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.

For those who follow offshore, specifically Swiss, banking, there have been some interesting news items recently.

According to a Reuters report, Swiss Finance Minister Hans-Rudolf Merz repeated last week that Swiss banks will no longer accept untaxed money, known in German as ‘Schwarzgeld’ or black money. He said Switzerland also wanted to find a solution for the estimated $600-700 billion of undeclared assets still hidden in the country.

Separately, Switzerland’s justice minister questioned whether tax evasion should continue to be treated as a misdemeanour rather than a crime. Switzerland has already abandoned the distinction between tax evasion – failing to declare your income or wealth to the taxman – and tax fraud , which is deliberately misleading the revenue – for foreigners investing money in the country.

HSBC, meanwhile, has been implicated in handling of schwarzgeld for American clients, alongside Credit Suisse and UBS. So says an article in London’s Daily Telegraph describing subterfuge by an account holder who mailed large amounts of cash into the USA in an attempt to avoid detection. HSBC, like most major banks, has private banking operations in Switzerland and you may recall it was data stolen from HSBC that recently fell into the hands of French tax authorities.

The French, meanwhile, released a new blacklist of tax havens and will penalise French companies and individuals doing business with those countries. The blacklisted countries are Anguilla, Belize, Brunei, Costa Rica, Dominica, Grenada, Guatemala, the Cook Islands, Marshall Islands, Liberia, Montserrat, Nauru, Niue, Panama, Philippines, Saint Kitts and Nevis, Saint Lucia, Saint Vincent and Grenadines.

The Financial Times, as usual, has a more upbeat and realistic view, with a piece pointing out how important safe havens like Switzerland are when it comes to offering stability in times of crisis: Greek crisis proves Switzerland is still a safe haven. As investors were being freaked by the unfolding crisis in the Euro zone, money was pouring into Swiss banks. This would suggest that tax was not the main motive for opening accounts in Switzerland, but rather the stability offered by a strong and trusted currency, the Swiss Franc. This of course is what we’ve been saying for years!

If you have unreported bank accounts in Switzerland – or anywhere else for that matter – the time to do something about it is now. We are happy to assist our members with referrals to reputable, discreet experts who can help. We have personally seen them succeed in solving problems like this without too much pain! Contact the Q Wealth Front Desk initially and ask to be put in touch with our recommended experts who handle this service. (Please note this service is reserved for our paid-up members. Please read our Practical Offshore Banking Guide first. If you are not yet a member you can sign up here)

This is an edited version of an e-mail sent out to our Q Bytes mailing list. Q Bytes is a free weekly e-mail service that keeps you up to scratch on wealth preservation, asset protection and offshore banking, as well as strategies for prospering during times of crisis. To sign up free to Q Bytes, go here.

We write a lot of articles about Panama as an offshore haven here. This is not an accident, nor an unreasonable bias. We still consider Panama to be an excellent jurisdiction in which to set up an IBC, Corporation, or Foundation… and possibly an offshore bank account. But a reader asked me a question the other day which made methink back to basics… what is the real advantage of a Panama corporation? And what kind of services to Panamanian banks really offer?

The most obvious advantage is that Panama offshore corporations are completely tax free. That’s right – as long as they do business internationally (as opposed to in Panama) they don’t even have to file a tax return, let alone pay any taxes. Some people love the simplicity this offers.

Perhaps surprisingly, however, tax is not normally the major motivation for my clients who choose to go offshore in Panama. This is partly because most major jurisdictions these days have so-called CFC or “Controlled Foreign Corporation” legislation that severely limits the tax advantages of doing business in offshore havens these days.

No, most clients these days are not tax evaders. Instead, they are looking for offshore asset protection or wealth management strategies – diversification out of the US dollar for example. (This may seem strange given that Panama’s national currency is the US dollar, but please indulge me for a moment – more on this below)

Panama Private Interest Foundations are an ideal vehicle for ‘family office’ type asset protection applications – similar in many ways to a common law trust, but with a strong offshore privacy advantage. Panama Private Interest Foundations are the instrument of choice for those seeking to pass on their hard-earned assets securely to future generations.

Panama Corporations are often used for trading activities – like import/export, consulting, or – increasingly – e-commerce. You’ll find lots more on these topics in my articles and free reports on this subject in the Members’ Area. You can start with my Report on Panama Offshore Corporations and Banking that you can download immediately for free, with no obligation – right now!

But what about setting up a Panama Corporation, Foundation or Panama LLC?

