MossFon Report December 2003.qxd - Mossack Fonseca & Co.

Legal and current affairs on The Bahamas, the British Virgin Islands, Niue, Panama, and Seychelles
PANAMA
Panama Celebrates 100 Years
of Independence
President Mireya Moscoso
DECEMBER 2003:
Panama Celebrates 100 Years of
Independence
New FATF Rules Set to Permit Bearer
Shares
New Trust Legislation to Enhance and
Strengthen BVI Financial Services
Niue’s 29th Constitutional
Celebrations
Package of Offshore Legislation
Enacted
Girls’ Home and Children’s Dining
Room in Panama Benefit From
Mossfon’s Donation
Presidents and heads of state that attended the official ceremonies (from left to right): Honduras’ Ricardo
Maduro, El Salvador’s Francisco Flores, Costa Rica’s Abel Pacheco De La Espriella, Bolivia’s Carlos Mesa,
Ecuador’s First Lady Ximena de Gutiérrez, Panama’s Mireya Moscoso, Barbados’ Owen S. Arthur, Taiwan’s
Chen Shui-bian, Guatemala’s Alfonso Portillo, Nicaragua’s Enrique Bolaño and Rumania’s Ion Iliescu.
During the Centennial celebration, President Mireya
Moscoso offered a State Banquet for all delegates.
Shown above is Guatemala’s President, Alfonso Portillo,
President Moscoso and El Salvador’s President,
Francisco Flores.
November 3rd marked Panama's official
100th birthday signifying a century of independence
and secession from Colombia.
Following its independence from Spain in
1821, Panama had become part of
Colombia for more than 82 years.
When Panama declared its independence,
U.S. warships protected the secessionists
and the then-U.S. President Theodore
Roosevelt recognized the new government.
Eight days later, a treaty was signed granting
U.S. control in perpetuity over a 10-mile
strip of land for the construction, protection,
and operation of the Panama Canal. After
lengthy negotiations, the U.S. returned the
Canal Zone to Panama on 31st December,
1999.
Both local and international activities have
highlighted the country's Centennial celebrations
throughout 2003, and eight heads of
state attended the official birthday event in
November, including U.S. Secretary of State
Colin Powell, Colombian President Alvaro
Uribe, and Taiwan's President Chen Shuibian.
Colin Powell commended Panama's achievements
following the ousting of former dictator
Manuel Noriega and said he was “so
pleased to see how Panama had progressed
over the past 14 years from those difficult
days in December 1989.” He also praised
Panama's President Mireya Moscoso and
the Panamanian people saying “I compliment
the president - and through her, the
Panamanian people - for their commitment
to democracy, the economic reforms that
have taken place and the superb manner in
which the Panama Canal has been operated.”
DECEMBER 2003

PANAMA continued
Mr. Powell also said that he expects a decision
soon regarding inclusion of Panama in a
proposed US-Central America free trade deal
and when addressing a major concern of
Panama, he said the U.S. is considering ways
to help train Panamanian organizations to
neutralize ordnance from the former U.S. military
bases.
BAHAMAS
New FATF Rules Set to Permit
Bearer Shares
At a workshop on the prevention of money
laundering and terrorist financing sponsored
by the Central Bank of the Bahamas and the
Bank for International Settlements, Rochelle
Deleveaux, legal counsel for the Central
Bank, told delegates that although the
Financial Action Task Force's revised 43
draft recommendations include provisions
requiring banks, financial institutions and corporate
service providers to identify beneficial
owners and prevent the abuse of devices
such as bearer shares, there were no
requirements that countries immobilize or
eliminate bearer shares as they have previously
been forced to do.
The previous Bahamas FNM government
abolished bearer shares in the 11-piece
package of legislation it pushed through
Parliament in 2000 in an ultimately successful
bid to escape the FATF blacklisting crisis.
The FATF's newly revised recommendation
not calling for the elimination of bearer
shares has re-ignited much debate in the
Bahamas financial services industry,
although the sector wants to determine
whether there is still a significant market
demand for bearer shares before lobbying
Government for their reintroduction.
Ms. Deleveaux said “There are no provisions
against the use of bearer shares in member
countries, which will cause some surprise for
those territories and jurisdictions that were
caused to remove or immobilize bearer
shares in their own jurisdiction.”
