There are many reasons why anyone with even a little bit of money should diversify and open a bank account offshore. Opening a bank account in Panama as a non-resident is an option.
I spent some time on the ground in Panama in early March and went to few banks. Let’s look at the pros and cons of opening a bank account in Panama as a non-resident.
- A few banks in Panama accept non-residents, unlike most banks in most countries in the world.
- Even Americans are accepted, which is not that common due to FATCA.
- Higher interest rates on your USD deposits than in other countries.
- A fully dollarized economy.
- Easily accessible.
- Credit cards are available, even for non residents.
- Low barriers to entry; some banks let you open an account with only USD1,500.
- Panama is fiscally prudent with a debt to GDP ratio of around only 40%.
- No capital controls.
- The compliance departments of local banks are familiar with Latin America, so channeling funds through a bank in Panama for deals in places like Colombia and Nicaragua could make sense in case your bank in Asia or Europe doesn’t want to go ahead with the deal.
The cons of opening a bank account in Panama as a non-resident
- Physical presence is required.
- The requirements change on a regular basis.
- The customer service levels are not fantastic, and can be quite slow. That said, online banking is improving, thus resulting in less “human” interaction.
- The stigma associated with a bank account in Panama; Panama is on various blacklists for still being perceived as a tax haven, most notably on an EU money laundering blacklist.
- In many countries, you have to declare your foreign bank accounts to the authorities, which is fine, but if you add Panama to the list you might get a higher chance of being audited.
- Some banks will completely refuse to accept money coming from a Panama bank account.
How do you open a bank account as a non-resident in Panama?
Different banks have different procedures, but generally you need the following for those that do accept non-residents:
- Your physical presence.
- 2 national identification documents (passport + ID). If your country does not have IDs, then the second document can be your driving license. These documents should be from the SAME country.
- Source of income; a work contract or an income tax declaration should suffice.
- A bank reference letter from your current bank mentioning since when you’ve had an account with them, and confirming that you are in good standing.
What interest rates should you expect on your term deposits?
Here were the rates as of early March 2020 in the bank I would say was the most suitable for non-residents. The rows are for the term deposit duration, and the columns for the payout frequency.
As you can see, the rates are substantially higher than in almost all developed countries.
Should you open a bank account in Panama as a non-resident?
The credit card option is very interesting, as getting one can sometimes be a struggle for Digital Nomads, meaning activities like booking rental cars can be near impossible. If you want, say, $2,500 credit, the bank will ask you to block approximately $3,000.
in summary, opening a bank account in Panama as a non-resident is viable, but not the best option out there. There are countries that make it easier to open bank accounts, and that have better functionality and service, without all the stigma attached to them. That said, the country is well managed and it is not a bad Plan C or plan D banking option. I would not choose a Panama bank for my main offshore banking, but rather as a place to park money at some respectable interest rate, and as a back-up solution.
If you want to find out which bank offered me the best service and was open to non-residents, get in touch with me.
*a consulting session is a discussion about your portfolio and objectives. It does not constitute legal, financial, tax or investment advice.