Opening a Panama Bank Account

How to Open a Bank Account in Panama: Pros and Cons

Opening a bank account in Panama can be a practical step for those planning to move to or spend extended time in the country. Whether you’re retiring, running a business, or simply seeking a financial foothold in Panama, it’s important to understand the process and weigh the pros and cons of having a Panamanian bank account. Additionally, depending on your country of origin, you may need to report your foreign bank account to comply with financial regulations.

Steps to Open a Bank Account in Panama

1. Choose the Right Bank
   Panama is home to both international and local banks. Some of the most popular choices include Banco General, Multibank, BAC Credomatic, and Global Bank. Each bank offers different services, fees, and requirements, so shop around for one that meets your needs. Also, verify that the bank has a branch in the town you are moving to. Some banks offer online banking in English and Spanish but some do not. If you are not fluent in Spanish, I strongly recommend opening an account at a bank that has online banking and an app in English.
2. Prepare the Required Documentation
   Banks in Panama have stringent Know Your Customer (KYC) regulations, so be prepared. Every bank has different requirements for opening an account. You can look on their website to see what they are. It will be easier and faster to open an account if you already have an eCedula ( national ID card in Panama). You cannot get an eCedula until you have a permanent visa.

• A valid passport.
• A second form of ID, such as your residency visa.
• A reference letter from your current bank (usually from a manager or an officer).
• Proof of income or source of funds (e.g., pay stubs, pension statements, or business earnings).
• Proof of address (e.g., a utility bill or rental agreement).
• A letter of recommendation from someone who has a Panamanian bank account (sometimes required).
• A minimum deposit, which varies depending on the bank. ($50 to $1500)
• Two years of tax returns or proof of income

1. Visit the Bank in Person
   Most Panamanian banks require you to open the account in person. Some banks may also require you to have a local contact or sponsor.
2. Complete the Application Process
   The application process can take anywhere from a few hours to several days, as banks will conduct due diligence to verify your documentation.
3. Maintain the Account
   Be mindful of minimum balance requirements and any fees associated with maintaining the account. Failing to meet these requirements could result in additional charges or account closure.
4. Get a Debit Card
   Having a debit card will make it easy to pay for purchases or get cash at any ATM.

Pros of Having a Panama Bank Account

I can’t imagine living in Panama without a Panama bank account. It’s easy to transfer money from my account to someone else’s account in a few minutes and with no fees.

1. Convenience
   A local bank account allows you to manage everyday expenses like paying rent, utilities, and other bills in Panama. It can also make it easier to access cash without high international transaction fees.
2. Currency Options
   Panamanian bank accounts operate in U.S. dollars, which is the primary currency used in Panama. This eliminates the need for currency exchange if you’re from a dollar-based economy.
3. Potential for Higher Interest Rates
   Some Panamanian banks offer competitive interest rates on savings accounts and fixed-term deposits (CDs), often higher than what’s available in other countries. You can get an intercuenta account that pays 2.5-3.5% interest without no long term commitment, like a CD.
4. Local Credit Opportunities
   Having a local account can help you build financial credibility in Panama, potentially making it easier to qualify for loans or mortgages.
5. Privacy
   Panama’s banking system is known for its strong privacy policies, although international compliance measures have tightened in recent years.

Watch the reply to this livestream about opening a Panama bank account:

Cons of Having a Panama Bank Account

1. Strict Documentation Requirements
   Opening an account can be a time-consuming and paperwork-heavy process. Some banks are more accommodating to foreigners than others, but overall, the process requires patience.
2. Account Fees
   Panamanian banks often charge an annual fee of $25 for having a debit card and a fee is you failing to meet minimum balance requirements.
3. Limited Online Banking Features
   While online banking is available, it may not be as sophisticated or user-friendly as what you’re used to in your home country. Be sure to open an account at a bank that offers online banking in English if you are not fluent in Spanish.
4. Foreign Account Reporting Requirements
   If you’re a citizen or resident of a country that requires the reporting of foreign bank accounts, such as the United States (via the FBAR and FATCA), you’ll need to ensure compliance. Failure to report foreign accounts can result in severe penalties.
5. Risk of Economic or Regulatory Changes
   Although Panama has a stable economy, no banking system is entirely risk-free. Consider diversifying your assets in to multiple Panama banks to mitigate potential risks.

How to Get Money Into Your Panama Bank

Transferring Money from a US or Canadian Bank to Your Panama Bank Account

When you need to move cash from your U.S. or Canadian bank account to a Panamanian bank account, several secure and efficient options are available, including international wire transfers, Wise (formerly TransferWise), and OFX. Each method has its advantages and is suited to different needs depending on the speed, cost, and ease of use you require.

International Wire Transfers

The most traditional way to transfer funds is through an international wire transfer. To initiate one, you can usually use its online banking system. You’ll typically need to provide your Panamanian bank’s SWIFT code, the bank’s address, your account number, and your account name. Wire transfers are highly secure and can move large amounts of money at once, but they often come with high fees—both from the sending bank and potentially from the receiving bank in Panama. It usually costs about $50 to do an international wire transfer, plus your Panama bank may have a $20 fee, too.

