Panama Snapshot:
Panama is located in North America and has a population of 4.404 million people as of 2023. The capital city of Panama is Panama City and it is bordered by Costa Rica and Colombia. Modern-day Panama was founded in 1903 and its official name is the Republic of Panama.
Panama has the 11th largest economy in Latin America and the Caribbean and is considered a “high-income” economy by the World Bank.
Banking in Panama:
In this article, we’re going to be sharing everything you need to know before submitting an application to open a bank account in Panama, to help you decide whether Panama is a suitable banking jurisdiction for you or your entity.
Table of Contents
- What Should You Know Before Banking in Panama?
- How Strong is Panama’s Economy?
- What is the Official Currency of Panama?
- How Stable is Panama’s Political System?
- How Strong is Panama’s Legal System?
- What is the History of Panama’s Banking Sector?
- How Strong is Panama’s Banking Sector?
- How Many Banks Operate in Panama?
- What Are the Largest Banks in Panama?
- Which Banking Services Are Available in Panama?
- Who Can Open a Panama Bank Account?
- What Are the Requirements to Open a Panama Bank Account?
- How Can You Send Money to Panama?
- How Much Does it Cost to Bank in Panama?
- What Other Banking Jurisdictions Are Similar to Panama?
- How Can You Open a Panama Bank Account?
What Should You Know Before Banking in Panama?
Panama is primarily considered an offshore banking jurisdiction with 55 banks, including international and domestic banks.
Foreign non-residents and foreign or offshore entities looking to bank in Panama can usually open accounts remotely. However, showing up in person can increase the number of banking options available.
Like other banking jurisdictions, foreign non-resident applicants typically have fewer banks to choose from in Panama compared to local applicants. This is true whether opening remotely or in person.
But, before diving into Panama’s banking sector, we will discuss several key areas that impact the stability of Panama, Panama’s economy, and Panama banks.
We will start by discussing where Panama is located and its proximity to major countries. That way, if you do decide to bank in Panama, you’ll know where your money is actually located and how far you’ll have to travel if you decide to open accounts in person.
That said, if you’re still trying to decide where to open accounts, don’t forget to download your free copy of “Where to Bank Offshore”.
Where is Panama Located Geographically?
Panama is located in the southern part of North America. It is bordered by the Caribbean Sea and the Pacific Ocean. Panama’s highest peak is Volcan Baru, which is located near the border with Costa Rica.
Panama is 1,867.29 kilometers south of Miami, USA; 3,859.21 kilometers south of Toronto, Canada; 8,490.07 kilometers southwest of London, UK; 13,817.41 kilometers west of Dubai, UAE; and 18,812.26 kilometers east of Singapore.
What Are Panama‘s Neighboring Countries?
Panama‘s neighboring countries include Costa Rica to the west and Colombia to the southeast.
How Strong is Panama’s Economy?
Panama‘s economy is considered stable, primarily supported by infrastructure, transportation, and professional services. Panama‘s economy is the 11th largest in Latin America and the Caribbean and the 82nd largest in the world, according to the World Bank.
The development of the Panama Canal and international trade played an important role in Panama’s economic prosperity. Both copper and bananas are among the most important exports in Panama’s economy, while refined petroleum and crude petroleum are the most important imports.
Panama’s total exports in 2021 were $27.237 billion, while imports in 2021 were $24.627 billion. Additionally, according to the International Labour Organization, Panama’s unemployment rate in 2022 was 8.80%.
What is the Official Currency of Panama?
The monetary tender and currency of Panama is the Panamanian balboa, its symbol is B/. and its ISO 4217 code is PAB. The Panamanian balboa has been the official currency of Panama since 1904. Prior to the Panamanian balboa, Panama’s currency was the Colombian peso. The Colombian peso was the currency of Panama from 1837 to 1904.
How Important Is Banking to Panama’s Economy?
Panama’s banking sector is critical to the success of the economy. In addition to supporting domestic consumer and business activities, Panama’s banks facilitate international trade and attract important investment into the country.
Panama’s banking sector also employs a large number of people, with over 36,025 individuals employed in banking, finance, and related services in 2021.
How Stable is Panama’s Political System?
Panama has a stable political system, characterized by safe and free elections every five years. Elections have an average turnout of 71.23% and the transition of power is peaceful.
What Type of Government Does Panama Have?
Panama’s political system is based on the Presidential Republic system. The major political parties in Panama are the Democratic Revolutionary Party (PRD) and the Democratic Change Party (CD). Panama is governed by 71 elected representatives and the country’s constitution is called the Constitution of Panama, which came into force in 1972.
What Are Panama‘s Political Affiliations?
Panama has been a member of the World Trade Organization (WTO) since 1997. Panama is also a member of the Community of Latin American and Caribbean States (CELAC), the Organization of American States (OAS), and the United Nations (UN). Panama’s closest allies include the United States, France, the United Kingdom, and Spain.
How Strong is Panama’s Legal System?
Panama‘s legal system is based on the civil law system. The current legal framework came into effect in 1917. The Public Ministry of Panama is responsible for the enforcement and execution of the legal code.
