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Offshore Banking In Panama: No Longer A “Haven”

Banking Haven No More

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Dear Live and Invest Overseas Reader,

For years, we’ve promoted Panama as a top offshore banking haven and, as well, an international banking center.

The banks are still here, but the country’s status as in this regard needs adjustment.

You know about the Tax Information Exchange Agreement (TIEA) that President Martinelli signed with the United States last November, ending, for all intents and purposes, this country’s tradition of bank secrecy. The dust is still settling in the wake of this surprise turn of events, but, bottom line, an American should take for granted that any bank account he has in Panama is known to IRS and other U.S. government officials.

Panama is an offshore banking haven no more. You can’t come to Panama and open a bank account with any expectation of its existence and its holdings remaining private.

That’s one reason to have a bank account in another country…as part of an overall strategy to keep your financial affairs and assets private. And, again, if this is your agenda, you should look beyond Panama now.

As an aside, I hate to be the bearer of bad news, but, if bank secrecy is your end game, you also need to reconcile yourself with the idea that this is something that’s going to continue to become more and more difficult to realize anywhere in the world. Some jurisdictions continue to honor bank secrecy (Belize, for example), but I think it’s only a matter of time before other countries give in to continued pressure from the United States and other global bullies.

However, an interest in privacy isn’t the only reason to want to open and keep a bank account in a foreign country. There are other, more mundane ones. To pay your local rent, for example, or your electric bill. Or maybe to accumulate deposits from a rental investment property you own in that country.

In this regard, too, Panama is less appealing than ever. We’ve had bank accounts in this country for a half-dozen years. We’ve owned real estate here for five years. And we’ve been full-time legal residents for 2 ½.

Our banking activities are ordinary. No big unexplainable deposits, no large cash outflows. No reason to raise anyone’s red flag.

Yet every transaction we make is questioned and must be detailed. A representative of Scotia Bank, one of the banks where we currently hold accounts, was in our office this week asking for back-up documentation for deposits from 2009…deposits that we’ve already documented…for a Scotia Bank representative who visited us last year…

I don’t mean to point the finger at Scotia Bank, which is no more difficult to deal with than other banks in Panama City and perhaps less so. We’ve worked with Multibank, HSBC, and others, as well, and have had much the same experience across the board

At least Scotia Bank will still work with American clients…

If, that is, you can show a Panama connection that passes the bank’s muster. A Panamanian corporation isn’t enough. You must own real estate or be legally resident in the country. And, again, this requirement isn’t unique to Scotia Bank. Most every bank operating here demands the same of you in the current climate.

We have, though, recently discovered a good option, a new bank, opened in Panama City late last year and working hard to build a client base. Meaning they don’t mind if you’re American. We’re finding them easier to deal with than any other bank in Panama we know and dedicated to customer service.

The bank is Unibank, whose office has just opened on Avenida Balboa. Capitalized with US$50 million, they’re large enough to take seriously.

And they’ll consider your application for an account even from a distance. As a rule, banks in Panama require you to be present in the country, in the bank, in front of a bank representative, to answer questions related to why you want the account, how you’ll fund it, how much money you expect to flow through it on a monthly basis, etc.

Unibank prefers an in initial face-to-face meeting with all new account-holders. However, if you’re not in the country, they’re still open to the idea of speaking with you about an account.

I’d say it’s the least painful option available right now for opening a new bank account in Panama.

Representatives from Unibank will be participating in our Live & Invest in Panama Conference taking place in Panama City this month (March 30-April 1).

Kathleen Peddicord

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