Offshore Bank Accounts

Panama is the second largest financial center in the world, Hong Kong being the largest. The country is home to approximately 100 banks including international brand names as well as a few "national" banks, and a number of domestic banks, which vary in size from boutique, wealth management firms to billion dollar, multi-branch chains which service the commercial and business needs of the country's three million inhabitants as well as non-resident clients.

While most banks will open personal or business accounts for non Panamanian residents if referred by local law firm, the vast majority of offshore accounts are created for corporations and foundations which have been established by Panamanian lawyers for their clients from all over the world.

In fact, there are some 400,000 corporations and foundations in Panama and numbers continue to grow.

The reasons for this are not hard to understand: Panama has strongest asset protection and privacy legislation in the world, is a true tax haven and it has the strongest bank secrecy laws on the planet. Bank employees (or others) violating the confidentiality of depositors are subject to very stiff fines and prison terms.

Panama has no tax treaties with other governments, including the United States. Nor does it have any currency exchange controls, meaning that there is no restriction on the flow of capital in or out of Panama.

While the banking giants in the US and Europe are reeling from massive losses from so called Mortgage Backed Securities, the banks in Panama have remained strong and liquid. There are reasons for this.

While Panamanian banks do grant mortgages, they do it the old fashion way: they require down payments on the order of 25%. When I was a banker in San Francisco many years ago, that is the way mortgage loans were made. The bank would lend 75% - 80% in rare cases and the borrower would provide the rest. Panama has no government sponsored bank insurance. Instead they rely on a vigorous government supervisory agency that mandates stiff capital requirements and carry out audits of the banks they license.

The results? There has not been a bank failure in Panama in the last 100 years.

We have relations, via the law firms with whom we work, with multiple banks in Panama.

We have traveled to Panama and have met with senior officers of Panamanian banks. Having been a banker and senior credit officer for two US banks, I know how to read a bank's financial statement. I have examined the balance sheets of banks we have chosen to do business with and while we make no guarantees regarding future condition of any bank we recommend, I would give the bank/s we recommend a four star rating.

This is an important reason to do business with Offshore Financial Solutions: not only that we have been to Panama and met with law firms, bankers and investment advisors face to face, but that we have the ability to review the financial statements of the banks we recommend.

A shiny annual report and household brand does not guarantee bank safety and security. One need only consider the recent development with Bank of America and Citibank to understand this to be true.

To help provide increased understanding about Panamanian banks and how they operate, we offer the following:

Most Panamanian bank accounts can be opened with a minimum deposit of $1,000. Checking, savings and certificates of deposit (CDs) are available at the banks we recommend. CDs normally have a higher minimum deposit requirement.

The law firms with whom we work, can normally get an account open within a few days of receiving the paperwork needed to open the account.

Many Panamanian banks provide multi-currency accounts (e.g., Yen, Swiss Francs, Euros) but deposit minimums are usually higher - in the $3,000 to $5,000 range.

Most banks provide online banking. The banks we recommend provide on line banking in both English and Spanish.

The banks we recommend offer debit cards and secured credit cards for corporate accounts.

Law firms are major referral sources for banks and are a critical intermediary to the bank in opening the accounts for the corporations and foundations that they establish for their clients. Without a law firm or other trusted intermediary, many banks require an in person visit to open an account.

While interest rates are constantly in flux in all parts of the world, current rates (early 2009) range from 2.5% to 6.5% depending on the bank, the amount of the deposit and the time for which it is deposited.

Banks require complete "know your customer" documentation including: passport photocopy, at least one bank reference letter, two commercial / professional reference letters (CPA, vendor), personal reference letter, proof of address (utility bill or the like) and completion of the bank account application. The bank's due diligence information is extensive, but is protected by the country's strict confidentiality laws.