• Embed Doc
  • Copy Link
  • Readcast
  • Collections
Download
 
Panama Bank Secrecy Laws
By Aurelia Masterson, www.panamalaw.orgToday Panama has become the Switzerland of Latin America. There are 150 banks in Panama many of which have their name on a 40 story modern skyscraper. Panama is often touted as having the best banking secrecy laws in the world. This author believes this to be true and we will address the bank secrecy laws of Panama in depth.The first important point to look at is the existence of any tax treaties that Panama may be in with anyother countries. This is an easy topic since Panama has no tax treaties with any other countries. Taxtreaties can be privacy invasive for a banking client. Under some treaties the bank must collect a certain percentage of taxes from interest income paid to the clients and this money is turned over to the client’shome country. Other treaties call for an exchange of information so if a requesting country wanted togather certain facts about a bank account or if a certain constituent of theirs had a bank account the bank would be obligated to provide the information. The European Union Withholding Tax Treaty is a very relevant treaty.The next type of treaty one must look at is called theMutual Legal Assistance Treaty,or MLAT. This treaty allows countries to request information from other countries in the treaty. The general way thistype of treaty operates is through diplomatic channels. Panama is in such treaties. The requestingcountry must have a criminal case on file in the national courts of their country. They would then citethis case already in their criminal courts when the request for information is made. The requestingcountry would a need to show that the requested information about the Panama bank account isabsolutely required to successfully prosecute the case and that the requesting country has no other wayto obtain such evidence. Then the request is considered by Panama. Panama may ask for moreinformation. Panama could deny the request on whatever grounds they wish to use. Panama could alsodecide to conduct their own investigation because they feel that some Panama laws may have been broken and delay the MLAT request until after they have concluded their investigation which may besome years. The statue of limitations could expire before Panama completed their investigation. This isnot to say that Panama is in the habit of thwarting requests for information but Panama does have aright to investigate crimes that took place in their jurisdiction. As a result of these investigations theycould confiscate assets and prosecute individuals under their own laws.For the MLAT to take effect the violation in question must be a crime in both the requesting countryand the country the information is requested from. Various MLAT treaties have all sorts of details andexceptions and should be read individually if you are seriously interested in a particular treaty. Panamanot only has no tax treaties with any other nation but all income tax related offenses in Panama are civiloffenses only, not criminal offenses. So tax matters are not a crime in Panama. Thus Panama does not participate in requests for information in tax offenses. Panama does cooperate in certain areas freely. If one acts fraudulently while in the capacity of a fiduciary in a financial relationship Panama willcooperate. Panama also cooperates in cases of narcotics trafficking, money laundering, terrorism andchild pornography.
The Panama Bank Secrecy laws are contained in a number of different legal statues. We will gothrough some of the relevant ones:
 
 
The Panama National Banking Commission was formed by Cabinet Decree 238 of July 2, 1970.
Article 74 of Decree 238 deals with protecting the privacy of Panama bank clients. It states thatthe Commission is prevented from conducting or requesting investigations concerning the banking affairs of any bank clients. Any data obtained by the Commission in the course of itsnormal regulatory functions may not be revealed to any person or authority, except if subpoenaed in accordance with the legal provisions in force (Panama Court Order required). If a violation of this occurred Article 101 of this Cabinet Decree contains provisions for thedealing of such a violation.
Article 101 of Cabinet Decree 238 states that:
"Any person who furnishes information in violation of this Cabinet Decree, or who violates anyof the prohibitions established in it, for which no specific punishment is provided for, shall be subject to a monetary fine as determined by the Banking Commission, without prejudice toapplicable criminal and civil liabilities." 
This is fairly strong language.
Article 65 of Cabinet Decree 238 deals with how the National Banking Commission may gainaccess to documents relating to the bank's operation, not individual records of banking clients.The Banking Commission needs to regulate the banks financially and thus inspect their books but this is mandated to be done on a collective basis, thus the books for the bank as a whole areinspected not the records for an individual account holder at the bank. The BankingCommission may not examine or inspect any type of individual deposit accounts, nor thesecurities held in custody by the bank for clients, nor the safe deposit boxes belonging to clientsand their contents, nor the documents associated with receiving credit from the bank, unlessthere is a Panama Court Order in place that specifically authorizes such inspection or examination according to Article 89 of the Panama Commercial Code.
Panama statues specify that bank secrecy may be lifted by a Panamanian court through Article89 of the Commercial Code. This is not a commonly invoked procedure but is possibleconcerning serious criminal activities.
Articles 168 and 170 of the Panamanian Criminal Code contain two sections which enablescriminal prosecution for violation the privacy of Panama banking clients:
o
Article 168. Any person that is in legitimate possession of correspondence, records or documents which are not intended for public knowledge and notwithstanding disclosessaid correspondence, records or document without proper authorization, even in theevent that they were addressed to him, shall be subject to prosecution, whenever suchdisclosure might inflict damage.
of 00

Commenting has been disabled.