With advancing technology, not too many things in our lives are remaining private any more and one of the main areas where our privacy is invaded on a regular basis is financial matters. This is why when you consistently keep hearing about the strong banking secrecy laws of the Republic of Panama, you wonder what makes them so different and how they compare with other offshore jurisdictions.
Banking secrecy laws prohibit banks and other financial institutions from releasing information about their account holders. These laws are typically enforced by a fine and at times, even a jail term. While many countries do have banking secrecy laws in some form or another, the Republic of Panama is one of the few reputed to enforce it to the letter, not hesitating to put the offenders even behind bars.
A Look At What Other Countries Offer
Countries like Switzerland, Cayman Islands, Liechtenstein, Hong Kong, Singapore and Belize, all claim to have strict banking secrecy laws. However, over the years, it has been found that there is more and more pressure on these countries to change their legislation so that information about account holders can be obtained more easily.
Some of these countries like Switzerland for instance, has recently announced that it will adopt OECD regulations that govern international banking transparency and provide information more readily. Previously, many of the above stated countries made a clear distinction between tax evasion and tax fraud and would not cooperate with foreign governments in case of mere tax evasion cases. However, many of them are now willing to provide information about their foreign account holders provided the authorities can provide them with specific and concrete evidence about the tax evasion. This has dealt quite a blow to the reputations of these countries as banking strongholds.
Till recently, Uruguay and the Republic of Panama were two countries that still held some of the strongest bank secrecy laws in the world. However, Uruguay has entered into Mutual Legal Assistance Treaties and Tax Treaties with many countries.
The Republic of Panama has continued with the same banking secrecy laws that were put in place many years ago to protect the account holders. While efforts have also been made to strengthen these laws, no stone is left unturned when it comes to implementing even the current ones. The government is very clear that any person associated with the banks who discloses any private information about the clients will be dealt with severely.
It is also important to note that though Panama also has entered into Mutual Legal Assistance Treaties with other countries, it has ensured that this applies only to cases that involve crime such as terrorism, money laundering or narcotics. The Republic of Panama does make sure that the MLAT is not used to get information in civil cases such as business litigation or matters of tax evasion.
In terms of the strength of the banking secrecy laws, the long tradition of enforcing these laws and the consistent as well as stringent manner in which these laws are enforced, the Republic of Panama is way ahead of many other offshore jurisdictions.