June 2009 - Mossack Fonseca & Co.

THIS ISSUE
PANAMA SKYLINE
| Legal and current affairs in The Bahamas, British Anguilla, BVI, Panama, Samoa and Seychelles |
COVER STORY
Panama
A Jurisdiction of
Opportunity
COVER ARTICLE
Nick Poole & Andrzej Radomski
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Samoa
A proactive approach to the
economic crisis
Panama – A jurisdiction of opportunity
The Republic of Panama has always been a country with special
fiscal features, but one that has also experienced a controversial
past. Its status as a transit country is world famous due to its
inter-oceanic canal, one of the world’s primary maritime crossroads.
In the past, however, the narrow isthmus between the Pacific and
Atlantic oceans was used as a crossing point for the Spanish gold
convoys and thus attracted the attention of pirates and privateers,
most notably the notorious Englishman, Captain Henry Morgan.
Over the centuries, Panama has developed a sophisticated
cosmopolitan attitude and a thirst for trade and economic
opportunities.
Panama was one of the first countries in the world to have a
structure of corporations that developed alongside an emerging
shipping registry, highly attractive features for both local and foreign
entrepreneurs. In effect, Panama became one of the first genuine
financial centre in the world and that experience has assisted its
development into modern times. Panama today is a primary centre
for banking and investment and will shortly be undertaking one of
the world’s largest civil engineering projects to date, the first
widening of the Panama Canal since it opened in 1914.
Viewed alongside other international jurisdictions, Panama’s
extensive experience stands up well. Many other jurisdictions are
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BVI
FATF Compliant
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www.mossfon.com
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INSIDE Mossack
Corporate Social
Responsibility
struggling in today’s precarious economic environment. External
international pressures and outdated colonial influences are forcing
unwelcome legislative changes upon resentful governments. Local
financial authorities are now requiring more information to be made
available, resulting in clients and practitioners looking to alternative
administrative centres. Panama, a fiercely independent country,
has welcomed many of the accepted changes, but has also ma
intained the position that it is up to Panama to decide and excessive
external pressures will not be tolerated.
Panama: one of the first genuine financial
centre in the world
Eight years ago, Panama enacted legislation that in effect allowed
the country to retaliate in the event that another country took
actions that were detrimental to its position. A number of European
countries who had unjustifiably placed Panama on economic black
lists have suddenly found themselves excluded from being able to
tender for the enormous and lucrative Panama Canal project. In
light of this, several countries rapidly removed Panama from their
black lists. Few other jurisdictions have the political clout to protect
their independence and position in this manner.
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FEATURE ARTICLE
Exchange of information and transparency are fast becoming
watchwords for international financial centres. Numerous
jurisdictions are struggling to amend their legislation to encompass
these factors. Panama has for many years recognized the need for
transparency, but at the same time realizes that a degree of
confidentiality is necessary to safeguard individual rights.
Interestingly, Panamanian Law No. 32, regarding corporations, has
required information on directors of a corporation to be in the public
domain since 1927. This is still not the case in the UK and many
other offshore jurisdictions, where it is now understood this attitude
must change soon.
While other financial centres have seen a fall in incorporations or at
least minimal growth, Panama still maintains a healthy level of
formations with over 46,000 new corporations being registered in
2008. In addition, nearly 5,500 new Private Foundations were
registered in the same period. This compares extremely favourably
when viewed against jurisdictions such as Jersey, Guernsey and the
Isle of Man. Certainly, one cannot compare the formation of
foundations with those of UK jurisdictions, as these are only now
slowly introducing these vehicles into their product portfolios. Again,
Panama is a trailblazer in this regard, its Private Foundation Law
was enacted as long ago as 1995 and now boasts an excess of
32,000 foundations on its register.