Attorney General Alfred Sears also spoke at
the workshop and told delegates that one of
the greatest concerns to arise during his current
tenure as chairman of the Caribbean
Financial Action Task Force (CFATF) has been
“the uneven application of regulatory standards
in FATF countries and non-FATF countries.”
Mr. Owen Bethel, a Bahamas Financial
Services Board (BFSB) Director said “I think
the Government certainly should look at all
areas - whether IBCs or other legislation -
where our competitors have not gone as far
as we have and basically, in the cliché of a
'level playing field', come back to a 'level
playing field'.”
Ms. Deleveaux noted that although it was not
certain the FATF would adopt the 43 draft
recommendations because some countries
were objecting to parts of the text, they
sought to adopt a risk-based approach to
'Know Your Customer' (KYC) identification.
Under the new FATF recommendations, financial
institutions must take all reasonable
measures to identify beneficial owners, and
the magnitude of due diligence required
should depend on the money laundering risk
posed. The FATF recommends that more
due diligence be applied to 'Politically
Exposed Persons' (PEPS), such as politicians
and senior civil servants who hold prominent
positions in foreign countries.
Financial institutions accepting business and
clients from third parties will have to acquire
the introducer's customer verification information
and satisfy themselves the third party
has appropriate anti-money laundering and
due diligence systems. Non-financial institutions
such as lawyers and accountants will
also need to perform due diligence when executing
transactions for clients.
BRITISH VIRGIN ISLANDS
New Trust Legislation to
Enhance and Strengthen BVI
Financial Services
To augment BVI's good reputation as a quality
financial services centre, Chief Minister Dr.
the Honourable D. Orlando Smith plans to
pilot three trust legislation bills through the
Legislative Council, being 'The Virgin Islands
Special Trusts Bill', 'The Trustee
(Amendment) Bill', and 'The Property
(Miscellaneous Provisions) Bill'. All three bills
were introduced to the Legislative Council
and received their first reading on 28th
August.
Chief Minister Smith said “All in all, the three
statutes will serve to demonstrate that the
BVI is in the forefront of jurisdictions which
are able to introduce innovative measures to
meet the legitimate needs of its international
clientele.” He added that “It is our hope that
the passage of these statutes will also provide
this country with an excellent marketing
opportunity, increase government revenue
and as a result of all these factors, create further
employment opportunities for
BVIslanders.”
Dr. Smith pointed out that the Virgin Islands
Special Trusts Bill is the most innovative of
the three proposed statutes, and is likely to
receive extensive international attention. The
objective of this Bill is to permit the shareholders
of BVI companies to establish trusts
that separate the trustee from management
responsibilities, leaving management tasks
to the directors and enabling the company
(and its business) to be retained as long as
the directors think fit. Trusts created under
this proposed legislation will be promoted as
“VISTA” trusts. It is anticipated that this proposed
Bill will appeal to many individuals who
want to set up trusts to hold shares in their
companies who were previously hindered by
current constraints of English trust law, thus
attracting more trust business to the BVI.
Because the statute will be confined to
shares in BVI companies, it is hoped that the
number of IBC's incorporated in BVI for reputable
purposes will also increase.
The Trustee (Amendment) Bill addresses various
issues that were raised in the KPMG
Report and includes numerous improvements
to BVI trust law, including provisions relating
to dealings between trustees and third parties,
desirable provisions relating to charities,
a strong new regime for purpose trusts,
and some amendments relating to the BVI's
conflict of laws rules for trusts.
The purpose of the Property (Miscellaneous
Provisions) Bill is to update BVI laws in several
areas, including a significant provision
abolishing the archaic requirement that
deeds executed by individuals need to be
sealed. Under the new Bill a document will
still qualify as a deed if it is drawn up so that
it is expressed to be a deed, and is witnessed.
NIUE
Niue's 29th Constitutional
Celebrations
Niue celebrated its 29th Constitution from
18th to 21st October 2003. although this
year's celebration calendar was more moderate
than previous years because Niue is
gearing up for more elaborate celebrations

NIUE continued
for next year’s 30th Constitution, which concides
with their unanimous invitation from
the Pacific Islands Forum Leaders to host
the prestigious 35th Pacific Islands Forum
meeting in August 2004.
