Where once there were in excess of one hundred and fifty international banks operating out of Panama there are now just over eighty, but of these all adhere to Panama’s new offshore banking laws which follow the guidelines of the Basle Committee on Banking Supervision which ensure client privacy and seek to prevent criminal banking activity.
It’s usual to have to make a minimum initial deposit to open a bank account in Panama and then once the account has been opened it’s usual to have to keep a certain balance in the account otherwise fees will be charged. An individual wishing to open an offshore bank account will have to provide irrefutable proof of identity such as notarized copies of a passport as well as financial reference letters.
Panama offshore banking is now benefiting from tightened regulation and controls and the jurisdiction has created a highly competitive, extremely private and confidential but well monitored offshore banking industry.
Advantages of offshore banking in Panama
- Offshore banks can sometimes provide access to politically and economically stable jurisdictions. This will be an advantage for residents in areas where there is risk of political turmoil,who fear their assets may be frozen, seized or disappear.
- Some offshore banks may operate with a lower cost base and can provide higher interest rates than the legal rate in the home country due to lower overheads and a lack of government intervention. Advocates of offshore banking often characterise government regulation as a form of tax on domestic banks, reducing interest rates on deposits.
- Offshore finance is one of the few industries, along with tourism, in which geographically remote island nations can competitively engage. It can help developing countries source investment and create growth in their economies, and can help redistribute world finance from the developed to the developing world.
- Interest is generally paid by offshore banks without tax being deducted. This is an advantage to individuals who do not pay tax on worldwide income, or who do not pay tax until the tax return is agreed, or who feel that they can illegally evade tax by hiding the interest income.
- Some offshore banks offer banking services that may not be available from domestic banks such as anonymous bank accounts, higher or lower rate loans based on risk and investment opportunities not available elsewhere.
- Offshore banking is often linked to other structures, such as offshore companies, trusts or foundations, which may have specific tax advantages for some individuals.
- offshore banking also assert that the creation of tax and banking competition is an advantage of the industry, allows people to choose an appropriate balance of services and taxes.