All foreigners are rich, aren’t they?

All foreigners at some point have to deal with the bureaucracy of Panama’s banking legislation. My first experience of this was when I arrived in the country in 2002. As most residents will know, nothing relating to the government or banks in Panama can be achieved electronically, by phone or trusting the mail system. Therefore, everything has to be done in person.

This not only is exceedingly time consuming but you soon realize that due to the money laundering and trafficking of drugs which unfortunately is prevalent in this part of the world very restrictive measures have been put in place to ensure that your money has been obtained legally.

My first experience of this was when my wife and I wanted to open a bank account with ‘American Express’ traveler’s checks. We had to have a letter from a prominent businessman in Panama who would act as a guarantor that we were not criminals.

Once we had obtained this and filled out the necessary application forms, we were told that it would take a minimum of thirty days for these checks to clear, obviously during this period no interest would be given.

Our understanding was that traveler’s checks were the same as money and should be paid immediately upon presentation. We also paid another $75.00 for a ‘Visa Debit Card’ enabling us to withdraw money. Note this was not a credit card!

Secondly, if you want to transfer more than $9,999 you have to follow these procedures: You need a note which should be on the originating bank’s letterhead stating that the money has been obtained legally as a ‘gift’ or ‘inheritance’ etc.

The note has to be in Spanish and have an accompanied ‘apostille’ (seal). Once you have organized this, much to the amusement of my English speaking bank staff, they then have to send it by international courier to your home address in Panama (using the regular mail system correspondence can take up to three months). You then take it to your local bank upon receipt of the funds, noting that you should have advised the manager what you are planning to do before hand.

Now don’t forget that the money has to be sent in U.S. dollars from the originating source. Needless to say all this bureaucracy costs you more time and money.

If you are a foreigner in Panama it is unlikely that any legal institution will lend you money to purchase a car or a house. After all, all foreigners have plenty of money don’t they?

Wrong! I suppose the thinking is that you can always disappear back home with the money and not pay anything. This is true, however, I thought that was one of the reasons why one has to purchase insurance. Furthermore, these institutions can repossess the goods and sell on to a new client, so the risk is minimal for the lender.

Fortunately for me, my wife is a Panamanian citizen so we did eventually obtain a loan for a new truck, no one would even lend her money for a second hand vehicle (which is what we wanted) as there would not have been enough equity in it had we not repaid the loan.

In the next year we are going to embark on buying a house, not in the city as we cannot afford it.

Amusingly the deposit will come from overseas in my name. However, the mortgage no doubt will have to be put in my wife’s name as no one is lining up to give a foreigner a mortgage.