Corporate compliance in Panama: from “complying” to “making better decisions”

Jean Carlo A. Núñez A.
Nov 6
4 min read

Compliance isn't just a manual gathering dust in a drawer. It's a management system that allows you to identify, prevent, detect, respond to, and document legal and ethical risks, enabling you to operate with confidence in your dealings with banks, clients, and investors. When well-designed, it accelerates decision-making and reduces the costs of errors.

What is “compliance”?

Simply put: comply with the law + do the right thing + be able to prove it . This includes clear policies, operational controls, training, reporting channels, and evidence that everything works.

Essential acronyms:

AML/CFT ( Anti-Money Laundering / Countering the Financing of Terrorism).
KYC/KYB ( Know Your Customer / Know Your Business : know your customer/company).
UBO ( Ultimate Beneficial Owner ).
PEP ( Politically Exposed Person ).
EDD ( Enhanced Due Diligence ).
KPI ( Key Performance Indicator ).
RBA ( Risk-Based Approach ).
SLA: Service Level Agreement (target times).

Why does it matter in Panama?

Access to the financial system: banks and payment providers require complete and traceable KYC/KYB files.
Reputation and growth: a solid program opens doors to corporate clients and investors.
Regulatory requirements: In addition to general rules, certain activities (e.g., client asset management, creation/management of legal entities, trusts) have specific AML/CFT and UBO obligations .
Internal efficiency: reduces rework, bank rejections and “surprises” in audits.

Note: Regulations are frequently updated. This article describes best practices applied in Panama; for specific cases, it is advisable to review the current framework and sector-specific guidelines before making decisions.

The 7 pillars of an effective program

Leadership and tone from the top: Management defines ethical expectations, approves policies, and allocates resources.
RBA: Risk-based approach. Maps risks by customer, product/service, channel, and geography . Prioritizes high risks and justifies low risks.
KYC/KYB and UBO: Identify and verify who your counterparty is and who controls them ( UBO ). Evaluate PEPs and sanctions lists; activate EDD if there are red flags.
Operational controls and traceability: Transactional limits, segregation of duties, approvals, checklists, and evidence . If it's not documented, it doesn't exist.
Confidential reporting and response channel , without retaliation , with investigation protocol and defined timeframes.
Useful training: Brief, periodic, and based on business cases. Assesses understanding.
Monitoring, auditing and continuous improvement: Key Performance Indicators ( KPIs ), independent reviews and action plans with responsible parties and dates.

How to get started: 30–60 day route

Week 1–2: express diagnosis

Interviews with key areas (sales, finance, operations).
Preliminary risk map and gap analysis.

Week 3–4: documentary foundations

One-page policies : gifts/hospitality, conflicts of interest, KYC/KYB-UBO, cash handling.
Customer and supplier onboarding forms and checklists .

Week 5–6: Operation and Measurement

Implement controls (limits, alerts, approvals).
Launch a reporting channel and micro-training sessions .
Define KPIs : % of completed files, response times, resolved alerts, closed findings.

A practical example (short story)

A logistics company needed to sign a regional contract during peak season. The risk lay in the complex corporate structure of the counterparty and in advance payments .

With RBA , we prioritize the essentials: signing power, purpose of the relationship , and source of funds .
The initial KYC/KYB process was simplified to a one-page checklist and staggered document upload .
For UBO , trustee certification and continuous updating obligation were required .
A PEP match triggered EDD ; with open sources and independent verification, the risk was ruled out.
AML/CFT controls were designed to coexist with the operation: payments only to corporate accounts, limits based on service milestones, and a termination clause for falsification/omission of the UBO . Result: on-time contract, accepted bank file, and a replicable process for future clients.

Common mistakes (and how to avoid them)

Policies that are too long: nobody reads them; keep them to 1–2 pages with roles and examples.
"On-the-record" KYC : Verify once and never again. Define update triggers (amounts, company changes, signals).
Unprotected reporting channels: there must be a no-retaliation policy and a clear investigation flow.
Not measuring : without KPIs there is no improvement or defense against audits.

Metrics that actually work (KPIs)

Complete files : % of KYC/KYB with verified UBO .
Decision time : from case entry to approval/rejection.
Alerts resolved : # and % within SLA (service level agreement).
Training : coverage and evaluation scores.
Findings : % of corrections closed within the deadline.

Frequently Asked Questions (FAQ)

1) Does compliance slow down sales? No, if it's designed with RBA and tiered evidence. Prioritize what's critical and move forward in parallel with what's secondary.

2) Do all companies need the same thing? No. The program depends on your risk profile : industry, channels, jurisdictions, and transaction volume.

3) What happens if a PEP appears? It is not an automatic rejection. Activate EDD and decide with evidence and reinforced controls.

4) How often should I update KYC/KYB and UBO? Define periodic risk reviews (annual/biennial for high/medium, for example) and triggers for relevant changes.

5) How is effectiveness demonstrated? With KPIs , decision logs, training evidence, and audit results.

Conclusion

Compliance is not a hindrance; it's a method for making clear decisions . It organizes information, prioritizes what's essential, establishes reasonable controls, and leaves evidence. In this way, the company gains speed with confidence , reduces the costs of errors, and improves its access to financing and demanding clients.