What Are Panama‘s Banking Laws and Regulations?
Panama’s current banking law came into effect in 1998 and is governed by the Superintendency of Banks.
Which Institutions Regulate Panama‘s Banking Sector?
The Superintendency of Banks of Panama is responsible for the regulation and oversight of Panama’s banking sector. This makes the Superintendency of Banks the licensing and disciplinary authority for all financial institutions in the country.
Does Panama Have Banking Secrecy Laws?
No, Panama follows international standards for information sharing and banking secrecy. As a result, Panama has participated in Common Reporting Standards (CRS) and the Automatic Exchange of Information (AEOI) since 2018.
What is the History of Panama’s Banking Sector?
Panama’s banking sector was first established in 1904, following its independence from Colombia. It later expanded to support the development of the Panama Canal. It then started supporting international banking clients and foreign borrowing following deregulation in 1971. Today, Panama is synonymous with offshore banking and to a lesser extent money laundering, largely due to the Panama Papers.
How Strong is Panama’s Banking Sector?
Panama’s banking sector is considered resilient and well-regulated, according to the International Monetary Fund (IMF). Banks are considered well-capitalized and liquid. Fitch Ratings’ assessment of Panama’s banking system is stable. That said, like banking anywhere, there are financial uncertainties and risks to banking in Panama if you don’t select the right banks.
Does Panama Have a Central Bank?
Panama does not have a central bank. Instead, Banco Nacional de Panamá is responsible for managing monetary policy and issuing Panama’s currency, the Panamanian balboa, and promoting positive short-term economic conditions in the country.
Are Panama Banks Safe?
Banks in Panama are considered safe by international standards. However, when choosing a Panama bank, you should consider each bank’s exposure to credit risk, operating risk, and depositor concentration risk.
Additionally, it’s important to consider each bank’s reserve ratio and liquidity ratio, which indicate each bank’s ability to withstand short-term financial problems. This is especially important in countries without deposit insurance, which we will cover next.
Does Panama Have Deposit Insurance?
No, Panama’s banking system does not provide deposit insurance.
How Stable Are Panama’s Correspondent Bank Relationships?
Panama’s correspondent bank relationships are collectively stable. However, this can vary from bank to bank. In all cases, we suggest trying to open accounts with banks that have more than one correspondent banking relationship. Of course, the quality of the correspondent bank should also be taken into consideration.
Otherwise, in the event that a bank loses its correspondent bank relationship, depositors would be unable to access their money until a new correspondent relationship is secured, which can take months.
When Was the Last Time a Bank Failed in Panama?
The last time a bank failed in Panama was in 2019 when the Superintendency of Banks forced the liquidation of one of Panama’s banks.
Is Panama on Any International Blacklists?
Yes, Panama is included on three international regulatory blacklists. These blacklists include the Financial Action Task Force’s (FATF) list of Jurisdictions Under Increased Monitoring, the European Union’s (EU) List of Non-Cooperative Jurisdictions for Tax Purposes, and the United Kingdom’s list of High-Risk Third Countries for AML Purposes. Knowing that Panama is on these lists is important as it can impact sending and receiving of funds to and from your Panama bank account.
How Many Banks Operate in Panama?
Panama has 55 active banks across two license categories, including the General (Full) License Class A and the International License Class B.
That said, most foreign non-residents will only consider opening accounts with Panama banks that specifically cater to non-resident clients.
Our team has prepared a full collection of financial institutions and a list of banks in Panama to help you assess your options, which you can access here.
What Are the Largest Banks in Panama?
The largest banking corporations, including the largest banks in Panama, include Banco General, Banistmo, and Banco Aliado. That said, while opening with the largest banks in a country may seem like the obvious choice, it usually isn’t an option for non-resident clients and foreign companies. Of course, this varies on a case by case and can change if the applicant can demonstrate sufficient ties to Panama.
Which Banking Services Are Available in Panama?
As an offshore banking jurisdiction, customers can expect to access a wide range of banking and financial services in Panama including personal banking, business banking, private banking, and wealth management.
Of course, local individuals and businesses will be able to access additional financial services, including a wider range of financing options, credit cards, and merchant services.
Who Can Open a Panama Bank Account?
Panama bank accounts can be opened by a wide range of clients, including foreign non-residents, foreign and offshore entities, and (of course) local individuals and entities.
However, there are several nuances that certain applicants need to consider before opening a Panama bank account. With this in mind, here is a closer look at the individuals and entities that can bank in Panama.
Can Foreign Non-Residents Open Panama Bank Accounts?
Yes, foreign non-residents can open a Panama bank account. In fact, opening a personal bank account in Panama is common for individuals getting started with offshore banking.
That said, there are challenges in accessing individual checking accounts with a personal bank account in Panama, not the least of which is choosing a bank with adequate customer support, English-speaking staff, and suitable online banking.
This is especially important for individuals who do not speak Spanish and are used to more sophisticated banking platforms. That said, personal bank accounts can be opened by individuals from most countries.