Before you move to Panama, verify that you can do online wire transfers from your current bank to your Panama bank.

Using Wise (Formerly TransferWise)

Wise offers a cost-effective and user-friendly alternative for transferring money internationally. Unlike traditional banks, Wise uses local banking networks to minimize fees and offer competitive exchange rates. To send money, you’ll need to set up a Wise account and link it to your U.S. or Canadian bank account. Then, you enter the details of your Panamanian bank account, including the SWIFT code and account number. Wise is particularly useful for smaller transfers or for people who want transparency in fees and exchange rates. Transfers are typically processed quickly, often within 1-2 business days.

Using OFX

OFX is another excellent option for transferring money internationally, especially for Canadians. Similar to Wise, OFX offers favorable exchange rates and lower fees than traditional banks. After setting up an OFX account, you can link your U.S. or Canadian bank account, initiate a transfer, and input the details of your Panamanian account. While OFX may take slightly longer than Wise to complete a transfer (usually 2-3 business days), it can be more cost-effective for large transactions because it does not charge fixed fees—just a margin on the exchange rate.

Write a Check!

If you have a US bank account, you can write a check to yourself to deposit into your Panama bank account. It will usually take 15-21 days for the check to clear, so plan ahead. The fee to deposit a check from a US bank is about $10 – substantially less than an international wire.

Key Considerations

When transferring funds to Panama, always verify your Panamanian bank’s specific requirements for receiving international transfers. Some banks may charge incoming wire fees, so check beforehand to avoid surprises. Additionally, always be mindful of currency exchange rates and processing times to ensure you’re getting the best deal and your funds arrive when needed.

By understanding the strengths of each method—wire transfers for high security, Wise for cost-effectiveness and speed, and OFX for large transactions—you can choose the best option for moving money to your Panamanian bank account.

Foreign Account Reporting Requirements

If you’re a U.S. citizen or permanent resident, you are required to report foreign financial accounts to the IRS if the total value exceeds $10,000 at any point during the year. This includes filing:

• FBAR (Foreign Bank Account Report) via FinCEN Form 114.
• FATCA (Foreign Account Tax Compliance Act) if your foreign accounts meet certain thresholds.

The $10,000 is the total amount of money in an offshore bank account! So, if you have $5000 in one bank and $5000 in a different bank, both bank accounts must be reported.

Keeping several accounts below $10,000 will not work. If the total amount of money that you have in foreign bank accounts exceeds $10,000, even for one day, you are required to report ALL foreign bank accounts.

Other countries may have similar reporting requirements, so check with your home country’s tax authority or a qualified accountant to ensure compliance.

Several countries mandate their residents to report foreign bank accounts to ensure tax compliance and prevent tax evasion. While the specific requirements vary by country, the following nations have established regulations for reporting foreign financial accounts:

1. United States: U.S. citizens and residents must file the Report of Foreign Bank and Financial Accounts (FBAR) if the aggregate value of their foreign financial accounts exceeds $10,000 at any time during the calendar year. Additionally, they may need to file Form 8938 under the Foreign Account Tax Compliance Act (FATCA) for specified foreign financial assets.
2. Canada: Canadian residents are required to file Form T1135, the Foreign Income Verification Statement, if the total cost amount of their specified foreign property exceeds CAD 100,000 at any time during the year.
3. United Kingdom: UK residents must report foreign income and gains on their Self Assessment tax return. The UK has also adopted the Common Reporting Standard (CRS), facilitating the automatic exchange of financial account information between countries.
4. Australia: Australian residents are obligated to report foreign income, including interest from overseas bank accounts, on their income tax return. Australia participates in the CRS for the automatic exchange of financial account information.
5. Germany: German residents must declare foreign income and assets on their tax returns. Germany is a participant in the CRS, enabling the automatic exchange of financial account information.
6. France: French residents are required to declare foreign bank accounts and income from foreign sources. France also participates in the CRS for automatic information exchange.
7. Japan: Japanese residents must report foreign assets exceeding JPY 50 million by filing a “Statement of Foreign Assets” with their tax return. Japan is a participant in the CRS.
8. India: Indian residents are required to disclose details of foreign assets and income in their income tax returns. India has adopted the CRS for automatic exchange of financial account information.

Many other countries have implemented similar reporting requirements, especially those participating in the Common Reporting Standard (CRS), an information standard for the automatic exchange of financial account information between tax authorities globally.

It’s crucial to consult with a tax professional or the tax authority in your country of residence to understand your specific reporting obligations regarding foreign bank accounts.

Is a Panama Bank Account Right for You?

A Panama bank account can be an excellent tool for managing your finances if you live, work, or invest in the country. However, it’s essential to weigh the benefits against the challenges, including fees, reporting obligations, and the account-opening process. If you decide to proceed, ensure you’re organized with all necessary documentation and understand the long-term requirements for maintaining the account.

Some people do not open a Panama bank account. While living in Panama, they prefer to get cash from an ATM to pay for rent and other purchases. When using a foreign debit card, you can only get $250 per transaction and the fee is $6.50 so you want to be sure you are using a debit card that reimburses you for foreign transaction fees.

You can also access cash by transferring money to Panama using Western Union without a Panama bank account.