Opening a bank account should be a priority if you are considering living or doing business in Panama. It is essential for simplifying transactions, applying for residency and accessing tailored banking services. The process involves careful preparation: researching options, gathering documents and accounting for approval times. With proper planning and assistance, the account opening procedure is straightforward.
Reasons to open a bank account in Panama
Ease of local transactions
Paying taxes, utility bills and other services is simple through local banks' online platforms, which allow for quick, hassle-free settlements. ATM withdrawals are cheap or cost-free with a local card. A significant technological development in recent years is Yappy, a digital instant payment method. It helps users bypass cash and credit cards when paying for goods and services. A growing number of businesses accept Yappy, and many individuals use it for private transfers. Several banks in Panama have integrated this instant payment system—be sure to check if the bank you are considering is one of them.
Currency
Panama has a dollarized economy. Its currency, the Balboa, is pegged to the U.S. dollar at a 1:1 ratio. All banknotes in circulation are U.S. dollars. Panamanian balboa coins are available in denominations of 1, 5, 10, 25 and 50 cents, alongside their similarly sized U.S. counterparts. Besides, balboa coins equal to one U.S. dollar are in use; the design featured on these coins varies and could be of interest to collectors. Don't be confused by price tags with balboa signs (B.); you are expected to pay in American dollars.
Residency application
To apply for certain types of residency in Panama, foreigners must have a local bank account and provide a bank reference letter.
Types of bank accounts in Panama
Whether your priorities lie in savings, business or investing, you can find the right account type for your needs in Panama. Local banks offer a variety of options:
- Savings account: Ideal for personal, everyday use, savings accounts tend to have low fees and basic requirements. They also pay interest, with rates that may vary between banks.
- Checking account: This type of account comes with check-writing capabilities.
- Investment account: You can invest in local and international markets through investment accounts, which typically need a large deposit. Some banks offer accounts in multiple currencies.
- Time deposit account: These accounts require a fixed deposit for a set period of time and offer higher interest rates to their holders. Interest is paid on a monthly or yearly basis. Note that in Panama, unlike in some countries, it's impossible to close a time deposit account before the end date without a critical reason (death, severe disease, etc.). Don't hesitate to negotiate better interest rates if you can make a substantial deposit—some banks may be flexible depending on amounts.
- Corporate account: Local banks offer corporate accounts tailored for clients planning to operate a business in Panama.
- Joint account: These accounts can be opened by two or more individuals, each with equal access and rights to the account. The requirements are similar to those of individual accounts. All holders must present the necessary documentation. Joint accounts are popular among business partners and married couples in Panama.
Choosing the right bank in Panama
Panama is home to both local and international banks. Many financial institutions from Latin America have offices here. However, some globally renowned banks, including HSBC and Santander, have opted to divest their holdings in Panama. The Bank of Nova Scotia, known as Scotiabank, has a significant presence in the country. The Panamanian branch of the Swiss bank UBS focuses on asset management. Citibank continues to operate in Panama for institutional clients, while Scotiabank has purchased the rest of its portfolio.
When selecting a bank, consider the following:
- Reputation: Pay attention to the bank's track record. Banco General, BAC Credomatic, Banesco and Scotiabank have maintained strong positions in recent years.
- Accessibility: Choose a bank with branches or ATMs near your residence or workplace. Some banks are present throughout the country, while others only have locations in Panama City.
- Fees, interest rates and requirements: Banks differ in their initial deposit amounts, fees, interest rates and document requirements. Make a preliminary consultation via phone, chat or email. Most Panama banks have some English-speaking staff who can guide you through the process.
- Services for foreigners: Some banks, such as Scotiabank or Banistmo, are accustomed to working with expats. Other banks, including Caja de Ahorros and Banco Nacional, focus more on Panamanians.
Useful links:
Bank account opening process in Panama
Prepare your documents
Once you have chosen a bank that meets all your criteria, the next step is to present the required documents. Panama is quite strict about requisites, due to the international anti-money laundering regulations. Before the Panama Papers incident, banking in Panama was relatively easy compared to other jurisdictions. After the scandal, which was covered in the news all over the world, the country tightened its financial regulations to enhance transparency. It's worth noting that Panama's efforts have had a positive effect. On October 27, 2023, Panama was excluded from the Financial Action Task Force (FATF) grey list.
Here's what you'll have to provide:
- Valid passport: If you have Panama's permanent residency card, use this ID for all banking and governmental procedures in the country. Otherwise, your passport is required.
- Proof of income: You may choose between a work reference letter, tax declaration or other evidence of a steady income. In most cases, one type of proof is enough. Even so, you may need to present additional documents.
- Utility bill: Some banks may ask you to provide electricity, water or phone bills as a confirmation of your address.
- Source of funds declaration: Some banks may require you to submit a separate declaration detailing the source of your funds.
