Wealth management in Panama: private banking, mandates and custody

A centre geared to Latin American clients

Wealth management in Panama covers private banks, securities houses and licensed trust companies that hold and manage financial assets in US dollars for Latin American and international clients, under both banking and securities supervision. The centre has long attracted families from Central America, Colombia or Venezuela seeking a stable dollar account, so providers know regional entrepreneurs' wealth well and complex European portfolios less so.

For decades Panama has been a deposit centre for families from Central America, Colombia or Venezuela seeking a stable dollar account. Local private banks therefore know regional entrepreneurs' wealth well, and complex European portfolios less so.

Oversight shared by the SBP and the SMV

Deposits fall under the Superintendencia de Bancos, while securities houses and investment advisers are licensed by the Superintendencia del Mercado de Valores. Check which group entity holds your securities and which authority supervises it.

Discretionary or advisory management in dollars

A Panama wealth manager may decide trades alone within a signed risk profile, or simply propose investments for you to approve. Either way, portfolios managed in Panama are mostly invested in dollar-denominated bonds and funds.

Where the securities are really held

Panamanian securities houses often deposit assets with international custodians in the United States or Europe. Ask for the sub-custodian's name, how your securities are segregated and what happens to them if the Panamanian intermediary fails.

Entry thresholds for a wealth service

Thresholds vary between institutions, and many Panamanian private banks reserve their service for assets of several hundred thousand dollars. At Banco General, as elsewhere, access conditions are set case by case after a first meeting.

The fideicomiso in succession planning

Panamanian law recognises the trust, or fideicomiso, governed by a 1984 law and run by trust companies supervised by the Superintendencia de Bancos. It can organise the transfer of assets, but its effects must be checked against the home country's civil and tax law.

Management, custody and transaction fees

For wealth management in Panama, a private bank usually charges an annual management fee based on assets, custody fees and commissions on each trade. Insist on an annual statement listing every cost in dollars, including retrocessions received on recommended funds.

Cash on account and securities in custody: two risks

Cash left with a Panamanian private bank remains a claim on the bank with no public guarantee fund, whereas securities in custody are in principle kept off its balance sheet. That difference argues against leaving large cash sums idle.

Source of wealth, the most scrutinised point

For substantial wealth, the bank reconstructs its history: business sale, inheritance, professional income or investments. Sale deeds, estate filings and tax assessments are requested, as Panamanian banks have guarded their reputation closely since 2016.

Tax reporting for a client living in Europe

The private bank provides annual statements of gains, dividends and interest that help with the home-country tax return. Balances and income are also reported through the CRS, and a French resident declares Panamanian securities accounts on form 3916.

How to choose a provider for wealth management in Panama

Start by distinguishing the families of provider: private banks attached to a banking group, casas de valores licensed by the Superintendencia del Mercado de Valores, trust companies and independent advisers. Check the provider's licence with the competent authority before any transfer, because this simple check already rules out intermediaries that are not authorised to operate in Panama.

Next, examine the investment policy: weight of bonds, funds and cash, currencies, limits per issuer and investment horizon. Portfolios managed in Panama are mostly invested in dollars, which may or may not suit your situation. Ask for a written document describing what the manager may do, and compare several offers on those precise points rather than on past performance. Doing so keeps wealth management in Panama on firm ground.

A client living in Europe should be able to reach a Panamanian wealth manager at suitable hours and obtain written answers kept in a clear history that can be consulted whenever needed.

Documents and information requested by private banking in Panama

A private bank applies detailed identity checks: passport, recent proof of address, tax residence and tax identification number. A discrepancy between two documents is enough to delay the file by several weeks, because Panamanian banks have guarded their reputation closely since 2016. A cautious approach here pays off.

The source of wealth is the most scrutinised point. Prepare simple, verifiable items: sale deeds for a business or property, estate filings, tax assessments and statements of existing accounts. The bank reconstructs the history of your fortune before accepting the funds, and the more readable that history is, the more smoothly wealth management in Panama gets under way. Have these documents ready before the first meeting.

Answer frankly, because this questionnaire determines the strategy offered. If you are considering a fideicomiso to organise succession, say so from the start and plan to have its effects checked against the civil and tax law of the country where you live.

Common mistakes with a Panama wealth manager

The first mistake is to confuse cash on account with securities in custody. Cash left with a private bank remains a claim on the bank, with no public guarantee fund, whereas securities in custody are in principle kept off its balance sheet. Do not leave large sums idle in cash, and ask who the sub-custodian of your securities is. This distinction matters more than it seems.

The second mistake is to choose on the institution's reputation alone. Ask for an annual statement listing every cost in dollars, including retrocessions received on recommended funds, and compare at least two offers before signing. Fees compound quietly over the years.

The third mistake is to neglect tax reporting. A French tax resident declares Panamanian securities accounts on form 3916, and balances and income are reported through CRS. Ask the bank for annual statements of gains, dividends and interest, and have the whole arrangement validated by a tax adviser before investing a significant amount. Early advice saves effort later on. Revisit this every year.

Questions to ask before entrusting assets to a manager

Ask simple questions and write down the answers: which licence do you hold, what exactly are your fees, who holds my securities, how are they segregated, what happens if the Panamanian intermediary fails, how often will I receive a report and how can I end the mandate? Keep every answer in your file.

This step costs nothing. Note them in your file.

Questions to put to a Panamanian provider before signing a mandate

Start with the mandate itself. Ask whether the manager may trade alone or must obtain your approval each time, and make sure the risk profile you sign describes the dollar-denominated bonds and funds it allows. Then ask which group entity will hold your securities, whether the Superintendencia de Bancos or the Superintendencia del Mercado de Valores supervises it, and who the sub-custodian is in the United States or Europe. A written answer to each of these three points tells you more about a provider than any brochure about past performance, and it lets you compare several offers on equal terms.

Next, test the economics and the family angle. Request a table showing the management fee, the custody fee and trade commissions in dollars, together with any retrocessions on recommended funds. At a bank such as Banco General, where entry conditions are settled case by case after a first meeting, ask what happens if your assets later fall below the level discussed. If succession is the aim, ask which trust company would run the fideicomiso under the 1984 law, and have its civil and tax effects at home reviewed beforehand, including form 3916 for a French resident.