davivienda Group in those countries. The implementation of this transaction is subject to the respective approvals of the regulators in each jurisdiction, which are expected to be obtained in the second half of 2025. Partners Roberto Vidal, Ana Carolina Castillo, Jose Rafael Reyes, Sophia Lee, and associates Ariana Linares, Angelica Ortiz, David Ramos, Katia Pallares, Arantxa Fernandez, and Perla Piña, advised Banco Davivienda Panamá in this transaction.

For twelve consecutive years, Morgan & Morgan has received the “Leading Lights” recognition in Latin America for the firm´s Pro Bono program. Only Morgan & Morgan achieved this status in Panama, sharing honors with leading regional firms. This distinction is granted annually by Latin Lawyer, who, together with the Cyrus R. Vance Center for International Justice, investigates the institutionalization of the practice within the firms and the participation of their legal team. In 2024, Morgan & Morgan reaffirms its commitment to offer legal advice to more than 25 non-for-profit organizations (NGOs), highlighting the advice provided to Banco de Alimentos Panama and Marea Verde, two foundations that play a crucial role in their respective areas of work. Moreover, the firm continues to support adjustments to bills related to the maritime and corporate sector in Panama and provides regular advice to Trust Law, Vance Center, and Red Pro Bono, attending legal research on matters with social impact. We are very proud of the more than 45 lawyers of the firm who participated in this program in 2024, contributing their expertise and time to pro bono legal services. More information on https://latinlawyer.com/survey/pro-bono/2024/article/pro-bono-leading-lights.  

Panama, November 1, 2024.  For its initiative called “IDEA Committee, promoting diversity, inclusion and human rights,” Morgan & Morgan received the highest distinction in the Governance category of the “Sustainable Leadership Recognition 2024”, organized by the American Chamber of Commerce and Industries of Panama (AmCham). The AmCham Sustainable Leadership Award seeks to promote, encourage, and share inspiring social responsibility projects in the country, align them with international standards such as ISO 26000 and the Sustainable Development Goals (SDGs), and in essence, contribute to a sustainable economic development of Panama. Alvaro Tomas, partner of Morgan & Morgan, and Camila De Vengoechea, VPA of Sustainability of the firm, received the award and praised AmCham for this distinction regarding good corporate governance practices companies executes. About the IDEA Committee The IDEA Committee (Inclusion, Diversity, Equity and Support, for its initials in Spanish) was launched in 2023 and includes employees of the different companies related to Morgan & Morgan. The Committee oversees inclusion, diversity, and equity issues and supports initiatives that promote a culture which represents our corporate values and purpose, as well as an environment free of violence and discrimination within the different companies that make up our organization.  

There are more than 35 compliance companies duly registered and regulated by the Panamanian Superintendence of Non-Financial Regulated Subjects. To help eradicate from our country the crimes of corruption, tax evasion and money laundering, to improve our international image as a financial center and to get out of the grey listings of the EU and OECD, among other reasons, a new industry has been formed, generating qualified and highly specialized jobs: the regulated compliance companies. Panama is one of the few countries in the world that strictly regulate these types of companies that play a vital role in avoiding the aforementioned crimes and help create a culture of compliance. Panama wisely decided that those who train and help companies in the non-financial sector to follow the rules of due diligence, know your customer and promote the culture of compliance, had to be companies with certain characteristics, specialized capabilities and that met a number of strict requirements demanded by law. There is no doubt that foreign companies seeking to invest in Panama appreciate the development of this industry in the national economy and require, often, that their local counterpart has manuals and policies on compliance, money laundering and corruption prevention, among others. The threat of money laundering in our economy will not disappear once we get off the international lists of the different agencies that label Panama as deficient around supervision of money laundering non-financial companies. We must not forget past and recent scandals and the use of real estate to launder the proceeds of the sale and transfer of drugs and other crimes. It is a rare occasion when a police operation does not confiscate luxurious residences and expensive automobiles from these criminals.  Some company or private individual sold those assets. Had that company complied with due diligence process? The Panamanian Association of Compliance Companies (APEC) is in discussions with the Superintendence of Non-Financial Regulated Subjects and various associations and institutes to give, free of charge, seminars to create awareness among businessmen of the need to spread the culture of compliance in our business sector. Author: Alvaro Tomas

Morgan & Morgan served as legal advisors of the shareholders of Clínica Hospital de David, S.A. (“CHDD”) in the sale of a 55% stake in CHDD to Grupesal Panama, Inc. CHDD is the parent company Centro Médico Mae Lewis, a hospital in Chiriqui, Panama. Morgan & Morgan also advised CHDD in the merger with Grupesal SPV, S.A., which was required for closing the transaction with Grupesal Panama, Inc. Furthermore, the closing of the transaction was guaranteed by means of an escrow agreement. Partners Francisco Arias and Roberto Vidal, senior associate Alejandro Vásquez, an associate Katia Pallares, participated in this transaction.  

