Panama

In addition to the Constitution of Panama, the main laws applicable in Panama to anti-corruption, bribery and money laundering are as follows:

• Law 14 of 2007, as amended, adopting the amended and restated Criminal Code (Ley 14 de 2007, como ha sido modificada, que adopta el texto único del Código Penal).

• Law 59 of 1999, as amended, regulating Article 299 of the Constitution and including dispositions against corruption in public office (Ley 59 de 1999, como ha sido modificada, que reglamenta el Art. 299 de la Constitución Politica y dicta otras disposiciones contra la corrupción administrativa).

• Law 6 of 2002 regulating transparency in public office and establishing the Habeas Data action and other regulations (Ley 6 de 2002, que dicta normas para la transparencia en la gestión pública, establece la acción de Habeas Data y dicta otras disposiciones).

• Law 33 of 2013, as amended, creating the National Authority of Transparency and Access to Information (Ley 33 de 2013, como ha sido modificada, que crea la Autoridad Nacional de Transparencia y Acceso a la Información).

• Law 121 of 2013, modifying the Crimminal Code, Judicial and Criminal Procedure and adopting certain measures against organized crime (Ley 121 de 2013, que reforma el Código Penal, Judicial y Proceso Penal y adopta medidas contra las actividades relacionadas con el delito de delincuencia organizada).

• Law 23 of 2015, as amended, adopting measures to prevent money laundering, financing of terrorism, and financing of the proliferation of weapons of mass destruction and other regulations (Ley 23 de 2015, que adopta medidas para prevenir el blanqueo de capitales, el financiamiento del terrorismo y el financiamiento de la proliferación de armas de destrucción masiva, y dicta otras disposiciones).

• Law 23 of 2015 and Law 121 of 2013 specifically address money laundering activity and its associated conduct, in addition to anti-corruption and bribery.

a) Employee representative bodies such as a works council or union.

Organized workers’ associations, such as work councils or labor unions, do not have the right to be informed of an internal investigation before it is commenced or to participate in the investigation, unless this has been agreed upon in a collective bargaining agreement.

b) Data protection officer or data privacy authority.

Law 81 of 26 March 2019 (Law 81) and Executive Decree 285 of 28 May 2021, regulates data protection, creates a Council for Data Protection composed of members of the public and private sector, and establishes the Autoridad Nacional de Transparencia y Acceso a la Información (National Authority for Transparency and Access to Information) as the entity that supervises data protection matters.  Executive Decree 285 of 28 May 2021, which issues the regulation (the "Regulation") of Law 81, established the obligation for public entities to have a data protection officer, and in the case of private entities is it not an obligation under the Regulation, but it would be seen as favourable to do so under any evaluation done by the Autoridad Nacional de Transparencia y Acceso a la Información (National Authority for Transparency and Access to Information). To the extent any such investigations relate to the treatment of personal data, the Regulation establishes that: (i) the data protection officer should be involved in any matter which related to data protection; and (ii) if the controller (in Spanish, “responsable del tratamiento”) has knowledge of a breach in security, meaning any damage, loss, alteration, destruction, access and in general any illicit use or unauthorized use of personal data, even if it occurred by accident, in any stage of the treatment and that represents a risk for the protection of personal data, it will have to notify immediately of such incident to the Autoridad Nacional de Transparencia y Acceso a la Información (National Authority for Transparency and Access to Information) and the data subjects affected by such incident within 72 hours from when they become aware of the incident.

c) Other local authorities.

If related to a potential crime, there is an obligation to report an internal investigation to the competent criminal authority. Furthermore, internal investigations of regulated entities, such as banks, insurance companies, among others, must be notified to their respective regulator, which in the case of money laundering may include the Financial Analysis Unit (Unidad de Análisis Financiero).

d) What are the consequences in case of noncompliance?

In general terms, consequences for noncompliance include fines, suspension of licenses, and ethical code violations, among others. Under the Criminal Code, failure to act where there is a duty to do so may have criminal implications where such failure is related to a crime that is being prosecuted and the omission can be perceived as the act of an accomplice or participant in the crime.

Employees must participate in an interview to support an investigation, but they can refuse to cooperate with the interview process. In those cases, the employer cannot impose any disciplinary measures. Nevertheless, if the company has evidence that the employee is involved in wrongdoing that amounts to a good cause for employment termination, it will have the right to dismiss the employee without paying severance, as established in the Labor Code.

The Statute of Limitations is governed by the following rules:

• According to Article 12(6) of the Labor Code, the right to dismiss an employee or to impose disciplinary measures expires after two months. This period shall be counted from the date of the misconduct.
• In the case of criminal acts, the statute of limitations will run from the date on which the incident becomes known to the employer, but in no event can this period exceed a total of two years.

a) Conducting interviews?

