The Panama Papers scandal…
Ugh. Is anyone else tired of hearing about the bad guys? Frankly, this story is old news. There have always been people trying to hide their money from the government – in any country – and they took whatever means they could to do so. Some countries – like Panama – had set-ups – at least for a period of time – that allowed them to do that.
It’s important to note that the type of ‘numbered corporation’ type of set-up that allowed this type of thing in Panama hasn’t been legal now in Panama for some time. Something like four or five years.
So, while, yes, those with lots of wealth took advantage of it for a number of years in many countries, including Panama, Panama’s government decided to put a stop to that way before the Panama Papers story came out.
Entonces (which means, “Then…”), to me, this stuff is old news.
Panama Papers and What It Means for Expats
But, let’s step away from the media hype at the moment. Does all this seemingly new scrutiny on banking – in Panama and other places – really impact you as an expat living in Panama or retiring to Panama?
Bad PR about Panama
In my opinion, there hasn’t been much immediate impact to expats. Some locals I’ve talked to – both expats and Panamanians – feel that their country has been slimed because of a few rotten apples. Panamanian President Juan Carlos Varela even wrote a column about the Panama Papers in the New York Times last Monday. You can see that here: Panama’s President writes about the Panama Papers in the NY Times.
So, beyond a grand slam of Trump-sized bad press in the past few weeks, what else has happened that really impacts expats in Panama immediately related to this?
Impacts to expats living in Panama from the Panama Papers scandal
Has real estate demand, which has been higher in the past four months according to my broker friends in Panama City, been negatively impacted? Nope.
Are expats having to jump through extra hoops to get bank accounts opened any differently than they were a month ago? Nope.
Let me clarify that opening a bank account in Panama as an expat – especially if you are from the U.S. – has been laborious now for some time. I’ve written a few other posts about my own experiences with banking in Panama, which you can refer to here:
So, related to banking, the reality is that Panama has not been a free-wheeling, easy-to-get-an-account, skip tracing paradise for a few years. Especially not for U.S. citizens.
Anyone heard of FACTA? It’s been in place now for several years. And, for those U.S. citizens that live in Panama, it’s been a requirement for three years now that you claim, list and report every single bank account you have abroad to the Department of Treasury AND the IRS. That responsibility falls on the shoulders of the individual, yes, but banks in Panama in the last five years – as those laws took shape and the implementation became real – began to require annual W-9’s on all U.S. account holders. And if you didn’t do it, my banks told me they would freeze or close your account. Does that sound like a fiscal paradise to you?
I personally have filled out at least ten W-9’s in the past five years. (Again, it’s a yearly requirement – or maybe they keep losing last year’s form, who knows…this is Panama.)
There have been rumors – and these are only rumors, people – that some Panamanian banks are losing their relationships with their correspondent banks in the U.S. However, larger, reputable banks in Panama that are on the up and up have not reported any issues related to this type of thing that I’m aware of.
How might this impact me if I lived in Panama and had a bank that lost its U.S. correspondent bank? Well, for one, it would make doing any international transfers difficult – at least for a period of time, until a new correspondent bank was found.
Moving beyond the Panama Papers scandal
Otherwise, for expats living in Panama, the Panama Papers is something that’s old news. Day-to-day life is ongoing. The challenges of adjusting to life in Panama as an expat are ongoing. (For more on that, get my first book, The Gringo Guide to Panama: What to Know Before You Go, as that is its main subject matter.)
So, let’s let the high-paid attorneys and the governments and the media carry on with whatever else they need to about the Panama Papers. The rest of us – with real jobs and school commitments and mouths to feed and books to write – have moved on.