If your business is engaged in financial services activity and needs to handle third party funds, it is likely that the banks you work with, both in Panama and elsewhere in the world, will ask to see that you are licensed to do so by an appropriate regulatory authority.

The risk in engaging in a financial service business without appropriate licensing is substantial. You may risk having your accounts closed or - worse still - having funds frozen for suspected illegal activity.

Panama Licensed Financial Service companies have become a very popular vehicle for international financial services businesses in recent years, due to the relative speed and ease with which one may obtain a licence. A provisional license may be obtained by our law firm within as little as one business day. The full Class “A” Financial Services licence will be issued within two weeks, and supplied along with a certified English translation with apostille.

Basic Legal Structure

The basis of this construction is a generally an anonymous Sociedad Anonima Bearer Share Panama Corporation, though you could also use a Panama SRL if preferred. This entity will then be additionally licensed by the Panamanian authorities as a Class A Financial Services Corporation. The license is in the name of the Corporation. Your name does not appear on the license or in any public registry relating to the corporation, so privacy is preserved. The Corporation Nominee Directors who are Panamanians will take out the license. The license is an official license with colored seals, stamps and apostille and is suitable for public display on your website or in a frame on your office wall.

What does the Class A Financial Services Licence specifically allow?

This license allows the corporation to engage in certain financial activities in Panama.

General Financial Consulting – Independent Financial Advisor, Financial Planner etc.

Debit, Credit or Prepaid Card Program Administration – This is useful for bank card programs where funds are received from or on behalf of individual cardholders and held in a central master account. Note: You can set up Debit and Credit Card Programs through our associates Genericard Corp.

Currency Exchange Merchant - The licensed corporation can operate a virtual gold or currency exchange merchant where you are accepting payments of any form for purchase and sale of digital currencies.

E-Wallet – The Corporation may be used for operation of an e-wallet or electronic cash system where funds are received for further credit into an individuals e-wallet account, or for person to person and consumer to business payments via an online interface. (This is the business model of Paypal, for example)

Factoring – You may operate a factoring business to buy and sell receivables and liabilities of other companies.

Leasing – You may arrange leasing of capital equipment, vehicles, intellectual property etc, including sale and leaseback arrangements with other companies.

Money Exchange and Precious Metals - The licensed company may open a physical Casa de Cambio (trading of Foreign Currency) operation in Panama. For example you may convert Euros into US Dollars for tourists, or buy and sell gold coins for cash or bank wires. You may also arrange cash advances on credit cards, and offer check cashing services. Such activity however is subject to further AML regulation: you must file monthly returns with client data for all transactions over $10,000 to the Financial Analysis Unit in Panama.

In addition of course the corporation may also engage in any other lawful activity that corporations can normally engage in without a license.

What is NOT permitted by this kind of license?

Debt Collection – you may not operate as a collection agency (though you are allowed to do factoring business)

Trust Company - you may not act as a trustee or carry on trust business, as that requires a separate type of Financial Services / Trust Company Licence together with a minimum capitalization of $250,000.

Banking – you are not a bank and cannot accept deposits or engage in banking activities without a banking license. Banks provide checking accounts, take deposits directly, make loans personal and otherwise, write mortgages etc. Banks require a minimum capitalization of $1,000,000 and are subject to very strict regulation and oversight.

Securities Broker – You are not a securities or stockbroker with this license.

Financial Administration Services - you may not offer accountancy or book-keeping service.

Bank Accounts: The Major Advantage of the Class A Financial Services Licence in Panama

This kind of license opens many otherwise closed doors to banking services, both in Panama and worldwide.  Your company will be able to demonstrate to a Bank or other financial institution that the company is lawfully authorized by the Republic of Panama to manage third party funds within the corporation’s bank account or any account it has with another financial institution.

Cost of the Licensed Financial Corporation

An anonymous Panama Financial Services Corporation with Class A License can be set up for under $10,000, making it very attractive compared to other jurisdictions.  Our firm can assist with the opening of a Bank Account as well in Panama and in other Jurisdictions for an additional fee if required.

Due Diligence

Naturally, Panama relies on its reputation as a professional and well regulated financial services center. Therefore, Panamanian law requires due diligence on all such incorporations. This procedure is not intended to be intrusive or difficult, and can usually be completed very quickly.

In order to proceed with a Panama-licensed Financial Services business incorporation, we will need:

• Certified copy of passport (or we can certify this at a personal meeting)
• Proof of client’s home address and country of residence
• Full details of beneficial ownership
• Bank and professional references on Beneficial Owner
• Full written business plan outlining the proposed business, how it will be run, source of initial capital, expected turnover etc. We can assist with preparation of the business plan, but please note that this service is not included in the basic fee.

Note: We will know who you are but all that information is covered by strong Panama secrecy laws, which would require a Panama judge to order us to release this information.

The ownership of the corporation does not appear in any public registry or database. Even the government of Panama will not know who owns the corporation. Shares need not be kept in Panama. The license is issued to the company, not you personally. Of course if you prefer to have your name shown, you may be listed as an officer of the company. You do not have to travel to Panama for this purpose.

Other Options for Financial Services Companies: Uruguay and New Zealand

Depending on the nature of the financial services to be offered, other options may include a Uruguay SAFI or a New Zealand Trust Company. We can also arrange incorporation of these entities. Please feel free to contact us for a free initial consultation by email or telephone.