There is no express regulation on the matter. From an employment law perspective, there is no regulation prohibiting employee interviews in connection with internal investigations.

b) Reviewing emails?

An employer can review emails or other electronic data if the computer, cell phone, or other electronic device is property of the company and was provided to the employee to perform their hired job. We recommend that companies regulate in writing the use of electronic equipment and warn employees that any files stored on company devices are subject to review by the employer.

We also recommend that the employer include a disclaimer in employment contracts or a separate form that states that company-provided equipment should only be used for work purposes, that no personal information should be kept therein, and that the employer has consent to access, review, dispose of and store any personal information found in company devices.

c) Collecting (electronic) documents and/or other information?

Employers have the right to collect any type of documents, electronic or non-electronic, or any other information from employees if the computer, cell phone, or other electronic device is the property of the company and was provided to the employee to perform their hired job. In this case, we recommend that the review of emails or documents be completed in the presence of a Public Notary that will serve as witness to verify the information retrieved. Another option is to seek a court order issued as part of a judicial process in which it is requested by the interested party.

d) Analyzing accounting and/or other mere business databases?

There are no restrictions for employers to perform accounting functions or to access business databases.

Lastly, for purposes of 5.b), 5.c) and 5.d) above, criminal investigations are a matter of public order, and as such, the State Prosecutor has broad authority to investigate any misdemeanor or felony and its authors or participants. The State Prosecutor may hold interviews without restrictions. However, for the purposes of searching or confiscating mail or other private documents, prior authorization of a supervisory judge will be required. Similarly, searching or confiscating computers or other electronic equipment or information stored therein also requires authorization by a supervisory judge.

There are no specific procedures and there is no legal protection for whistleblowers, unless a company’s internal rules include provisions addressing the matter.

For criminal investigations, there are measures for the protection of witnesses, victims, legal experts or expert witnesses, or other parties who intervene in a case (Article 332 of the Criminal Code).

a) Receive written instructions?

In Panama, there are no legal regulations for conducting employee interviews. There is no obligation to provide written instructions to the interviewee. If an employee is required to participate in an interview, the employer can provide a verbal explanation of the reasons or causes for the interview.

b) Be informed that he/she must not make statements that would mean any kind of self-incrimination?

It is not necessary. If the interview will be taped, it is advisable to inform the interviewee and obtain consent before moving forward with the interview.

c) Be informed that the lawyer attending the interview is the lawyer for the company and not he lawyer for the interview (so-called Upjohn warning)?

There is no Upjohn warning obligation under local law. However, it is common practice for a lawyer to communicate to the employee that they are attending the interview on behalf of the company. If an external lawyer will be present at the interview, the interviewee must be informed. There is no obligation for the employer to accept a request by the interviewee to have a lawyer present at the interview. Nevertheless, an employee can refuse to participate in the interview or answer questions.

d) Be informed that he/she has the right to have his/her lawyer attends?

The employer does not have the obligation to inform the interviewee that he/she has the right to have a lawyer present at the interview.

e) Be informed that he/she has the right to have a representative from the work council (or other employee representative body) attend?

If the employee is a member of a labor union, the employee has the right to have a representative of

the union present during the interview.

f) Be informed that data may be transferred across borders (in particular to the United States)?

Under the Panamanian Labor Code, there is no obligation to inform employees of cross-border data transfers. However, if the information is considered personal data,  in
general terms, and unless said, transfer is under the exceptions included in Law 81 and its Regulation, c consent will be required for the information to be collected, stored, and transferred.

g) Sign a data privacy waiver?

There is no obligation on employers to provide employees a data privacy waiver. However, if personal information (personal data, sensitive, confidential, or restricted) is expected to be discussed at the interview, and this information will be collected, stored, treated, or transferred, based on Law 81 and its Regulation, it is recommended that the interviewee sign a waiver consenting to the use, collection, storage, and treatment in general of personal information incompliance of the Regulation. 

h) Be informed that the information gathered might be passed on to third parties, including local or foreign authorities?

Yes, we recommend that the interviewee be informed that information gathered at the interview may be shared with third parties, and that consent is requested by the employer to share this information. Note that if the employer is legally required to share information obtained at the interview, then consent from the employee is not required and the information may be passed to local or foreign authorities without taking any additional steps.

i) Be informed that written notes will be taken?

Before beginning an interview, employers should inform employees that written notes will be taken and that they may be asked to sign the minutes or records of the interview.

During the interview, it is recommended that the company be represented by at least two witnesses that should sign the final minutes or report of the interview.

There are no employment law regulations addressing document hold or retention notices in Panama; therefore, in-house counsel would be able to send such warning to employees.

Moreover, there are no such notices under the Criminal Code. However, Article 255 of the Criminal Code establishes as a crime any behavior that tends to conceal, cover, or obstruct the determination, origin, location, destination, or ownership of moneys, assets, securities, or other financial resources, or grants benefits when those benefits are a result, directly or indirectly, of any crime related to money laundering.