Facing, as others do, a worldwide recession, Panama’s economic
growth has outstripped its European counterparts. The IMF predicts
Panama will grow 3.5% to 7.5%, an amazing rate that European
economies can only dream about. In the first half of 2008, Foreign
Direct Investment (FDI) reached $1.1 billion, a 32.8% increase over
the same period in 2007. The fact that Panama has used the US
dollar as its legal tender since 1903 greatly reduces the threat of
inflation characteristic of other Latin American economies.
Many of the UK offshore jurisdictions boast efficient and modern
regulatory regimes. They have in the past cited other jurisdictions
as being less well regulated, in many cases without due evidence.
NEW & NOTEWORTHY
KEEPING YOU TUNED-IN
SAMOA
No Complacency for Samoa
Prime Minister of
Samoa
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Panama has enacted a number of new laws to counter money
laundering and other fiscal crimes, and the Banking Superintendent
oversees licensing and compliance auditing for all trust and
administrative practitioners. A Panamanian Foundation must be
formed through a lawyer, a requirement that does not apply in the
case of European and UK jurisdictions. Banking in Panama requires
in-depth and detailed KYC and Due Diligence, in many cases in
excess of that required in the UK.
As a result of the General Noriega fiasco, Panama has in the past
been portrayed, by those wishing to debase it, as a centre for
money laundering and other fiscal misdemeanours. Perhaps a
closer look would reveal the truth. This old, well established and
experienced jurisdiction has in many ways lead the field for years.
Perhaps this explains why more practitioners are reverting to the
use of Panamanian corporations and why more Panamanian Private
Foundations are formed each year than companies are
incorporated in Jersey or Guernsey. In 2008, the 10th Annual STEP
Caribbean Conference was held at the Sheraton Panama Hotel, an
indication that STEP and other professional bodies appreciate
Panama’s standing in this modern inter-jurisdictional environment.
Panama is certainly a jurisdiction worth re-visiting by those
practitioners seeking an alternative to the jurisdictions they
currently utilise. Panama is in every way ‘a jurisdiction of
opportunity’.
Word Bank
KYC & Due Diligence- these two terms refer to procedural activities
undertaken by financial institutions and their service providers
throughout the world in order to mitigate their risk exposure and to
comply with anti-money laundering ("AML") and counter-terrorism
financing laws and regulations that are promulgated by the various
financial regulatory agencies.may register ships of unlimited tonnage,
type and size.*
We shouldn’t be complacent, warned Prime Minister Tuilaepa Lupesoliai Sailele Malielegaoi at the Economic Stimulus Package
Forum, held at the Development Bank Building in Samoa in late March. “The global meltdown is tremendous and for small open
economies like Samoa, we cannot avoid being hit even though it is no fault of ours. We should take a proactive approach to
cushion our economy against those economic tidal waves,” he added.
Fortunately, the global financial crisis has yet to hit Samoa as hard as it has many other countries. According to Tuilaepa, this is
largely due to the programme of reforms the Samoan government has put in place in the last 15 years, which have resulted in
sound economic policy fundamentals and macroeconomic stability. This has certainly provided a cushion to slow down the pace
of the economic shocks being felt worldwide.

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- continued from page 2
Tuilaepa did express his preoccupation that the bold policy measures
implemented in Samoa in the last few years could be undone by the
global crisis. However, with careful assessment of the needs and
capacity to undertake remedial, prioritised policy actions, and the
support of the international community, Tilapia believes it will be possible
to have a better chance of rolling with the punches once they land.
Samoa: Program of Reforms
• Enabling environment built for the private sector to grow
• Strengthening Government institutions
• Reforming SOEs
• Raising service delivery standards
• Increased partnership with the community, as well as
• Continuing the development agenda promised in the SDS
This recent Forum will open up discussions and predictions on how the
financial crisis might affect Samoas economy and how to design a
response that is affordable and realistic. It will ultimately provide a good
basis for some form of relief that is realistic and affordable whilst at the
same time avoid compromising Samoaís macroeconomic stability.
economies of the Eastern Caribbean Currency Union [...] stemming from
the global financial crisis.”