Of course, it is also possible to open private bank accounts in Panama, though applicants should consider all of the available options before choosing to bank here.
Can Foreign Businesses Open Panama Bank Accounts?
Foreign businesses can also open a Panama bank account. However, commercial bank accounts or business bank accounts in Panama are typically opened by businesses with local connections to the country such as employees, contractors, suppliers, shareholders, or customers. With this in mind, if your business does not have local economic substance, you may want to consider applying for accounts elsewhere.
Can Offshore Companies Open Panama Bank Accounts?
Yes, offshore entities can open a Panama bank account. However, Panama banks typically look for offshore entities seeking investment products or long-term fixed deposits. Additionally, offshore entities with a clear tie to Panama, such as a resident shareholder or director, will have a stronger chance of opening accounts.
Can Trusts and Foundations Open Panama Bank Accounts?
Trusts, foundations, and other wealth management structures can open a Panama bank account. This is true for entities that are formed in Panama and abroad. However, not all Panama banks are suitable banking options for these entities. Likewise, few Panama bankers will have experience onboarding these entities, which can result in a drawn-out onboarding process.
What Are the Requirements to Open a Panama Bank Account?
The requirements to open a Panama bank account include standard account opening documentation, know your customer information, copies of government-issued identification, and an initial deposit.
That said, like opening bank accounts elsewhere, every Panama bank will have its own unique requirements. In the case of Panama, this usually means providing additional documentation, including certified copies and proof of income. That said, the real challenge when opening a bank account in Panama is navigating the account opening process and finding a qualified banker.
Lastly, depending on the bank you choose to apply to in Panama, you may be required to show up in person. However, this can usually be overcome if you choose the right bank.
What Are the Requirements to Open a Panama Bank Account for an Individual?
Here is a closer look at the standard requirements to open a bank account in Panama:
- Account opening application
- Supporting documentation for each applicant
- Government-issued identification
- Tax identification number from country of residence
- Proof of address from your country of residence
- Proof of income
- Bank reference letters
- Transaction estimates
- Qualifying deposit
What Are the Requirements to Open a Panama Bank Account for a Legal Entity?
In the case of opening a bank account in Panama for a legal entity, you will need to provide the following in addition to the requirements above:
- Incorporation (or formation) documents
- Supporting documentation for each shareholder
- Supporting documentation for each director
- Tax identification number for the entity
- Registered address for the entity
- Information about transacting parties
It’s important to note that these are the general requirements you should expect to meet when opening a bank account in Panama. In many cases, additional documents, translations, and certifications may be required.
How Can You Send Money to Panama?
There are several international transfer services for sending money to Panama. These conventional methods include wire transfers, money orders, and online transfer services. That said, not all Panama banks are able to facilitate transfers using each transfer method.
With this in mind, if you are planning on funding your Panama bank account using a specific method (e.g. online transfer services), you should confirm that your chosen bank works with this particular provider prior to submitting an application.
Likewise, if you will need to withdraw funds from your Panama bank account using a specific method, you should confirm that this method is an option prior to opening accounts.
How Much Does it Cost to Bank in Panama?
Panama is a moderately expensive banking jurisdiction. That said, like elsewhere, the cost of banking in Panama does depend on your client profile.
In most cases, applicants should expect maintenance fees, transaction fees, inactivity fees, and credit card fees. In total, these fees can range from USD 25 per month to USD 100 per month.
Not surprisingly, higher-risk and more complex clients can expect to pay higher fees in order to offset ongoing compliance and due diligence costs.
What Other Banking Jurisdictions Are Similar to Panama?
Panama is relatively accessible in terms of account opening and requires relatively low opening deposits for an offshore banking jurisdiction. For example, opening bank accounts here often requires an initial deposit of USD 10,000 and accounts can be opened remotely. Fees are reasonable and accounts can be opened by most individuals and entities.
With this in mind, Panama has a similar country banking profile to several offshore jurisdictions, including the Isle of Man, Saint Lucia, and Mauritius. All of these are considered relatively accessible in terms of account opening and require relatively low opening deposits for offshore banking jurisdictions.
On the other hand, Panama is not directly comparable to Switzerland or Liechtenstein, which cater primarily to ultra-high-net-worth individuals (UHNWI) and are significantly more difficult for most people to access.
How Can You Open a Panama Bank Account?
To open a Panama bank account, you will need to select a bank that matches your client profile or that of your entity. Then, submit all of the required documents (referenced above), and make the qualifying deposit.
That said, the step that most applicants struggle with in Panama is selecting a bank that provides the service you desire, accepts your client profile, and will meet your expectations in terms of customer service, security, and risk.
If you would like to shortcut your search and immediately find Panama banks that match all of your requirements and cater to foreign non-resident individuals and entities, you can start right now with GlobalBanks IQ.
You also receive direct support from our team of banking experts, answering your most pressing banking and account opening questions in the Members-Only Q&A.
Click here to learn more about GlobalBanks IQ, our international account opening platform, and to start opening your Panama bank account today.
