Thursday, April 5, 2012

Panama Report Part II: Panamanian Bankers React to FATCA

A few weeks ago I wrote about my trip to Panama and particularly my interaction with some of the American expat community in Boquete and in Panama City. Another part of my trip was a number of meetings with the compliance and executive officers of some of Panama’s largest banks to learn how they were dealing with FATCA and whether Panama’s banking elite were resisting FATCA or whether they were ready to “get with the program.”

Panama used to get a black eye every time U.S. and Western European leaders wanted to take a swing at banking havens and Panama was usually lumped in with the bad boys in the Cayman Islands, Jersey and Guernsey, and Andorra. Recently the President of France slipped and bad mouthed the Panamanians seemingly not aware that in recent years Panama has gotten with the program.

 Panama used to be called the "Switzerland of the Americas" for its banking privacy and secrecy. In August 2009, Panama was put on the OECD's "gray list" of countries deemed uncooperative with global tax standards. To get off the list, Panama entered into a number of international tax agreements. Panamanian President Martinelli recently signed a 2011 agreement with the US which requires Panamanian authorities to cooperate with US investigations even when the charges are not criminal in nature or violate Panamanian law.

Despite these changes, the reaction I received from some of the bankers I met from some very large banks ranged from incredulity as to what was expected of them to comply with FATCA, to outrage yet again, as American hegemony over Latin America reared its head once more.


I had the good fortune to be able to address my new friends in Spanish which generated a spirited debate amongst the principals and staff assembled at the meetings.  I’ll save for another time, the many ways a US law can be excoriated in Spanish but at least they had the decency to make it clear to me that they did not intend to kill the messenger!

In explaining FATCA to my new banking friends, I tried my best to be as diplomatic as possible but it was uncomfortable at the least to go into a foreign country, sit down with some of its captains of industry and tell them the IRS was expecting their FATCA compliance applications no later than January 1, 2013, and that the following year, they are expected to have conducted detailed searches for every American in their data bases and be ready to turn over their names, rank and serial number to the IRS forthwith. 

FATCA continues to cause an uproar all over the world but it is clear that this train has left the station. Just look at the number of international conferences and programs on everything from the multibillion dollar world of FATCA Information Technology how to make sure your Anti-Money Laundering and Know-Your-Customer rules and regulations will pass muster under IRS government inspection.

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