It probably won’t have escaped you that, although we are a global wealth building and wealth management newsletter with our roots in the United Kingdom, in recent years we have developed a distinct Latin American bias. That is no accident.
It is in Latin America that we have found freedom, wealth, and privacy – in the form of governments that have no particular interest in keeping the residents of their countries under surveillance. They say power corrupts, absolute power corrupts absolutely. Well it seems to us that Latin American governments have power, but not absolute power – because their systems are less developed than those further north. So the fact that these governments don’t have the financial resources to employ high-tech methods of spying on their citizens is certainly a blessing.
The Republic of Panama stands out in Latin America as a major offshore tax haven and financial hub. Offshore bank accounts, IBCs (Panama Corporations), Private Interest Foundations and other similar privacy tools make for a business-friendly environment. The recently elected Martinelli government promises to continue with Panama’s liberal economy at least for the next five years (whether conservatives hold power after that will depend on whether Martinelli can deliver on his promises.)
But besides being a good place to incorporate or open bank accounts, Panama is a very liveable place. Sophisticated capital Panama City has some beautiful areas and, despite a real estate boom in recent years, remains relatively inexpensive. You can still get a good meal with a local beer for $5. But if you want to pay $100 for a top-class trendy sushi dinner, you can do that too. You have the choice.
Banking services in Panama are getting better too. Traditionally Panamanian banks have had a ‘take it or leave it’ approach to new business, and pressure from the US has made it particularly difficult for US citizens and residents to open bank accounts in Panama. One of my favorite articles about Panama banks is here. In the last year or so I have seen this changing, with more product differentiation and even something that’s never been seen before – Panamanian banks such as Multibank (the locally owned bank formerly known as Multi Credit Bank) and London-based international giant HSBC competing with each other agressively in the local market, trying also to steal away market share from more expat-oriented banks like Credicorp.
So these days, it is getting easier to open bank accounts, customer service is getting better (think shorter lines in bank branches), and probably most importantly for our global readership, internet banking and credit/debit card services are becoming much more developed.
One of my clients, for example, now has an airline miles credit card linked to his Panama company account and spends tens of thousands of dollars every month buying goods for resale all over the world. The goods move through the Colon Free Trade Zone and are sold on worldwide. The credit card works in US dollars without surcharges, allows 30-50 days interest free credit, and as a bonus my client can fly almost anywhere he wants to go for free, using the miles accumulated.
At the same time, Panama banking privacy is good, and the country is one of the few that still allows offshore corporations with bearer shares, much to the chagrin of the G20. But they can’t say too much because Panama has one huge strategic card to play – the canal – which the Chinese would happily buy up at any time. But that’s another story…
Further resources: Peter Macfarlane has authored an e-book entitled “EIGHT IMPORTANT THINGS YOU SHOULD KNOW ABOUT GOING OFFSHORE IN PANAMA THAT YOUR LAWYER MAY NOT TELL YOU!” You can obtaihn this ebook free, right here and now, simply by visiting our Panama Banking for Corporations and Foundations page. You’ll also find further information on banking in Panama together with a range of other worldwide financial centres in our Practical Offshore Banking Guide.