Article 309 of the Criminal Code establishes that the following items cannot be confiscated or searched: (1) written communications or notes between an accused and their attorney or between persons that have abstained to act as witnesses due to a legal requirement (e.g., physicians and patients, lawyers and clients, parent and child, among others); and (2) medical exams or diagnosis related to medicine or science performed under professional confidentiality if they do not relate to the purpose of the investigation. This limitation only applies when the communications or documents are held by the person(s) that must abstain from rendering testimony or act as witness or, in the case of professionals, are subject to the professional privilege. Furthermore, Art. 912 (1) of the Judicial Code establishes that “[t] he following [parties] are not obligated to testify: 1. The attorney or attorney in fact about confidences received from their clients and the advice given to them regarding the process that they are handing.”

Yes, it is applicable to any person that is an attorney, without distinction.

Under the Labor Code, early notifications are not required when starting an internal investigation. If criminal activity is found, it is advisable to report it to the authorities.

a) To insurance companies (D&O insurance, etc.) to avoid losing insurance coverage.

Yes, in general terms.

b) To business partners (e.g., banks and creditors).

Yes.

c) To shareholders.

Yes, as a matter of good corporate governance and subject to the relevance and materiality of the issues for the company, notice should be provided, at a minimum, as part of the corporate annual report.

d) To authorities.

Yes. If criminal activity is suspected, it must be reported to the appropriate regulatory authority. If the activity is related to financing transactions of money laundering, financing of terrorism or weapons of mass destruction, the Financial Analysis Unit (Unidad de Análisis Financiero) should be notified.

There is no regulation in the Criminal Code that requires the State Prosecutor to notify insurance companies, banks or creditors, shareholders, or other authorities. Law 121 of 2013 against organized crime allows the State Prosecutor to issue a resolution ordering a total or partial gag order for up to 30 days, and this time may be extended by the same period if required by the investigation.

If the company has enough evidence that proves criminal activity by an employee or employees, the parties involved can be immediately dismissed with cause, in which case no severance will be owed to such parties.

At the same time, a complaint to the competent criminal authority should be submitted by the legal representative of the employer. Once the competent criminal authority has knowledge of the criminal action, if it is considered a crime, it will have to initiate the appropriate investigations and the State Prosecutor will take necessary actions to prove the crime and discover the authors and other participants.

In Panama, the crimes of corruption by governmental officials (against public administration) and money laundering (against the economic order) are prosecuted ex officio, and a complaint or internal investigation is not required. Nonetheless, an internal investigation by a regulatory body of a regulated entity, such as banks, insurance companies, and broker firms, or by the Financial Analysis Unit may serve as a stepping stone to start a separate investigation. Investigations by the Financial Analysis Unit are limited to financial transactions. In turn, this may also result in the investigation of any other crimes by the Public Ministry.

It is necessary for a resolution to be issued explaining the reasons for the warrant. It is not enough to only mention the existence of a crime; the resolution must describe any signs or evidence to support the issuance of the warrant. Moreover, the warrant must be issued by a competent authority. If any evidence is found or collected without a warrant or if the warrant is issued by a government official without authority, the search is deemed invalid under the law and any evidence gathered is of no legal value.

Panama’s Code of Criminal Procedure allows corporations to enter into plea agreements for final judgements or agreements of collaboration to provide information to uncover the authors of a crime or to provide evidence of a crime. In those cases, an investigation against the company is suspended and it is possible for the criminal file to be closed if the company’s collaboration results in the prosecution of the parties involved or if the information provided by the company serves to uncover another crime.

An employee can be subject to monetary fines or penalties for crimes involving the company, but the consequences of those actions are only civil damages. In Panama, from a criminal law perspective, only the individuals who committed the crime are subject to prosecution. However, in accordance with Article 51 of our Criminal Code, if a company was used to commit a crime, then it may be subject to penalties, cancellation of licenses, loss of fiscal benefits, barred from entering into contracts with the government, and dissolution, among others.

Recently approved legislation to fight organized crime allows defendants to enter into collaboration or sentencing agreements for the purposes of uncovering those crimes or the criminal authors. This legislation also permits the State Prosecutor’s Office to impose gag orders and deny access to the case files to all other parties, including defense attorneys. This last element is currently a matter of study and dispute since many consider that it violates the right to a defense. At the time of this writing, our constitutional courts have not addressed the constitutionality of this measure. In addition, recently approved legislation criminalizes certain tax offenses. Lastly, there is a bill under consideration by our Legislative Branch related to the proposal to eliminate the accessory penalties and the police record under the argument of the resocialization to the people convicted of any crime except those related to the public administration, however, there are doubts and questions on the subject.