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Panama's Secrecy Laws
Panama's Secrecy Statutes do not appear in a unified body of law. They are,in fact, the accumulation of several laws enacted over the last 70 years. The first legislation establishing Panama as a tax haven and secrecy shelter was in 1927 and resulted in the enactment of the General Corporation Law,which followed the Delaware and New Jersey Corporation Law models.
Cabinet Decree 238 of July 2nd, 1970 amended the Banking System and established the National Banking Commission, thereby laying the foundation for the country's banking and financial center.
Complementary statutes appear in Panama's Criminal and Labor Codes, with regard to the confidentiality that protects banking and financial transactions.
Commercial Documents Secrecy
Article 74 of said Decree specifically forbids the investigation of the private affairs of any bank client or of the bank itself in the following terms:
"Article 101 of Cabinet Decree 238 stipulates:
Article 65 of Cabinet Decree 238 outlines the rules by which an inspector of the National Banking Commission may gain limited access to documentation related to a bank's operation:
Prior to the adoption of Cabinet Decree 238 of 1970, Panama enacted Law 18 of January 28, 1959, authorizing the use of coded or numbered bank accounts.
Article 2 of Law ~8 of 1959 defines these accounts as follows:
Article 2 further explains how coded bank accounts operate:
Managers, officers and employees of banking institutions are specifically addressed with regard to the secrecy and confidentiality of banking transactions in Articles 4 and 5 of Law 18.
"Article 4. Managers, officers and other employees of banking institutions, whether national or foreign, who reveal or disclose to persons alien to the institution and to the handling of these accounts any information with reference to the existence, balance or identity of the account holder of a coded bank account shall be punishable with imprisonment and/or monetary fines, or both."
"Article 5. Information on numbered current bank accounts duly requested by court officers, judges and magistrates of Bank Managers and employees, in compliance with legal proceedings, shall hold the information in strict reserve and restrict its use to the legal matter under investigation.
"One of the fundamental differences in banking secrecy as applied to ordinary versus numbered or coded accounts is that for ordinary non numbered accounts, secrecy may be lifted by a Panamanian court through Article 89 of the Commercial Code. On the other hand, in the case of a numbered account,even if the identity of the account holder is revealed, a Panamanian judge has no legal power to order seizure of the account unless the investigation is of a criminal nature. Articles 168 and 1 70 of the Panamanian Criminal Code contains two articles that make it an offense to divulge confidential information and establish that unauthorized disclosure is subject to criminal prosecution.
"Article 168. Any person that is in legitimate possession of correspondence, records or documents which are not intended for public knowledge and notwithstanding discloses said correspondence, records or document without proper authorization, even in the event that they were addressed to him, shall be subject to prosecution, whenever such disclosure might inflict damage.""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 o f 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.
The major advantages of a Panamanian Corporation can be summarized as follows.
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