Morgan & Morgan served as legal advisors of MMG Trust, S.A., in the acquisition of Mercantil Trust & Finance, Inc., a trust company and subsidiary of Mercantil Banco, S.A. Morgan & Morgan conducted a due diligence of the target entity, negotiated, signed, and closed the share purchase agreement and procured the regulatory change of control approval from the Superintendence of Banks of Panama. Partner Aristides Anguizola, senior associate Alejandro Vásquez, and associate Miguel Amado, participated in this transaction.  

The need to find mitigation mechanisms against climate change increases as time passes.In this context, Panamanian legislation is directly influenced by international instruments whose main objective is to combat the effects of climate change and assume commitments to reduce greenhouse gases ("GHGs") emissions; within which is the Kyoto Protocol to the United Nations Framework Convention on Climate Change, adopted by Panama through Law 88 of November 30, 1998; the United Nations Framework Convention on Climate Change through Law 10 of April 12, 1995; the Paris Agreement through Law 40 of September 12, 2016, and, the Doha Amendment to the Kyoto Protocol through Law 38 of June 3, 2015. A carbon credit is a mechanism that allows companies, countries, and organizations to offset the carbon dioxide emissions they produce. These credits represent the amount of GHGs emissions that a company, country, organization, or individual has reduced, prevented, or removed from the atmosphere by investing in projects that reduce or mitigate these gases. Carbon credits are traded in the carbon market, which is divided into voluntary and regulated. The voluntary market operates outside the regulated markets and allows the purchase of credits through the free supply and demand of credits, allowing companies, organizations and even countries to offset their emissions on a voluntary basis. In contrast, the regulated market operates within the framework of a government or international organization and trading must conform to applicable regulations. It is important to mention that the prices of carbon credits are not standardized, but vary according to the type of market, the project, the sector, and other factors. Panama has expanded the regulation of this particular issue through Executive Decree No. 100 of October 20, 2020 (the 'DE 100') and Decree 142 of December 9, 2021 (the 'DE 142'). DE 100 grants the Ministry of Environment ('MIAMBIENTE') the potential to develop and regulate the National Carbon Market ('NCM'), while DE 142 further defines the NCM and its components. DE 142 refers to carbon credits within the NCM as a greenhouse gas emission reduction unit ("UNRE"). The components of the NCM are: National greenhouse gas management programs: These programs of GHG management, under the Reduce Your Footprint National Program (in Spanish, Programa Nacional de Reduce tu Huella) (“PNRTH”)are expected to represent the demand for credits within the NCM. Currently there are programs under the PNRTH, such as Reduce Tu Huella Corporativo-Carbono (“RTH Corporativo – Carbono”) and  Reduce Tu Huella Municipal (“RTH- Municipal”), which were created to standardized the processes related to GHG. Panama's National GHG Offset System ("SNCP"): This component corresponds to the demand for carbon credits (or UNRE) at the national level by participants in the PNRTH. The SNCP will be composed of project developers that implement GHG reduction or removal initiatives in sectors such as energy, waste, refrigeration, forestry and livestock. These projects will be registered in the National Climate Transparency Platform, which will serve as a general information registry for those interested in joining the SNCP and participating in the NCM. Panamanian Carbon Exchange ("BPC"): This platform will connect the supply and demand of domestic carbon credits (or UNRE), facilitating the connection of organizations participating in the PNRTH with projects that reduce emissions in the SNCP. The BPC will be managed by the Bolsa Latinoamericana, de Valores S.A. (LATINEX). The BPC is expected to begin operations in 2024. Despite the recent nature of this regulation and the NCM, there is a noticeable trend towards future projects of this type, as it can be shown in several projects, including  The Azuero Reforestation Project, in which we have recently participated as legal advisors. We are witnessing a growing number of investors and companies expressing interest in joining the SNCP, as well as companies, organizations, and countries eager to invest in carbon credits in the voluntary market. This increasing interest bodes well for the future of carbon credit trading in Panama.