At the 29th Constitution celebration, Cook
Islands Honourable Minister Robert Wigmore
(Minister of Works, Marine Resources,
Agriculture & Justice) was able to attend,
and it was also the first Constitutional celebration
for Her Excellency the Honourable
Sandra Lee-Vercoe, the New Zealand High
Commissioner who was appointed earlier
this year.
In his speech, the Honourable Premier
Young Vivian encouraged all Niuean people
to work together to maintain a steady
course for Niue and her people for another
29 years.
SEYCHELLES
Package of Offshore
Legislation Enacted
In July, the Seychelles National Assembly
unanimously approved a package of four
new bills conveying total national support of
the offshore industry as a key contributor to
the country's economy. The four new Acts
are:
The Companies (Special Licenses) Act (CSL)
allows companies to be incorporated under
the Companies Act, 1972 with special provisions
giving measures of confidentiality
and low tax status of 1.5% on worldwide
income and complete exemption from withholding
tax. The CSL satisfies all disclosure
requirements expected of modern corporations,
and has access to all of Seychelles‘
double taxation avoidance treaties, including
one with the People's Republic of China
where the maximum rate of withholding tax
has been set at 5%. Seychelles IBCs can
'continue' under the CSL Act, as well as foreign
registered companies (provided their
home jurisdiction permits continuation). To
'continue' under the CSL Act, companies
must comply with all requirements of the
Companies Act, 1972.
The Protected Cell Companies Act (PCC)
allows a company incorporated under the
Companies Act, 1972 to divide into identifiable
cells, each of which can have its own
cellular/unit assets without assuming a separate
legal personality (ideal for use in
umbrella funds and captive insurance structures).
This new Act will complement existing
Seychelles legislation permitting the
establishment of captive insurance companies
and mutual funds.
The Limited Partnership Act (LP) allows registration
of partnerships subject to the
Commercial Code. An LP must have at least
one limited partner and at least one general
partner who must be a Seychelles person
(natural or legal), and must file annual
returns with the Authority. The LP has a 20
year guarantee of exemption from all forms
of taxation.
The Interactive Gambling Act 2003 allows
for licensing of legitimate operations to offer
internet gaming and sports betting activities
in a well-regulated environment which
includes recognition and regulation of electronic
transactions under the Electronic
Transactions Act, 2001. Additionally, internet
gaming activities may be licensed under
the SITZ regime, which provides further tax
incentives and concessions.
This new legislation will soon be supplemented
by the 'International Corporate
Service Providers Act 2003', which will regulate
company and trust formation and
related services to further enhance the
Seychelles' modern regulatory framework.
The legislative review is expected to be
completed when SIBA announces new measures
to introduce controls on the use of
bearer shares to comply with 'Know Your
Customer' requirements advocated by the
FATF and the IMF.
MOSSFON GROUP
Girls’ Home and Children’s Dining
Room in Panama Benefit From
Mossfon’s Donation.
This year, part of our annual charitable
donation was allocated to Panama, and the
sum of US$12,500.00 was granted to two
very worthy causes.
One of such causes is the “Comedor Divino
Niño”, a center in a very poor suburb of
Panama City where 400 children get a free
meal every day. The funds donated were
used to repair the roof, install a new floor
and windows, and a new industrial sized
double sink.
www.mossfon.com
The Comedor was also able to buy a refrigerator,
restaurant sized cooking pots and a
new industrial stove. As this dining room
gets no financial support from public or private
entities, its administrator, Mr. Alfredo
Rosas, and the children welcomed the
donation, as we can see in the photo below.
Perhaps most important of all, Mossack
Fonseca & Co. has obtained legal personality
for the Comedor, so that other companies
and associations may be more wiling to
make contributions to it.
The other part of the annual donation was a
bequest to the “Hogar de las Niñas de la
Capital”, a home for orphaned and homeless
adolescent girls in Panama City. The Hogar
provides these youngsters with healthful
food, health care and all facilities for their
education, besides counseling and religious
guidance. Mossfon's donation was used to
remodel and expand certain areas of the
Home. Its administrator, Elba Flores, and
the girls of the Hogar were quite touched
and grateful to the Mossfon Group for this
donation.
Mossfon staff members, Mr. Alfredo Rosas and children
from the Comedor Divino Niño.
