Just after the handover of the Panama Canal from America back to Panama, British spy Andy Osnard (PIERCE BROSNAN) has been banished to the country by his boss, Luxmore (DAVID HAYMAN), for past indiscretions with various officials' wives and mistresses. Needing an "in" with some British local so as to be in touch with the country's various high level activities, Andy picks Harry Pendel (GEOFFREY RUSH), an ex-con who's reinvented himself in the Central American land as a tailor to the rich and powerful.
Although Harry is reluctant to help, he could use the money that Andy offers for information to pay off his debt on a farm, and worries that the spy might tell his beautiful wife, Louisa (JAMIE LEE CURTIS), or kids, Mark (DANIEL RADCLIFFE) and Sarah (LOLA BOORMAN), about his checkered past. With his dead Uncle Benny (HAROLD PINTER) serving as his imagined mentor and muse, Harry starts looking for anything juicy, but finding nothing, decides to make up things to appease Andy's appetite for information.
Accordingly, he begins showing Andy around, introducing him to both his assistant, Marta (LEONOR VARELA), and old friend, Mickie Abraxas (BRENDAN GLEESON), both of whom he states were anti-Noriega freedom fighters and are current members of something called the Silent Opposition.
Meanwhile, Andy checks in at the British embassy where he meets Ambassador Maltby (JOHN FORTUNE) and Francesca (CATHERINE McCORMACK), an employee he quickly puts the moves on, but no one there has heard of the secret organization.
As Andy begins a passionate affair with Francesca, and Louisa becomes increasingly suspicious of Harry's peculiar behavior and the time he spends with Andy, the tailor starts telling even taller tales that soon grab the attention of various British officials, the Pentagon, and then involve a large sum of money that everyone wants a piece of.