- Residency: If you are not a permanent resident of Panama, you will need a temporary resident card in addition to your passport. Some banks open accounts for non-residents, but the requirements may be stricter. You may have to provide other documents, including proof of your connection to Panama (e.g., ownership of a titled property, a letter from a lawyer regarding your immigration process in the country or a residential contract of over a year).
- Personal reference: While filling in the bank's forms, you must provide personal references. A Panamanian referee would be ideal if you can find one.
- Account opening forms: You will need to fill out and sign the forms provided by the bank.
Choose the type of account
Based on your preferences, choose which account type is right for you. Sometimes, a combination of several accounts would be the best option to fulfill your banking needs. Bank staff can help you determine the best choice.
Visit the bank
In our fast-paced environment, time is priceless. For efficiency purposes, start the account opening procedure online. Request and provide the necessary information before visiting the bank of your choice. Panamanian banks offer valuable support via email, phone and chats. Yet, there's nothing like face-to-face communication to establish a good rapport with the bank's officials and get clear information. Plus, you must sign the forms in person.
Wait for approval
In Panama, the due diligence process takes time. So, it's unlikely that your account will be opened on the spot. The time varies by bank. Some are stricter (for example, Banco General), while the process is seamless in others. It can take up to several weeks. Be patient and provide any extra info that the bank may require.
Make the initial deposit
When your account is approved, you'll need to make a deposit. The amount varies by bank. Sometimes, it can be as low as $50.
Most banks in Panama offer Premium Banking services for accounts exceeding $100,000. If you are a lucky client of the Premium Banking department, you will have a dedicated officer assigned to your account. This executive will provide you with a direct cell phone number to assist with any questions or needs. You may also benefit from easier remote management of your banking matters when necessary.
Once the formalities are complete and your account is set up, you will be able to manage your finances with no effort. Having a local debit or credit card, along with other banking services, simplifies living and doing business in the country. Manage your accounts remotely through online banking and enjoy discounts when paying with your local credit card at restaurants, shops and other businesses in Panama.
Debit and credit cards in Panama
Panamanian banks provide their account holders with debit and credit cards that work worldwide. International transaction fees may apply.
Most accounts include a debit card and a Clave card. The latter is helpful for local payments and cash withdrawals.
Credit cards are offered depending on the client's credit history. Additionally, the individual must be a Panamanian resident or have the ongoing residency process to obtain a credit card. For a regular client, it may take up to a year, while Private or Premium Banking clients may be able to get it earlier.
International money transfers in Panama
International money transfers can be made through a bank's online platform, mobile app or in person at a branch. Fees vary by bank and apply to both sending and receiving funds internationally. The most popular international transfer apps in Panama are Western Union, PayPal and MoneyGram.
Cryptocurrencies in Panama
Many banks in Panama do not allow the purchase of cryptocurrencies or the receipt of profits from crypto exchanges. However, Towerbank positions itself as crypto-friendly, offering greater flexibility with cryptocurrency transactions. It is also known for its smooth account opening process.
Possible challenges for expats when opening a bank account in Panama
Opening a bank account in Panama may present a few challenges—nothing that can't be overcome with some patience and a smile.
One of such challenges is the language barrier. Although most banks in Panama have English-speaking personnel, they might not always be available when you need their assistance. This means prolonged waiting times to resolve your matters. To speed up the process, bring a Spanish-speaking friend or a translator, or hire a Panamanian law firm to assist you.
Long approval times are another aspect of the process that may demand some patience. Account opening can take weeks due to extensive background checks. Plan accordingly to avoid financial inconveniences, maintain correspondence with the bank, and provide any additional information that may be requested.
Do not expect the banking procedures to resemble those in your country of origin. You may encounter surprises regarding timing, services or requirements within Panama's financial system. The country is known for its slower pace of life, and banking is no exception. Things may take longer or require further steps or documentation compared to your home country.
Good to know:
- If you value convenience over costs, working with a local attorney can be beneficial. Many law firms in Panama specialize in assisting foreigners with opening bank accounts. They have extensive knowledge of Panama's banking sector. Moreover, they often have connections with various banks to speed up the process prior to your arrival.
- Even if you are thrilled about your new Panama bank account, consider keeping some banking facilities in your home country or elsewhere. Using multiple jurisdictions for your financial transactions may be convenient for business purposes. Be sure to consult your accountant about any potential tax implications.
This article focuses on setting up a personal bank account. If you plan to establish a financial structure for your business, it is crucial to consult a Panamanian accountant and/or lawyer.
Takeaway
Opening a bank account in Panama is vital for anyone planning to work or live in this beautiful piece of land joining the two American continents. While it might seem like a chore, the process is straightforward with the proper preparation and guidance. By doing preliminary research, choosing the right bank and staying organized, you set yourself up for financial success in your new home. Enjoy Panama with peace of mind.
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