Panama is the "new Switzerland".  Switzerland was once known for numbered bank accounts, but today these types of accounts are no longer available.  Panama does not have numbered accounts, but it does have the next best thing.  Panama has bearer share corporations which can own a bank account.  These corporations have no ownership records.  The person in possession of the share certificates owns the corporation, and thus the bank account.

Who's name is on the bank account?

Someone has to sign on the bank account.  Every corporation has one or more people with signing authority on its bank accounts.  This does NOT mean they are the owner of the funds.  It merely means the corporation has assigned them the responsibility of managing the bank account.  The beneficial owner of the bank account is the corporation, not the signatory.  Take Walmart for example.  Walmart has certain employees who are authorized to sign on one or more of their many bank accounts.  Walmart is the beneficial owner of the money, while the signatory is just an employee.  If the employee  were to be sued because someone slipped on his/her driveway walmart's money is not at risk.  Similarly the employee does not claim walmart's money on his/her taxes.

I understand I am just a signatory on the bank account and the bearer share corporation owns the money but I still want to know who can find out I sign on the bank account and how?

Panama has strong bank secrecy laws, both on paper and in practice.  Here are some of the more relevant sections of Panamanian banking law:

• Article 74 of Decree 238 prevents the Panama banking commission from conducting investigations on individual banking clients.  Any information it uncovers while doing its regulatory operations cannot be revealed to any person or authority, unless subpoenaed by a Panama court order.  Anyone found violating this order is subject to Article 101 which states:  " Any person who furnishes information in violation of this Cabinet Decree, or who violates any of 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 to applicable criminal and civil liabilities."

• Article 65 of Cabinet Decree 238 regulates how the National Banking Commission gets access to banking information and documents.  It clearly states that the Commission may only inspect the books of the bank in general and cannot single out individual bank accounts.  This includes both deposits and securities held by the bank.  Again this can only be broken by a court order.

• Now look at Article 170. "Any person that in the course of his occupation, employment, profession or activity obtains knowledge of confidential information that in the event of being made public could inflict damages, and such person discloses that information without the consent of the concerned party; or in the case that disclosure of such information were not necessary to safeguard a higher interest, shall be punishable by imprisonment of 10 months to 2 years or a comparable fine, and the inability to practice his occupation, employment, profession or activity for not more than 2 years."

Now that we have established that the signatory's privacy is protected by Panama bank secrecy laws, there are still a few loose ends to tie up.

Under what circumstances will a Panama court allow banking secrecy protection to be lifted?

In today's world there are 3 reasons in which your banking secrecy can be violated no matter what jurisdiction your bank in.  They are severe criminal activity like terrorism, money laundering and drug smuggling. Tax evasion is NOT a crime in Panama, and no court in Panama will allow your banking secrecy to be violated for tax related issues.  (Under no circumstances are we recommending you commit tax evasion in your home country.)

What about MLAT (Mutual Legal Assistance Treaty)?

Panama is a member of this treaty.  Since 9/11 all jurisdictions that can move funds in and out the North America and Europe are in this treaty.  At first this treaty looks dangerous, but on further investigation it is not so bad and here is why:

To comply with a request the following conditions must be met:

• The activity under investigation must be a crime in BOTH countries.  (again tax evasion is not a crime in Panama)

• The requesting country MUST show that there is no other way for it to obtain this information and that without this information it cannot successfully prosecute the case.

• The requested information must be specific.  No fishing expeditions.

• The requesting country must file a criminal case in its NATIONAL courts.  Minor criminal cases usually are not brought into the NATIONAL courts

After all these conditions are met, the request is sent through diplomatic channels (which are slow).  Panama then considers the request.  Panama does not like to break its banking secrecy laws.  Panama may then ask for more information or clarification or do its own investigation into the matter to see if the matter warrants breaking banking secrecy.  Many of these request are NOT honored by Panama.  Basically the matter needs to be serious by Panama standards.  Panama can deny the request on any of the grounds listed above.

Panama will not and does not comply with information requests unless the matter is a serious criminal activity.  The proceedings are slow and often end in the request being denied.  

What about Tax Treaties?

PANAMA DOES NOT PARTICIPATE IN ANY TAX TREATIES PERIOD, nor does it recognize tax related investigations as criminal.  As such, Panama will not disclose your financial information for any tax related reasons.