The initial process is straightforward. The cost can vary from about US$1,500 to US$5,000. You might find some a little cheaper, but many law firms in Panama have an unpleasant habit of adding hidden charges later for documents you didn’t know you needed – so beware. More on this topic too in the free report mentioned above.

Not nearly as straightforward, however, is the process of opening a bank account in Panama. Let’s compare this to the USA for a moment. The USA is still one of the easiest places in the world to open a bank account. Answer a few questions, sign some forms, and, hey presto, you’ve got yourself a bank account.

However, the OECD, American and G20 wars on terror, taxes, drugs, and money laundering have made opening corporate bank accounts in Panama very difficult. These days, Panamanian banks view opening an offshore bank account not as a right but a privilege – especially if you are an American! Expect to jump through hoops.

Up front, you will probably be asked for two bank references. If you have only one bank account currently, you can probably substitute a letter
from a credit card company for the second bank reference. You will also
need at least one local professional reference – in other words an introduction from a Panamanian law or accountancy office. “Who you know” is very important in Panama.

A really good introduction might even avoid the need for the bank references, but then your introducer had better be a personal friend of the bank manager! I’ve seen it done (and, yes, I know how to do it for my clients in need)

Then you will need two forms of government-issued ID with photo: your passport of course, then a second ID, such as a driver’s license.

Armed with those documents, make an appointment to meet with a bank
representative, and prepare your trip to Panama. During your meeting (which will seem more like a job interview), expect lots of questions. Why are you opening this account? How much money will you be depositing initially? Where is that money coming from? How much money do you expect to receive into the account on an ongoing basis? What will be the source of those funds? How much will you be withdrawing from the account each month?

Can you open an offshore bank account online without traveling to Panama? Yes, in certain special circumstances…but it is frowned upon. It is highly preferable to make the effort to get to know your banker face-by-face.

You might however question if you need a bank account in Panama at all. Of course, most Panamanian lawyers will want to sell you a Panamanian bank account. But do you really need one? If your aim is to diversify out of the dollar, for example, it makes a lot more sense to take your Panama Corporation or Foundation, then go ahead and open your account in an offshore bank in another jurisdiction – maybe Uruguay for example. You’ll find more on this and similar pieces of advice in my Panama Report available absolutely free for instant download. Click here to claim your Free Panama Report.

Maybe you’ve read our recommendations on buying and storing physical gold bullion in a secure offshore location. Maybe you are looking for a secure storage solution for confidential documents. Anyway, a secure offshore safe deposit facility is a useful asset to any freedom-oriented individual.

The good news is that most Austrian or Swiss banks will be happy to rent you a safe deposit box, regardless of your passport. The bad news is that you need your passport! The famed Austrian and Swiss anonymous numbered bank accounts now only exist in the movies. Swiss banks usually want you to have an account from which they will deduct the annual box rental fee. Costs start at around 65 euro ($90) per year for a small box.

There is one exception: a safe deposit outfit in Vienna known as ‘Das Safe’- located in a beautiful Austrian palace. You’ll find more information in Peter Macfarlane’s Gold Report, available free to Q Wealth members.

Just about every bank in Austria or Switzerland also sells gold bullion coins. Purchases up to around CHF 25,000 do not require ID in Swiss banks.
Consider buying gold coins like the Austrian ‘Philharmonic’  a  one ounce Austrian gold coin, similar to the American Eagle, Krugerrand or Maple Leaf.

Austrian and Swiss law prohibits banks from opening your safe deposit box unless they are sure you are dead! Austria is one of the only countries in the world with this protection. I have been in Safety Deposit vaults in France and the USA where it seems half the boxes have stick-on government seals on them due to tax investigations, lawsuits, or  creditor claims. Those seals mean that the owner can’t get into his box, and it is scheduled to be drilled open for inspection if the owner doesn’t show up for an appointment with “the authorities.”

So Austrian and Swiss banks are great places to hold safe deposit boxes, but what if Latin America is your stomping ground? How can you buy and sell gold bullion bars and coins in major Latin American capitals like Panama City?

Unfortunately, buying gold in Panama is much harder. Banks selling gold are few and far between (though see the recommendations in Peter’s report) But there is a bit of good news… a new private, non-bank safe deposit facility is opening in Panama City, named “Best Safety Boxes” which is opening in the Credicorp Bank building in Panama City. Further details on Best Safety Boxes may be found here: Do Business in Panama – Best Safety Boxes article.