Offshore Banking in Panama

For those individuals and companies considering Panama as an offshore banking venue, understand that there are risks in banking in any foreign country, including Panama.

Ballinphort Corporation has experience working with a variety of banks in Panama and has been gained on behalf of clients from Europe, North American and the Pacific Rim.

It is important to understand that Panama banks operate like no other banks in the world.

Firstly, no one person makes a decision: every decision is a group process with an anonymous group membership.  These group decisions are based upon unknown requirements and the customer is seldom provided with any definitive reason for the decision.  For example, a Panama bank can take six months to determine if they will open a new checking or savings account for an International Business Company (IBC).  During this period they will require business plans, marketing plans, trade references, bank letters of introduction and all standard "due-diligence" documentation.  They may require this information from all officers, directors and stock-holders.  They will often require that the principals travel to Panama for a bank interview.  And once all the paperwork is submitted they may tell you that your business has been refused without providing a substantive reason.

Secondly, Panama banks have at least a two-tiered fee schedule; one for Panama citizens and one for foreigners (regardless of their domicile.)  As you might assume, the fee schedule foreigners is much higher than the fees charged their own citizens.

Thirdly, do not plan on the convenience of internet banking.  Most of the smaller, Panama owned banks do not have websites in English, French or German.  Those that do have some translated web-pages do not permit complete functionality.  For example, most will not allow a client to send a wire via internet banking.  Instead, the client must send overnight courier mail with an original bank wire transfer request signed by the approved signatory.  Just because you have requested a wire transfer, the transaction is given no priority over other bank business.  That means that if the person in the bank to whom the wire transfer request was addressed happens to be out sick or on vacation, your request will not be acted upon until that person returns to work, whether that is one day or two weeks.  Normal wire transfers routinely require two weeks from the date courier mailed to be received into the receiving bank account.

Fourth, Panama banks do not require their chartered banks to maintain their required reserves in Panama.  That means, if the bank keeps its reserves in England, Canada or the United States and any judge in those countries seizes the assets held in there, the bank in Panama will be immediately closed by the Panama Superintendent of Banking.  The Stanford Banking incident is a good case in point.  A U.S. Federal Judge (in Texas) ordered the Stanford Bank's assets held in the United States to be frozen pending litigation.  Stanford Bank Panama was immediately closed and no funds were available to depositors for over a year.  Many of the banks customers are still waiting for their funds to be returned.

Offshore banking accounts are attractive for many reasons.  Attempting to navigate the process without an experienced partner is not worth the risk.