Some people we talk to think that financial services from Panama are for scammers. We would beg to disagree. Of course, Panama has its fair share of scammers. But then, doesn’t everywhere? Madoff and Stanford come immediately to mind.

Stanford Bank in Panama has been taken over and is being liquidated. According to the Panamanian Banking Commission, regulations worked, and there was nothing wrong with the financial health of Stanford Bank Panama, the local operation here associated with Stanford International Bank of Antigua. They estimate that, despite the liquidity problems caused by the run on the bank that caused the international news headlines, Stanford Bank Panama’s depositors will getall their money less than 30 days from now.

This to follow up on an interesting article by Kathleen Peddicord, a real estate and offshore living expert at Live and Invest Overseas who came up with the following 8 point plan to avoid offshore investment scams:

1. The most basic rule is this: If the returns promised by the manager are too good to be true, they probably are. Look for another manager. No one can guarantee 12%+ on your money, unless he’s gambling. And no manager makes strong returns year after year. The market is cyclical.
2. Don’t believe someone who promises higher returns with less risk. Higher returns always mean higher risk.
3. Work with a firm that has been around for at least five years…the longer the better.
4. Find a firm that is responsive to your inquiries, both before and after you open your account. The number one complaint U.S. investors have with offshore firms in Central America or the Caribbean is that they are slow to respond to e-mails and questions.
5. If a country offers a broker/dealer or other type of license, select only firms that have gone through that process and have their books audited. In most countries, the local Banking Commission regulates investment firms.
6. If security is a major concern, invest with a bigger bank in Panama. I note that this security comes at a higher cost and with less varied investment options.
7. Understand what you are investing in. In the U.S., the highest-risk investments are limited to high net worth investors who, presumably, understand the risks and don’t gamble more than they can afford to lose. However, just about anyone can find and put money into high-risk investments offshore. So I say again: Invest only in products, funds, and instruments that you understand.
8. Diversify! Never put all of your assets with one firm or one manager.

Kathleen goes on to say about Panamanian banks and Panamanian brokerages: “Bottom line, I’d say that Panama provides the best balance between privacy and security, as long as you work with a quality bank, brokerage firm, or investment manager. Their economy remains strong, and their reliance on the U.S. dollar as their base currency is proving to be a major benefit. I also rate their banking industry, regulation, and security far superior to other competing countries, such as Belize.”

We couldn’t have put it better ourselves.

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Tags: live abd invest overseas, panama banks, panama brokerage

This entry was posted on Monday, March 2nd, 2009 at 3:14 pm and is filed under Banking and Business in Panama. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.