Mossfon staff members, Mrs. Elba Flores and girls
from the Panama Children’s Home.
DECEMBER 2003

JURISDICTIONS
BAHAMAS
Saffrey Square, Suite 205
Bank Lane, P. O. Box N-8188
Nassau, Bahamas
T (242) 322-7601
F (242) 322-5807
E bahamas@mossfon.com
GLOBAL OFFICES
EUROPE
JERSEY
T (44-1534) 767009
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E jersey@mossfon.com
LUXEMBOURG
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F (352) 349889
E luxembourg@mossfon.com
GENEVA
T (41-22) 809-5020
F (41-22) 809-5030
E geneva@mossfon.com
LONDON
T (44-207) 865-0660
F (44-207) 865-0056
E mossfon@mossfon.co.uk
ZURICH
T (41) 1 213-2080
F (41) 1 213-2090
E zurich@mossfon.com
CORRESPONDENT OFFICE
VANCOUVER
T (604) 688-3931
F (604) 688-2921
E vancouver@mossfon.com
Mossack Fonseca & Co.
Attorneys at Law
0832 - 0886 W. T.C.
Panama, Rep. of Panama
T H E
BRITISH VIRGIN ISLANDS
Akara Building, 24 de Castro Street
Wickhams Cay 1, P. O. Box 3136
Road Town, Tortola
British Virgin Islands
T (284) 494-4840 / 494-4976
F (284) 494-4841 / 494-5884
E General@MossFon-BVI.com
LUGANO
T (41-91) 993-2758
F (41-91) 993-2786
E lugano@mossfon.com
CZECH REPUBLIC
T (420) 2 2609 1119
F (420) 2 2609 1100
E mossfon@mossfon.cz
CYPRUS
T (357) 5 339 280
F (357) 5 339 316
E cyprus@mossfon.com
ISLE OF MAN
T (44) 1624 679375
F (44) 1624 628436
E IOM@mossfon.com
LIECHTENSTEIN
T (423) 230-1750
F (423) 230-1751
E liechtenstein@mossfon.com
UNITED ARAB EMIRATES
T (971-4) 352 5303
F (971-4) 351 9877
E mossfon.@hmlc.co.ae
FOR FURTHER INFORMATION OR ADVICE, PLEASE CONTACT:
PANAMA
MOSSFON REPORT
NIUE
Suites 21/22
Maluaga
P. O. Box #71
Alofi, Niue
T (683) 4341
F (683) 4357
E niue@mossfon.com
BAHAMAS
BVI
LATIN AMERICA
GUATEMALA
T (502) 361-2869 / 361-3370
F (502) 361-3317
E mossfon@gua.net
URUGUAY
T (598-2) 916-0588
/916-0589
F (598-2) 916-0642
E uruguay@mossfon.com
BRAZIL
T (55) 11 251-4222
F (55) 11 251-4222
E brazil@mossfon.com
PANAMA
Arango Orillac Building
54th Street
P. O. Box 0832-0886, W. T. C.
Panama, Rep. of Panama
T (507) 263-8899 / 264-2322
F (507) 263-7327 / 263-9218 / 263-7914
E MF@mossfon.com
PERU
T (51) 1 422-2906
F (51) 1 441-9579
E peru@mossfon.com
ASIA
HONG KONG
T (852) 2376-1998
/2376-2485
F (852) 2376-0308
E hongkong@mossfon.com.hk
SINGAPORE
T (65)- 6 221 0592
F (65)- 6 221 0591
E singapore@mossfon.com.sg
SEYCHELLES
Suite 13, First Floor
Oliaji Trade Centre
Francis Rachel Street
Victoria, Mahe, Seychelles
T (248) 324866
F (248) 324867
E seychelles@mossfon.com
SEYCHELLES
THAILAND
T (662) 636-3100
F (662) 636-3110
E thailand@mossfon.com
SHANGHAI
T (86) 21 63746708
F (86) 21 63746709
E shanghai@mossfon.com.cn
VISIT OUR WEBSITE AT:
www.mossfon.com
© This publication is intended to provide its readers with current information concerning the legal and
economic development of The Bahamas, the British Virgin Islands, Niue, Panama and Seychelles, and it
is not intended to provide legal advice.
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NINGBO
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DECEMBER 2003
NIUE