by Peter Macfarlane for the Q Wealth Report

Do Panamanian banks open multi-currency accounts? The answer is yes, but only in very special circumstances. See below for an explanation.

First, however, I owe an apology to regular readers for our failure to update the blog in a long time. Frankly, things have been very hectic over the summer. What with my research into Montenegro’s new economic citizenship (second passport) program, our upcoming event in Ireland and keeping on top of numerous requests from consulting clients concerned about capital preservation and international asset protection, I simply haven’t found the time to blog. From now on, things should be a little more back to normal – as far as is possible in this financially topsy-turvy world!

Anyway, readers know we are still keen on Panama as an offshore financial centre. Panama’s Private Interest Foundations offer some of the best asset protection there is. But a recurring concern of readers is Panama’s dependence on the US dollar. Whilst in theory Panama has its own national currency, the Balboa (currency code PAB) this has not had much financial significance for years.

Panama used to mint real silver and gold balboa coins, but the Balboa has always been at parity (one to one) with the US dollar, and balboa coins today only exist in the form of small change. Up until recently, dollarization was seen as a sign of the stability of Panama. No doubt the stability and low interest rates afforded by the dollar have contributed a lot to Panama’s success in the past. Today, however, it is seen as a threat by those who are going offshore for capital preservation.

Many clients have asked me how I can recommend Panama, considering its economy is based on the dollar, that is losing its value so fast. The answer is that I recommend the country, not the currency. Panama has a productive and diversified economy, and a good legal system. Panama corporation laws have stood the test of time since the 1920s and still provide great privacy and protection today.

But what about multi currency bank accounts in Panama? Up until recently, the dollar was king on the entire American continent. Banks simply did not have much demand for accounts in other currencies. Even currency exchange businesses like casas de cambio are rather thin on the ground in Panama.

In recent years, demand for banking services in other currencies in Panama has soared. Some of the larger retail banks, particularly Multibank and HSBC, are now routinely offering accounts in major world currencies like the euro, the yen, the pound sterling and the Swiss franc.

Unfortunately, foreign currency bank accounts are still far from the standard of sophistication you might expect if you are used to banking in Europe. Each account has a separate number, and in the case of HSBC, I was shocked to learn that the accounts can’t even be linked! That is, if you have a dollar account and want to open a euro account, you have to submit a whole sheaf of paperwork again – passport copies, bank references and the lot, just as if you were a new client walking through the door for the first time. If their IT system really can’t link accounts, it sounds like a criminal money launderer’s dream to me!

But things are changing. In the past year I’ve found three Panamanian banks that will open real multi-currency bank accounts. By this, I mean one account number you can log in to via internet banking, and in which you can keep different balances in different currencies. Switching currency or adding a new one to your portfolio is a matter of a simple mouse-click or two.

All three are Panamanian subsidiaries of established European banks. They will even open accounts where the beneficial owners are US citizens – something undoubtedly of value to our American cousins who are being turned away more and more from banks around the world – always provided that a Panamanian corporation or foundation is the legal owner.

The downside is that none of these three institutions are interested in small accounts. These are not accounts you can open with a small balance ‘in case you need them.’ You’re expected to put at least six figures on deposit, possibly more. If you are looking for an offshore safe haven, however, you couldn’t do much better.

Whether you are looking for a private banking experience such as these financial institutions offer, or a more run-of-the-mill offshore bank account, remember that your Q Wealth membership (click here to see the benefits and costs of joining) comes with a copy of the Practical Offshore Banking Guide 2010. At the back of that guide you’ll discover how you can take advantage of our free personalized banking referral service.

We’ve previously mentioned Das Safe, the well established safe deposit facility in Vienna, as a place where you can open an anonymous safe deposit box to store gold bullion, important documents etc.

But we always warn you not to keep all your eggs in one basket. Readers in the Americas have often asked us about safe deposit facilities in Panama City, Latin America’s financial hub… but up until the beginning of this year there was no such facility. The safe deposit box business in Panama was controlled by established Panamanian banks, who required clients to go through a bueaucratic account opening process and then join a waiting list for a safe deposit box to become free.

That’s all changed with a new safe deposit facility in Panama City, Panama that opened earlier this year. Peter Macfarlane recently visited this facility and was given a detailed tour by the owners. And, he says, it compares very favourably with other safe deposit boxes worldwide. Peter, for example, takes the credit for having suggested putting shredders in the private viewing rooms, a suggestion which management immediately adopted.

Best Safety Boxes is located on the ground floor of the Credicorp Bank building. For those of you who know Panama City, that’s the big green building on 50th Street (Panama’s “Wall Street”), near the Global Bank Building. It’s in the best area of town, and being surrounded by banks make the security excellent. Best Safety have their own top notch security. They offer five different box sizes ranging from $400 per year to $1250.

Now here’s a hot privacy tip! You cannot rent safe deposit boxes anonymously in Panama, but you can do the next best thing: a Panama corporation with nominee directors can rent a box for you. Provided you are present when contracting the box, you (not the nominees who sign the contract) would get the secret code necessary to enter the vault, as well as the two physical keys necessary to enter the box.

If you are interested in getting a Panama corporation with a box set up, contact Peter Macfarlane directly, via the Q Wealth Offices.  If you would simply like to rent a box in your personal name, drop by the facility or contact Scott LeRoy for an appointment

It’s also worth noting that located at the entrance to the safe deposit facility is a casa de cambio (money exchange house) that aims to offer good rates on currency exchange in Panama. Because the country uses the US dollar in daily circulation, not too many people need to exchange money in Panama. But when they do – for example Europeans who arrive in Panama with Euros, Pounds Sterling or Swiss Francs – the rates of exchange have typically been terrible. So much so that you will see signs saying “Compro Euros” (We buy Euros) fixed to utility posts all over Panama City – but this kind of black market exchange is risky. We are delighted, therefore, that the people at the Best Currency Exchange are trying to break this mould by offering the best rates for Euros etc.

Editor’s note: the above article was originally published in Q Bytes, our free weekly e-mail newsletter. If you would like to receive more privacy, wealth and freedom tips like this every weekend, please be sure to sign up for your free subscription here.