Panama has been under pressure from the Organization for Economic Cooperation and Development (OECD) to make its banking system more transparent. The OECD argument is that individuals and corporations are evading taxes in their home countries by banking in Panama and other “off shore” locations. The threat is that Panama will be “black listed” if it does not comply.

A large part of what has attracted capital to Panama has been the asset protection mechanisms of Panana Banking, Panama Corporations, and Panama Foundations. In order to preserve Panama’s attractiveness for investment and banking the new administration is looking to satisfy the OECD’s demands by negotiating treaties that will help investors and  those banking here to avoid double taxation of their income.

The hope is that this will allow Panama to open up its books to appropriate authorities while still maintaining a favorable investment and banking climate conducive to asset protection in Panama. The hope is that Panama can maintain its position as the Latin American country with the highest per capital rate of foreign investment.

Panama’s economy has been booming for years fueled by foreign investment. Poverty in Panama has been reduced as investment and employment in Panama have gone up. It is unlikely that Panama will negotiate a treaty that will take away its status as an attractive country for foreign investment.

Banking in Panama will likely become more transparent helping other countries track tax evasion, criminal activity, and terrorism. It is unlikely that Panama will negotiate treaties or inact laws that will reduce its favorable status as a center for investment in Latin America.