From May 2019, foreign customers will have to declare to local system banks that their funds meet their country's tax requirements.
The Superintendence of Banks of Panama (SBP) approved Agreement 02-2019, which implements the recommendations of the Financial Action Task Force, which consists of expanding the required due diligence measures of banks with their customers.
At the end of April of this year, the loan portfolio granted by banks amounted to $12.582 billion, registering a 13% increase compared to the same period last year.
According to figures from the National Commission of Banks and Insurance (CNBS), between the month of April 2017 and the same period in 2018, the loan portfolio grew by $1.433 billion, rising from $11.149 billion to $12.582 billion.
...and I will tell you who you are. In their quest to reduce exposure to risk, banking correspondents have started to restrict the services they provide to gambling companies, remittance companies, and brokerage firms that are not related to banking groups in the region.
In order to reduce risk exposure, some international banks with correspondents in Panama and other countries in the region are failing to open accounts for or provide services for companies whose income comes from activities such as remittances and gambling.The banks' argument is that they are more likely to be used for money laundering. Even non-banking brokerage firms claim to have difficulty offering their customers products and services,"... since banks wont open accounts in which customers can deposit their funds and receive a return on their investment."
A law has come into force which requires banks to register as atypical all transactions of more than $4 thousand that are realized in cash.
The decree by the Central Bank which comes into effect from April establishes new requirements for banks when dealing with transactions made both in domestic and foreign currency, as well as cash or through other means.
Amendments to the law on the financial system include changes to the conditions which must be present in order for an order to be issued for the forced liquidation of an institution.
From a statement issued by the National Congress:
The National Congress approved on Thursday, in the third and final debate, several articles of the decree containing the amendments to the Law on Financial Institutions, which aims to bring legislation into line with international standards and prevent banks from having problems which could lead to a forced liquidation, as recently happened with Continental Bank, through an early and timely action by the supervisory body, preventing savers or account holders from being affected.
The maximum amount allowed for banking transactions in cash in foreign and national currency has been lowered from $10,000 to $4,000.
From a resolution by the Central Bank of Honduras:
For purposes of the application of Articles 8, 12, 23 and 25 and in compliance with the provisions of Article 86 of the Special Law against Money Laundering the following amounts have been established:
Fitch predicts a difficult environment for Honduran banks and loan growth prospects in single digits in 2016.
The ratings of Banco del Pais, SA (Banpaís), Banco Davivienda Honduras, SA (Davivienda) and Banco de Desarrollo Rural Honduras (Banrural) are based on the support of their parent companies. The ratings Banco Financiera Comercial Hondureña SA (Ficohsa), Banco Atlantida, SA (Atlantis) and Banco Financiera Centroamericana, SA (Ficensa) derive from their intrinsic profile.
Fitch Ratings predicts headwinds and higher risks for banks in Central American countries in 2016, resulting in lower credit growth.
From a report by Fitch Ratings Central America:
Headwind: Central American Banking systems face greater risks in 2016. A slowdown in growth of gross domestic product (GDP) in the region and, consequently, lower credit growth is anticipated.
Diagram showing the people and companies identified by actions related to money laundering, according to the U.S. Department of the Treasury´s Office of Foreign Assets Control.
The US Treasury Department has advised that it will not sanction individuals or institutions participating in the liquidation provided that those transactions do not benefit any individual or entity other than those previously identified by the OFAC.
The Office of Foreign Assets Control (OFAC) of the Treasury Department of the United States has issued a statement regarding the decision of the Honduran authorities to liquidate Continental Bank, after identifying the institution and several of its executives as being involved in drug money laundering:
It has been announced that deposits up to $9,200 (L200,000) per person will be returned, and then payments to employees, depositors and others, noting that "... there are sufficient resources to address them all."
The cause is the inclusion of the institution in the list of the U.S Office of Foreign Assets Control, and the freezing of its assets abroad.
Analysis by Fitch Ratings projects that banks in the region will maintain strong balance sheets and have stable profitability in 2014.
Excerpted from Fitch Ratings:
Differential Growth and Opportunities: Low financial depth, in most systems, continues to provide significant opportunities for expansion of bank balance sheets; although this is limited by low average income levels.
From January 2013 financial institutions outside the U.S. will have to report on the accounts of citizens from that country, for tax purposes.
An analysis of the issue in an article in Capital.com focuses on Panama and risk management, but can be extrapolated to the entire Central American region.
“January 1 2013 will see the start of registration of agreements for compliance with FATCA for all entities in the financial sector, including insurance companies, brokerage houses, banks, credit unions and mutual funds that have U.S. customers, who must act accordingly. '
Fitch believes that increased volatility of international markets has had only a marginal effect on the stability of savings in the banks passive mix.
The funding of the Central American banks, led by domestic deposits in about 90%, had its strength tested during the spread of the financial crisis, according to a new report from Fitch Ratings.
Central American banks' borrowing from financial institutions outside the region remains low relative to the weight of its liabilities, serving mainly to finance foreign trade and long term operations. Fitch believes that increased volatility of international markets has had only a marginal effect on the stability of savings deposits and the banks passive mixture.
The Central Bank of Honduras said the Canadian dollar and the yuan, have been added to the list of currencies that can be deposited in foreign currency accounts.
The business sector will directly benefit from by this measure, which facilitates trade with the countries issuing those currencies.
The resolution by the Board of the Bank of Honduras states: