Belize: Law of Offshore
Offshore banking in Belize began when the outdated 1977 Banking Act, which did not adequately provide for a sound regulatory and supervisory authority, was repealed and replaced by the enactment of the Banks and Financial Institutions Act, 1995, and the introduction of the Offshore Banking Act, 1996, and the Money Laundering (Prevention) Act, 1996, which incorporated the best features of offshore banking legislation in Panama, Cayman and the British Virgin Islands.
The Offshore Banking Act was amended in 2002 to change the name of the Offshore Banking Act and offshore banks to International Banking Act (IBA) and international banks, respectively. The amendments also strengthened the supervisory and investigative powers of the CBB to meet international standards, to provide better transparency and exchange of information with respect to international banking and to empower the CBB to grant licenses for international banking.
In August, 2009 the Central Bank heightened its prudential supervision assure the soundness of Belize’s financial system. In line with the initiative, all banks, financial institutions and credit unions were required to submit a monthly report of delinquent loans, in addition to the more detailed, semi-annual reporting of delinquent accounts. The international banks were also required to submit their balance sheets and income statements on a monthly, rather than quarterly basis.
The collapse of the CLICO and Stanford groups and the region’s general vulnerability to international financial developments, prompted governors of the CARICOM central banks to give a mandate to the Caribbean Group of Banking Supervisors (CGBS) to craft a Regional Crisis Management Plan that would help member countries in resolving systemic crises within the Caribbean region. The Belize Central Bank developed a National Crisis Management Plan for Belize’s financial system in 2010.
A Belize International Bank can carry on the following activities within Belize:
- establish, maintain, and operate a business office in Belize;
- transact offshore banking business through its business office in Belize without restrictions;
- transact offshore banking business with a local entity in Belize licenced under the Banks and Financial Institutions Act, 1995.
The major local banks offer a full range of international banking services including foreign currency savings and checking accounts earning tax-free interest and operated for the purpose of exchange control on a non-resident basis. Such accounts are offered to IBCs, individuals and trustees. Credit card services are also available.
Belize International Banks are not subject to exchange control regulations.
The Central Bank of Belize, the financial sector's regulatory and supervisory body, said in 2003 that although many applications for international banking licences have been received since the introduction of the new legislation, only five had successfully met its requirements.
Two categories of Belize International Banks are currently available, "A" Class - Unrestricted and "B" Class - Restricted. A "B" Class bank is restricted to carrying on such business as is specified in its license.
The holder of an "A" Class international banking licence needs to establish, maintain, and operate a business office (physical presence) in Belize. This type of Belize International Bank is permitted to transact international banking business through its business office in Belize without restrictions on that business.
Authorised and paid up capital of not less than USD3,000,000 must be maintained if the licence is for a local company, or USD25,000,000 in the case of a foreign bank.
"B" Class - Restricted
The holder of a "B" Class international banking licence also needs to establish, maintain, and operate a business office (physical presence) in Belize, but they are limited to transacting only such international banking business as is specified in its licence. A "B" Class Belize International Bank is prohibited from soliciting or accepting monetary deposits or any other valuable property from the general public, as well as from issuing cheque books or providing any current deposits or chequing account facilities to depositors.
Authorised and paid up capital of not less than USD1m must be maintained if the licence is for a local company, or USD15m in the case of a foreign bank.
Belize's International Banking legislation stipulates that an entity is eligible to apply for an international banking licence if:
- it is incorporated or registered under the Companies Act or the International Business Companies Act as a company limited by shares, or if it is a foreign bank;
- its shares are in registered form and not in bearer form; its memorandum and articles of association are acceptable to the Central Bank; and
- its authorized and paid up capital are in compliance with statutory requirements (see above).
Upon application, eligible companies must furnish the following documentation, along with a non-refundable fee of USD2,500 (at the time of writing):
- name and address of directors and principal shareholders;
- the ultimate beneficial ownership of the company or proposed company where shareholders of record are, or are to be, corporations, trusts or other legal entities or organizations, or where the shareholders of record are acting as nominees for or under the direction of any other person;
- the shareholding structure, management, and financial standing of the company;
- detailed business and financial plans;
- particulars of referees, guarantors and other third parties;
- details of any subsidiary or affiliated company;
- details of any overseas office which the company has or proposes to open;
- names and addresses of the external auditors including the experience of the auditors in auditing banks;
- if a foreign bank, a written statement confirming that there is no objection to the application from banking supervisory authorities in its country of incorporation and in the country where its principal office is located;
- signed application by the directors of the eligible company; and
- any other information that the Central Bank may require.
The Central Bank of Belize submits its recommendation to the Minister of Finance within sixty days of receiving a completed application. After which, a decision is rendered within four weeks by the Minister.