Panama: Bank Secrecy and Prevention of Economic Crime
| Published date | 01 February 1998 |
| DOI | https://doi.org/10.1108/eb027161 |
| Date | 01 February 1998 |
| Pages | 352-359 |
| Author | Ricardo M. Alba |
| Subject Matter | Accounting & finance |
Panama
Panama: Bank Secrecy and Prevention of
Economic Crime
Ricardo M. Alba
Panama is an isthmian strip of land uniting Central
and South America, extending approximately
75,000 square kilometres and whose borders are: to
the North, the Caribbean Sea; to the South, the
Pacific Ocean; to the East, the Republic of Colom-
bia; and to the West, the Republic of Costa Rica.
Panama's population is nearly 3.3 million inhab-
itants with a gross national product, at current
prices, of US$7,500m for 1996, 48 per cent of
which was generated by the services sector and 10
per cent by the business sector. The remaining 42
per cent is divided among economic activities such
as agriculture, manufacturing, power generation
and others.
The fact that the Isthmus of Panama is the nar-
rowest part of the American continent, only 75 km
wide, between the two main oceans, has deter-
mined its geographic position as the most import-
ant advantage to Panama from a historic, political
and economical point of view ever since pre-
Columbian times.
BANKING SECRECY
Bank secrecy is based in the combination of
privacy of personal facts and the confidentiality of
business affairs. On this first aspect, human beings
are protected by the law in regard to the privacy of
correspondence, communications and other per-
sonal matters in their lives. On the aspect of con-
fidentiality, the information provided by a person
to a bank in order to carry out an operation, has
several implications such as the interest of the cus-
tomer to protect the success of the operation and
his desire to conceal the personal financial situa-
tion for security, fiscal and family reasons. The
respect paid by the law and the banks to these
needs of a customer, applied systematically, is the
'banking secrecy' or 'confidentiality in banking
operations' or, 'the commitment of the Bank in
order not to reveal to third parties, without
a
justi-
fied reason, the information that they know
because of the relations established with a cus-
tomer'.
There is a set of rules enacted in Panama
regarding the protection of banking confidentiality:
— Protection of identity of depositors, account
balances, existence of the account in the case of
ciphered accounts (no anonymous accounts).
— Protection of the information of banking opera-
tions of a customer, from third parties and the
Inspectors of the Official Agency.
— Protection of the information obtained in the
investigation of drugs and other crimes, which
may not be disclosed either to the public or to
third parties until there is a final legal decision.
However, there are limits in the Panamanian law
to the protection of the confidentiality of banking
operations, such as:
— Banks must comply with the requirements
about ciphered accounts and other customer
information, of the judicial authorities, in any
due process of a criminal nature. Bank secrecy
in Panama is not an absolute, but a relative rule.
The banker has the duty to give information to
the authorities under their requirements,
dif-
ferent from the case of the lawyer, the priest,
the physician and the judge in the areas of their
specific concern.
— Regarding investigations and indictments about
illicit drug traffic and money laundering, banks
and other financial institutions must comply
with all the requirements for information made
by the judicial authorities.
The trend in Latin American countries regarding
bank secrecy is to reduce barriers and to improve
the level of cooperation with the authorities pro-
viding them with information in cases of money
laundering and other drug crimes, which is already
the case in Argentina, Brazil, Chile, Colombia,
Costa Rica, the Dominican Republic, Ecuador,
Mexico, Panama, Paraguay, Peru, Uruguay and
Venezuela.
Page 352
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