It has been more than three decades since the enactment
of the law that regulates the Fideicomiso. The
Fideicomiso, in general terms, is the legal act
whereby a settlor transfers assets to a fiduciary (trustee).
The trustee in turn agrees to manage those assets according to
the provisions established in the Fideicomiso
instrument (trust), for the benefit of a beneficiary, which
could be the settlor itself.
Law 21 of May 2017 was enacted with the purpose of
implementing new boundaries and reinforcing the previous
regulations that applied to fiduciary companies and to the
trust in general (Law 21). It comprises three different
features. These revolve around the adoption of new regulatory
guidelines pertaining to the fiduciary business, the amendment
of Law 1 of 1984 (Law of Fideicomiso), and the
modification of several laws containing provisions that
regulate certain aspects thereto.
Regarding the regulatory matters contained in Law 21,
perhaps the most important consists of the express limitation
of the fiduciary business to holders of a fiduciary licence
issued by the Superintendence of Banks. These changes preclude
unauthorised persons from acting as trustees. The latter was a
permitted practice before the enactment of Law 21 so long as it
could have been reasonably construed that the unauthorised
persons were not carrying out the fiduciary business in a
In addition, Law 21 establishes a wide array of provisions
that aim to increase professionalism levels in order to
safeguard and preserve the assets of the trust. It is worth
mentioning that the provisions include a requirement to pay a
regulatory fee. They also adopt formal mechanisms of
reorganisation and liquidation of fiduciary companies, along
with a special process relating to unclaimed assets.
As for contractual matters concerning the trust, several
amendments were made to the Law of Fideicomiso. The
modifications essentially seek to protect the settlors and
beneficiaries by attempting to mitigate potential moral hazard
risks that may arise from situations associated with conflicts
Law 21 also sets forth provisions that modify the anti-money
laundering/combating the financing of terrorism law to bolster
Panama's commitment to tackle the misuse of fiduciary services.
It also incorporates certain provisions which improve the tax
treatment of trusts, in order to foster the structuring of
trusts for real estate financing.
Overall, Law 21 aims to enhance Panama's financial services
through the addition of attractive tax features, higher
professional standards, and tougher sanctions.
Galindo, Arias & López
Scotia Plaza, 11th floor.
Federico Boyd Ave. No.18 and 51 St.
T: +507 303 0303
F: +507 303 0434