Panama has a substantial financial services sector. The sector grew up providing trade finance for trade passing through the

Panama Canal The Panama Canal ( es, Canal de Panamá, link=no) is an artificial waterway in Panama that connects the Atlantic Ocean with the Pacific Ocean and divides North and South America. The canal cuts across the Isthmus of Panama and is a condui ...

, and later evolved into money laundering for the drug trade under

Manuel Noriega Manuel Antonio Noriega Moreno (; February 11, 1934 – May 29, 2017) was a Panamanian dictator, politician and military officer who was the ''de facto'' ruler of Panama from 1983 to 1989. An authoritarian ruler who amassed a personal f ...

. Panama has had two

Panama Panama ( , ; es, link=no, Panamá ), officially the Republic of Panama ( es, República de Panamá), is a transcontinental country spanning the southern part of North America and the northern part of South America. It is bordered by Co ...

nian government-owned banks: the

National Bank of Panama The National Bank of Panama ( es, Banco Nacional de Panamá) (BNP) is one of two Panamanian government-owned banks. As of January 2009, it held deposits of about US$5 billion. The other government-owned bank is ''Caja de Ahorros de Panamá'' (Savin ...

( es, Banco Nacional de Panamá) (BNP) and ''Caja de Ahorros de Panamá'' (

Savings Bank A savings bank is a financial institution whose primary purpose is accepting savings deposits and paying interest on those deposits. They originated in Europe during the 18th century with the aim of providing access to savings products to al ...

of Panama). Panama has never had a

central bank A central bank, reserve bank, or monetary authority is an institution that manages the currency and monetary policy of a country or monetary union, and oversees their commercial banking system. In contrast to a commercial bank, a central b ...

, and the BNP was responsible for nonmonetary aspects of central banking in Panama, assisted by the National Banking Commission (''Superintendencia del Mercado de Valores''), which was created along with the country's International Financial Center, and was charged with licensing and supervising banks. As of January 2009, BNP held deposits of about US$5 billion, while the Savings Bank held deposits or about US$1 billion. As Panama has no central bank to act as a

lender of last resort A lender of last resort (LOLR) is the institution in a financial system that acts as the provider of liquidity to a financial institution which finds itself unable to obtain sufficient liquidity in the interbank lending market when other faci ...

to rescue banks that get in trouble, Panamanian banks are very conservatively run, with an average

capital adequacy ratio Capital Adequacy Ratio (CAR) is also known as ''Capital to Risk (Weighted) Assets Ratio'' (CRAR), is the ratio of a bank's capital to its risk. National regulators track a bank's CAR to ensure that it can absorb a reasonable amount of loss and co ...

of 15.6% in 2012, nearly double the legal minimum requirement. In 1971 the government passed a banking law that allowed for a very liberal and open banking system, without any government agency of consolidated banking supervision, and confirmed that no taxes could be imposed on interest or transactions generated in the financial system. The number of banks jumped from 23 in 1970 to 125 in 1983, most of them being international banks. The banking law promoted international lending, and because Panama has a territorial tax system, profits from loans or transactions made offshore are tax free. Since the global

financial crisis of 2007–08 Finance is the study and discipline of money, currency and capital assets. It is related to, but not synonymous with economics, the study of production, distribution, and consumption of money, assets, goods and services (the discipline of f ...

the country has been trying to shake off its reputation as a

tax haven A tax is a compulsory financial charge or some other type of levy imposed on a taxpayer (an individual or legal entity) by a governmental organization in order to fund government spending and various public expenditures (regional, local, or n ...

, signing double taxation treaties with many (mostly OECD) countries. United States citizens, residents and green card holders opening a bank account in Panama, as in other countries, have since 2010 been subject to the US Foreign Account Tax Compliance Act (FATCA), in addition to Panamanian regulations. In April 2011, Panama entered into a treaty with the United States on the exchange of financial information.

Licensing

Banks in Panama are licensed and regulated by the Banking Supervisory Authority (''Superintendencia de Bancos'').Banking in Panama
/ref> Banks may be licensed as either: * General (full) license Class A - these banks can operate both within and outside Panama. The majority of banks in Panama have this license. * International license Class B - these banks are physically present in Panama, but can only do business with foreigners and non-Panamanian residents. They can only open accounts and accept deposits from individuals or organizations located overseas. There are also the two state owned banks in Panama that can only do business within Panama: the

( es, Banco Nacional de Panamá) (BNP) and ''Caja de Ahorros de Panamá'' (

of Panama).

References

{{Panama topics

Economy of Panama

Licensing

See also

References