The Common Law Trust as a Liable Party: The Panama Case

Abstract

The economic development and evolution of globalization has brought with it the need to adopt legal-administrative measures from an intergovernmental level to prevent money laundering and the financing of terrorism. Regulators and legislators must pay special attention to those figures that allow acting on behalf of third parties without having the possibility to know who – whether a physical person or legal person – that is actually behind the legal business. The common law trust shares these characteristics and is a corporate vehicle specially monitored for having inherent money laundering risks. Roman law does not govern this legal figure, but there are similar instruments that must be considered as such and, in short, as liable parties to whom the money laundering regulations apply. It is important to highlight the case of Panama, a jurisdiction under the common law system where these instruments are frequently used to carry out not only local but also international transactions.