BVI
Recognized as Compliant with FATF Recommendations
The British Virgin Islands Financial Services Commission (FSC) is
pleased to announce that the Caribbean Financial Action Task Force
(CFATF) concludes that BVI is largely compliant with the Financial Action
Task Force (FATF) 40+9 Recommendations and that, as a Territory, it
has maintained a robust public policy commitment to ensuring that it
plays its part in the global fight against money laundering and the
financing of terrorism.
The CFATF Report highlights the tremendous efforts undertaken by the
BVI since the last CFATF mutual evaluation of the Territory in 2002. The
mutual evaluation was conducted by an assessment team
whichreviewed the Territoryís institutional framework, relevant AML/CFT
laws, regulations, guidelines, policies and the regulatory systems in place
MOSSFON NEWS
MF OPENS OFFICE IN BOGOTA
On March 18, 2009, a seminar entitled “Business and Investment Opportunities at the Colon
Free Zone and the Panama Canal” was held at the exclusive Gun Club of Bogota, Colombia with
the participation of Mossack Fonseca & Co. Attendees had the opportunity to hear talks by
featured speakers such as Nilda Quijano, General Manager of the Colon Free Zone, Luis Ferreira
Kam, who represented the Panama Canal Authority, and Mr. Amauri Batista, a Mossack
Fonseca attorney who spoke of legal aspects concerning immigration, the structure of
Panamanian corporations, tax issues, business opportunities at the Colon Free Zone, and the
expansion of the Panama Canal.
Mossack Fonseca & Co. took advantage of this opportunity to announce the upcoming opening
of their new office in Bogota and introduced Mr. Juan Esteban Arellano as the manager of MF
Colombia.
N0. 02 June 2009
New & Noteworthy
to deter money laundering and the financing of terrorism. It also
examined the capacity, implementation and efficacy of these
systems.
The FSC is pleased with the outcome of the mutual evaluation
and the recognition given to the Territory’s adherence to
AML/CFT standards. However, the FSC recognises that there are
areas highlighted by the Report which call for improvement and it
is now focused on the adoption of appropriate measures to effect
necessary improvements to its areas of AML/CFT responsibility in
order to strengthen the Territoryís continued adherence to
established standards relating to the global war against money
laundering and terrorist financing.
In Depth Look
Inside FATF Report on BVI
BVI has maintained a robust public policy commitment to
ensure it plays its part in the global fight against money
laundering and the financing of terrorism.
Successive BVI governments have promoted policies to
ensure that it can play its part to effectively combat cross
border financial crimes, maintain a reputation of being a
clean jurisdiction, and fully cooperate with the
international community when criminal conduct is found.
The latter has led to the jurisdiction being in the forefront
in the introduction of modern financial services
legislation such as a licensing regime for trust and
corporate service providers, immobilisation of bearer
shares and the introduction of mandatory suspicious
activity reporting obligations.
The British Virgin Islands strives to ensure its continued place in
the international community as a leading and reputable
international finance centre. The Territory will continue to be a
strong cooperative partner in the shaping and implementation of
compliance standards and supervision pertaining to money
laundering and terrorist financing, while ensuring a modern and
conducive atmosphere for the conduct of legitimate business.
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Inside MOSSACK
CORPORATE SOCIAL RESPONSIBILITY
As part of its 2008 corporate social responsibility
program, Mossack Fonseca donated funds to
prestigious organizations in the country, on behalf of
its trusted clients.
Our warmest thanks to you for allowing us to support
important projects each year that benet our society
and communities. Your support makes it possible for
Mossack Fonseca to help those most in need.
Following are the areas that will benet from these
donations:
• CHARITY: 39%
• EDUCATION: 30%
• HEALTH: 14%
• RELIGION & SPIRITUALITY: 10%
• ARTS AND CULTURE: 7%
N0. 02 June 2009
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