Brokers and real estate developers in Panama, face a new regulation. Two months ago, it was published the Law Number 23 of April 27, 2015, which establishes measures against money laundering and the financing of terrorism and weapons of mass destruction. The standard included 31 new activities and now are controlled and monitored by the Administration for Supervision and Regulation of Non-Financial Subjects of the Ministry of Economy and Finance (MEF). Among these activities, real estate brokers were included , who will become non-financial reporting entities under the supervision of the Administration.
Brokers and real estate developers – Gogetit Highlights
* As a result of this legislation, this sector seems to perceive greater demands on the part of banks as to the information requested by its customers.
* Banks require to foreigners to have a bank account in Panama for at least six months (if not residing in Panama) and bank references abroad; in addition to the financial statements of the country of origin of the funds.
* Being Panamanian citizen, has an easier justification of references that are verified more expeditiously. The difference is in the local consumer financing rates, terms and fees within the standard parameters. Panama is given to 90% financing on residential and 70% commercial.
The new legislation provides for measures against money laundering has generated some impact on the real estate sector. When buying or investing in a property, there is a lng list of requirements to prevent illegitimate funds investing in real estate.
According to information published by Martes Financiero website, and according to testimony offered by Katherine Shahani, president of the Association of Brokers and Real Estate Developers (Acobir), foreign customers are demanding more requirements than local; however, efforts are needed to prevent money laundering.
“In our profession, what has affected us the most is the filter banks. Now the bank is restricting a little and this limits us to the sphere of clients. However, it is a country theme and what we want is that the funds invested in real estate, are legitimate”, said Shahani.
When investing in a property, usually a 70% financing on residential property and 50% in commercial is granted. If the person lives in Panama for more than two years, it is treated as a resident and he may be granted up to 90% on residential and up to 70% in trade, provided that they submit deposits or transfers to account in a personal capacity in Panama, financial statements, immigration card, tax returns, bank references local and abroad, local business references and local household income.
Banks, and credit analysts have as main duty the study of the history of assets and funds previously acquired by the buyer in Panama and abroad. Katherine Shahani added: “There are banks that have taken the decision not to lend to foreign clients. Sometimes abroad there is no way to take the money out of the country of origin issues. Also, exchange or political issues makes them very difficult to translate the financial statements of the country of origin of local currency to the dollar, which devalues their purchasing power. Therefore, they find it more costly to demonstrate their standard of living abroad in comparison with Panama.
The deputy director of the Administration for Supervision and Regulation of Non-Financial Subjects of the Ministry of Economy and Finance, Carlamara Sánchez, explains that “include brokers and real estate developers among the activities monitored by the Administration, was important because following several reports and statistics from organizations such as the International Monetary Fund and the International Financial Action Group, have resulted in several components and real estate players are vulnerable and are a vehicle to introduce illicit money into the system.”