BANKING SYSTEM OF PANAMA

Panama's banking sector is one of the most dynamic areas of the economy. A new banking law enacted in March 1998, modernized the banking system and increased government supervision. Under the new law, the system meets Basle Accord standards. Bank financial statements now must comply with international standards and be audited by internationally recognized auditors. As of May 2003, Panama's 77 banks reported total deposits of $24 billion, and $33 billion in total assets, an eight percent decrease from 2002. In 2003, approximately five percent of the total credit portfolio represented loans to the public sector. Loans to the private sector in Panama reached US$11 billion, or 95 percent of total credit. The three largest loan sectors were: trade and commerce (30%), mortgages (26%), and consumer lending (21%).

Panama opened its banking sector to foreign competition in 1971 under legislation, which placed high priority on banker-depositor confidentiality. This has heightened the risk that the banking system can be exploited by money launderers. The banking legislation establishes three classes of operations. General license banks operate full service banks in Panama and compete for domestic deposits and loans (43 banks). International License or "Offshore" banks, can only accept deposits from persons or organizations located overseas (28 banks). Representative Offices can only perform representational activities (6 banks).
A fee payable by the banks was approved to finance the functions of the Superintendence of Banks. The fee is US$5,000 for banks with representation licenses, US$15,000 for banks with international licenses and US$35,000 for banks holding general licenses.
There are also two state-owned deposit-taking institutions. Foreign and Panamanian banks compete on equal terms. Banks are organized into two groups, the Panamanian Banking Association (Panamanian and Foreign Banks) and the Association of Panamanian Banks (only Panamanians banks). Banks are licensed and regulated by the Banking Supervisory Authority (Superintendencia de Bancos). Panama's banking system does not have a deposit insurance scheme. Panama´s banking system has effectively achieved the following, among others factors: International Standards, International cooperation, Modern legislation, Competitive advantages.
As a necessary complement of the above, important legislation has been passed by the Panama Legislative Assembly and sanctioned by the President and resulted in relevant Cabinet Decrees being issued by the Executive power. These regulations, listed below, are not only in effect, but has also provided assistance throughout the region and beyond.

- Law 41 of October 2, 2000, which defines the crime of money laundering with regard to the predicate offenses: qualified fraud, illegal arms trafficking of humans, kidnapping, extortion, embezzlement, corruption of public officers, acts of terrorism, international theft, trafficking of vehicles and drug trafficking.
- Law 42 of October 2, 2000, which establishes as "accountable persons" in the observance of due diligence for banks, trust companies, currency exchange offices, money transfer service providers, non-bank loan companies, savings and loan cooperatives, securities exchanges, securities clearing houses, securities firms, securities brokers and investment managers.
- Law 45 of June 4, 2003, by which Chapter VII to Title XII of the Second Book of the Penal Code is added therein under the heading of Financial Crimes, fraud, illegal money transfers, concealing, deleting and counterfeiting accounting books and related documents. Disclosure of classified information, omitting or denying information, price discrimination, signing of fraudulent agreements, collecting financial means without proper authorization, among other types of crimes with their respective sanction.
- Executive Decree No. 78 of June 5, 2003, which modifies the name of the Financial Analysis Unit (FAU) to Financial Analysis Unit for the Prevention of Money Laundering and the Financing of Terrorism and extends its duties and responsibilities to assets related to the financing of terrorism.
- Law No. 48 of June 26, 2003, which regulates the operations of money remittance companies.
- Law No. 50 of July 2, 2003, by which Chapter VI, denominated Terrorism, is added to Title VII of Book II of the Penal Code and sets forth other provisions, This Law defines the crimes of terrorism and the financing of terrorism, turning both into autonomous crimes in our legislation.
This proven commitment by the Republic of Panama against money laundering and financing of terrorism includes both the public and private sectors, guarantees that Panama shall continue in this crucial endeavor and fully understands the importance of international coordination and cooperation.

Financial Institutions Operating
Some of the banks with general license in Panama:

Algemene Bank Nederland N.V. Sucursal Panarna (Hollland)
Banco Bilbao (Panama), S.A. (Spain)
Banco Central, S.A. (Spain)
Banco Comercial Antioqueño, S.A. (Colombia)
Banco Comercial de Panama, S.A. (BANCOMER) (Panama)
Banco Continental de Panama, S.A. ( Panama)
Banco de Bogotá, S.A. (Colombia)
Banco de Iberoamérica, S.A. (Multinational)
Banco de Latinoamérica, S.A. "BANCOLAT" (Panama)
Banco del Comercio, S.A. (Colombia)
Banco del Istmo, S.A. (Panama)
Banco DISA, S.A. (Panama)
Banco do Brasil, S.A. (Brasil)
Banco Exterior, S.A. (Spain)
Banco Ganadero, S .A. (Colombia)
Banco General, S.A. (Panarna)
Banco Industrial Colombiano de Panama, S.A. (Colombia)
Banco Internacional de Costa Rica, S.A. (Costa Rica)
Banco Internacional de Panama, S.A. "BIPAN" (Panama)
Banco Latinoamericano de Exportaciones, S.A. "BLADEX" (Multinational)
Banco Panameño de la Vivienda (Panama)
Banco Panamericano, S.A. "PANABANK" ( Panama)
Banco Santander Panama, S.A. (Spain)
Banco Unión, C.A.-Sucursal Panama (Venezuela)
Bank Leumi Le-lsrael B.M. (Israel)
Banque Nationale de Paris "Panama", S.A. (France)
Chase Investment Bank "Panama", S A. (U.S.A.)
Citibank N.A. (U.S.A.)
Citicorp Intemationa; Bank, S.A. (U.S.A.)
Deutsch Sudamerikanische Bank, A.G. (Germany)
Korea Exchange Bank (Korea)
Lloyds Bank, P.L.C. (United Kingdom)
Merchant National Bank (U.S.A. )
Multicredit Bank Inc. (Panama)
Primer Banco de Ahorros, "PRIBANCO" (Panama)
State Bank of India (India)
The Bank of Nova Scotia (Canada)
The Bank of Tokyo, Ltd. (Japan)
The Chase Manhattan Bank, N.A. (U.S.A.)
The Dai-lchi Kangyo Bank, Ltd. (Japan)
The First National Bank of Boston (U.S.A.)
The Hong Kong and Shanghai Banking Corporation Limited (Hong Kong)
The Mitsui Taiyo Kobe Bank, Ltd. (Japan)
The Sanwa Bank, Ltd. (Japan)
The Sumitomo Bank, Ltd. (Japan)