One of the hallmarks of Panama's financial system is the country's justifiably famous bank secrecy law.
But, when it comes to dealing in cash, the laws are very different. Like the United States, Panama requires that many types of cash transactions—particularly with financial institutions—be reported if they exceed $10,000. But as I found out personally, Panamanian law goes much further.
I spent the last 10 days in Panama to take part in a conference. One evening during my visit, I walked to a grocery store near the hotel where the conference was held. My intent was to pick up some snacks to avoid paying the scandalously high charges for these items in my hotel room's mini-bar.
To pay for these items, I pulled out a fifty-dollar bill—fresh from an ATM near the Phoenix airport. (Panama's circulating currency is the U.S. dollar.) And that began a very interesting sequence of events.
The young lady who scanned my groceries took the bill, looked me in the eye, and said "Momento, por favor." My Spanish is essentially non-existent, but I realized that some procedure had to be followed in order to accept my cash.
The clerk then called a supervisor to the checkout counter. Shortly thereafter, a female supervisor arrived, armed with a thick notebook. The supervisor, who spoke excellent English, explained that Panamanian law required logging many types of cash transactions paid for with a $50 or $100 bill, with no minimum threshold.
She offered me an opportunity to pay with a smaller bill or a credit card, but I declined, because I wanted to see what would happen next. This involved recording my passport number, along with the name and address on my driver's license, in the logbook. Once she copied this information, the clerk gave me my change, and I was free to go.
When I arrived back at the hotel, I took the remainder of my $50s and $100s to the front desk and exchanged it for smaller bills. I asked the desk clerk about the ID requirements for paying with bills in denominations larger than $20s.
He told me that this regulation came into effect because of an increase in circulation in counterfeit $50s and $100s. I had read that narcotics cartels in neighboring Colombia were producing high-quality counterfeits, and surmised that this is one way Panama is dealing with the problem.
Could these same rules come to America? Time will tell. But it certainly wouldn't hurt to begin exchanging any $50s and $100s you hold for smaller denominations.
Copyright © 2008 by Mark Nestmann
(An earlier version of this post was published by The Sovereign Society.)
