Corporate bank account in Panama: opening and operating

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Corporate bank account in Panama: opening and operating

Opening Corporate bank accounts in Panama

Last week, our post dealt with opening personal bank accounts in Panama. This week, we will look at how to open a corporate bank account. It is important to note that there is a difference between locally operating companies and offshore corporations, especially in the banking industry. Some banks in Panama will only open accounts for corporations with an “aviso de operación” – business license. That is a company that operates locally and is subject to local taxes. On the other hand, some banks will only open accounts for offshore companies. It is no longer easy to find banks that are working with both onshore and offshore business.

Among the issues that banks consider are:

  • FATCA compliance
  • Cost of Know Your Client and Due Diligence
  • Profile of the account – will the bank make money?
  • Is this type of business in the normal line of business of the bank?
  • How much money will pass through the account versus how much money will stay in the account?

Requirements: opening a corporate bank account

Many of the requirements for a corporate bank account are similar to those requested for the personal bank account. But in the case of a corporate account, the bank will want all documentation taking it back to the controlling interest or ultimate beneficial owner.

Keep it simple:

Imagine, for a moment, the following structure:

UBO, corporate structure, ultimate beneficial owner, know your client, asset protection, shareholder, directors, officers, account signatory, beneficial owner, beneficiary, controlling interest, controlling person, decision makers

While this may look really “pretty” from the perspective of asset protection or estate planning, it is a nightmare for the compliance officer at the bank. Supposing that you are opening an account for the Panama corporation under the holding company, the bank needs to receive documentation for:

  1. Your Panama corporation – each one of the three directors, the account signatories, and the copies of the corporate documents;
  2. The share register that shows who “owns” the company – a holding company. Now they need the corporate documents for the holding company, with the due diligence and know your client details for each of the directors, shareholders, and officers of this company.
  3. The shareholder of the holding company: a foundation. They need the incorporation documents of the foundation, the details of each member of the Foundation Council, the Protector and possibly even the founder.  And they still haven’t arrived back at the Ultimate Beneficial Owner.
  4. The bank ultimately wants to know:
  • who has the controlling interest?
    • which person is calling the shots?
    • who is the decision, maker?

In conclusion, for the bank: simple is always better. Your asset protection or estate planning needs can be taken into account, but you should be able to explain the structure easily to the customer services representative at the bank.

In a corporate structure with multiple shareholders, you will need to provide know your client details for any shareholder or controlling person holding over 10%. Additionally, if the shareholder or holding company is a publicly traded entity, expect to provide proof of this. Make sure you have the proper authorization for establishing the subsidiary (resolutions) and authorized persons on the account.

Basic account opening requirements:

So, ignoring the complicated structure outlined above, what does the bank require?

  1. Corporate account opening forms (the bank will supply). There may be some 6-10 pages which need to be completed.
  2. Copies of your incorporation documents: articles of incorporation, resolutions.
  3. Copy of the share register
  4. Extract from the public registry – known by many as a Certificate of Good Standing
  5. Business plan – the banks are looking for something that shows what the company will be doing. Who will be the suppliers to the company? Similarly, what customers will the company have?
  6. If the company has been in existence for more than one year: financial statements and/or accounting records.
  7. Source of funds for the initial deposit and trade projections (usually provided in the actual account opening forms)
  8. Documentation (such as that provided for the personal account) for each person associated with the corporation:
    1. directors
    2. account signatories
    3. shareholders / beneficial owners / controlling interests
  9. FATCA forms – W8Ben, W8Ben-E, W9 – depending on the situation

The documents will vary depending on the bank that you choose to open the corporate bank account, but the above list and those indicated on the personal bank account page are pretty comprehensive of what is usually expected.

Factors to consider:

Once again, when choosing the bank there are a number of factors that you should consider:

  • Language(s):
    • at the bank – your customer service representatives
    • in the call center – is there a special number for English?
    • what about their online system?
  • Online banking platform
    • Is it easy to use?
    • Does it have a good security system?
    • Do you need an App on your mobile phone, a token or how are passcodes generated?
  • What are the minimum deposit / minimum balance requirements of the bank?
    • What are your cash flow requirements?

Our office is happy to assist you with your corporate bank account needs in Panama. We are also able to offer banking options in other jurisdictions. In some cases, banks in other jurisdictions are easier to work with and offer a wider range of currencies and opportunities.  Beth Gray is experienced with local and international business companies, especially the aspects of tax compliance and reporting. Betsy Moran is experienced with compliance issues, especially the AML guidelines. Joan Villanueva can assist with any relocation inquiries that you may have. Do not hesitate to contact us for more information regarding your corporate or business needs.

Personal bank account in Panama: opening requirements

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Personal bank account in Panama: opening requirements

While you don’t need a personal bank account in Panama to live here, it may lower transaction prices and make paying bills easier.

Reasons to set up a personal bank account

Many expats have differing views on whether or not you need to open a personal bank account. If you have an account in USD, it may make little difference in the bank charges. In other currencies, the bank charges could be high and might be reason enough to set up your account here.

Another reason for setting up a personal bank account in Panama is to apply for the friendly nations visa. One requirement is that you have a personal account with no less than a mid-four figure balance. You should deposit at least USD$5,000 in the account, then.  The friendly nations visa will provide you with permanent residency, It also provides a work permit (depending on which application you make). And it allows you to eventually naturalize as a Panamanian (if having a second passport is your goal).

Paying bills online: many of the banks will allow you to pay bills online, although this is not for all utilities companies. Some still requirement payment at their office or through an approved intermediary. You can also pay your personal taxes online through some banks (such as income tax or property taxes).

Requirements: personal bank account

The requirements vary slightly from bank to bank. Nonetheless, the general requirements are the same:

  • Complete the bank account application forms, all of them
  • Your passport (the bank will make its own copy)
  • 2nd ID – such as driver’s license
  • Professional reference letter – such as from a lawyer / accountant / company you have done work with
  • Banking reference – they are looking for proof of a banking relationship of more than 2-3 years
    • If you don’t have a “bank account” but have a credit union account, this will usually work
    • They may accept an investment account letter instead of a “bank”
  • Minimum opening deposit: $1,000.00 (some banks do require less)
  • Minimum balance:
    • checking: usually somewhere between $250.00 to $1,000.00
    • savings: usually somewhere between $500.00 to $1,000.00

The forms ask for proof of source of funds: the bank is interested in knowing how you support yourself financially and where they should expect to receive income from.

If you are applying for your friendly nations visa through our office, we would be happy to accompany you to the bank for your initial interview.

Choosing a bank:

Consider the following when choosing where to apply for your personal bank account:

  1. Where you live and branches that you have close by
  2. Online banking – which ones have their website in English
  3. What online banking services do they offer?
  4. Do you / your friend / the company you work for already have a relationship with the bank?
  5. Expat opinions regarding customer service – you will be able to find complaints against every bank, but some are worse than others
  6. What is their online security platform? Will you need a widget in order to pay bills and make transfers?
  7. Number of ATM machines available in your area of town if you like to get cash out

For more information, do not hesitate to contact our office for assistance.