New Law on Financial Crimes in Panama

By means of Law No. 45 of June 4, 2003 , published in the Official Gazzette No. 24,818 of June 9, 2003 , the Republic of Panama updated its criminal legislation by incorporating to XII Title of the Second Book of the Criminal Code, a Chapter VII, named Financial Crimes.

Law No. 45 of June 4, 2003 (hereinafter the “Law 45) sets forth in its first article, the different crimes considered in this new Chapter VII named “Financial Crimes. It is also established that persons and/or corporations that incur in these crimes will be subject to a prison term ranging from 3 to 10 years.

The punishable conducts contained in Chapter VII of the Criminal Code are the following:

Possession, unlawful use or illegal transfer of financial resources

Article 393 A establishes that a prison term of 3 to 5 years will be applicable as punishment to those persons that for their own benefit, or that of a third party, using technological means or fraudulent maneuvers, takes over, makes unlawful use or permits the illegal transfer of financial resources of a banking entity, financial corporation or other that receives or acts as intermediary with financial resources of the public or that has been trusted therewith. The penalty will be of a 6 to 10 year prison term when the crime is entered into with the participation of an employee, director, officer, administrator or legal representative of the entity or corporation, that makes use of his position or of the mistake of others.

Falsification of accounting and financial information

Pursuant to that indicated in Article 393 B, whoever destroys, hides or falsifies the accounting books and/or accounting registries, financial statements and other financial information of a natural or juridical person, with the purpose of obtaining, keeping or granting a credit or capital facility of a banking entity, financial corporation or other that receives or intermediates with financial resources of the public or has been trusted with these,rading in a manner such that results detrimental, wiil be subject to a prison term of 4 to 7 years.

A penalty of 5 to 10 years of prison will be imposed to the authorized public accountant that destroys, hides or falsifies the books or accounting registries, the financial information or the annotations in registries or in custody accounts of an issuer registered in the National Securities Commission, or those that operate as a house of securities, investment consultant, investments manager, or as an intermediary or an autoregulated organization or of a member of an autoregulated organization, in such a manner that results detrimental.

The penalty described above also applies to the person that promotes or facilitates the performance of the conducts refferred to previously if he or she is an officer or director, manager, administrator, legal representative, attorney in fact or employee of the natural person or corporation that receives the financial or capital credit.

Fraudulent approval of credits

As it is established in Article 393 C of the Criminal Code, the director, officer, manager, administrator, legal representative, participants of the credit committee or the employee of a banking entity, financial corporation or other that receives or intermediates with financial resources of the public, that directly or indirectly approves one or more credits or other financing, over the legal regulations, in such a manner that this directly causes the compulsory winding up by the court, insolvency or permanent illiquidity, will be imposed with a penalty of prison for a term of 4 to 7 years. This same penalty will be imposed to the beneficiaries of the credit that have participated in the crime. The penalty will be greater if the crime is done for the benefit of oneself, with a prison term of 5 to 10 years.

Illegal exercise of financial activities

As set forth in Article 393 D of the Criminal Code, whoever receives, in a massive and continuous manner, financial resourses from the public, and is not previously duly authorized by the competent authority to do so, will be subject to a prison term of 3 to 5 years.

Disclosure of Confidential Information

A prison term of 3 to 4 years will be imposed to whoever uses or reveals unlawfully confidential information, obtained by means of a priviledged relationship, related to securities registered with the National Securities Commission, or to securities that are negotiated in a regulated market, in such a way that a detriment is caused and a benefit to himself or to a third party is obtained.

To the effects of this article, it is considered as confidential information that which due to its nature may have an effect of the prices of securities and that have not yet been revealed to the public.

The director, officer, manager, administrator, legal representative or employee of a banking entity, financial corporation or other that receives or intermediates with financial resources of the public that omits or denies to provide or provides false information to the supervising and controlling authorities, to hide situations of illiquidity or permanent insolvency of the entity, will be subject to a prison term of 5 to 7 years, as it is established in Article 393 F of the Criminal Code.

Illegal purchase and sale of securites

Based on that established in article 393 G of the Criminal Code, whomever with the purpose of obtaining a benefit to himself or for a third party, performs an offer to purchase or sell registered securites, or in order to buy or sell said securities provides a false or deceiving appearance that the registered securities are being negotiated actively, or establishes a false or deceiving appearance regarding the market of the registered securites, or manipulates the market price of any registered security, with the purpose to make a sale or to buy said securities, will be punished with a prison term of 3 to 6 years.

Silka Nino de Arrue 
Pardini & Asociados