Offshore banks, international business companies (IBCs) and trusts are authorized to operate from within Belize, although shell banks are prohibited within the jurisdiction. The Offshore Banking Act, 1996, governs activities of Belize's offshore banks. Presently, there are eight licensed offshore banks, approximately 32,800 active registered IBCs, one licensed offshore insurance company, one mutual fund company, and 30 trust companies and agents operating in Belize. Local money exchange houses, which were suspected of money laundering, were closed effective July 11, 2005. There are also a number of undisclosed internet gaming sites operating from within the country. These gaming sites are unregulated at this time. Currently there are no offshore casinos operating from within Belize. Government of Belize (GOB) officials have reported an increase in financial crimes, such as bank fraud, cashing of forged checks, and counterfeit Belizean and United States currency. The Central Bank of Belize has engaged in public awareness activities and trainings to regulate counterfeit currency.
The International Business Companies Act of 1990 and its 1995 and 1999 amendments govern the operation of IBCs. The 1999 amendment to the Act allows IBCs to operate as banks and insurance companies. The International Financial Services Commission regulates the rest of the offshore sector. All IBCs must be registered. Although IBCs are allowed to issue bearer shares, the registered agents of such companies must know the identity of the beneficial owners of the bearer shares. GOB legislation allows for the appointment of nominee directors. The legislation for trust companies, the Belize Trust Act, 1992, is not as stringent as the legislation for other offshore financial services and does not preclude the appointment of nominee trustees.
There is one free trade zone presently operating in Belize, at the border with southern Mexico. There are also designated free trade zones in Punta Gorda, Belize City and Benque Viejo, but they are not operational. Data Pro Ltd. is designated as an Export Processing Zone (EPZ) and is regulated in accordance with the EPZ Act. Commercial free zone (CFZ) businesses are allowed to conduct business within the confines of the CFZ, provided they have been approved by the Commercial Free Zone Management Agency (CFZMA) to engage in business activities. All merchandise, articles, or other goods entering the CFZ for commercial purposes are exempted from the national customs regime. However, any trade with the national customs territory of Belize is subject to the national Customs and Excise law. The CFZMA, in collaboration with the Customs Department and the Central Bank of Belize, monitors the operations of CFZ business activities. There is no indication that the CFZ is presently being used in trade-based money laundering schemes or by financiers of terrorism.
Allegedly, there is a significant black market for smuggled goods in Belize. However, there is no evidence to indicate that the smuggled goods are significantly funded by narcotics proceeds, or evidence to indicate significant narcotic-related money laundering. The funds generated from contraband are undetermined.
The Money Laundering (Prevention) Act (MLPA), in force since 1996, criminalizes money laundering related to many serious crimes, including drug-trafficking, forgery, terrorism, blackmail, arms trafficking, kidnapping, fraud, illegal deposit taking, false accounting, counterfeiting, extortion, robbery, and theft. The minimum penalty for a money laundering offense as defined by the MLPA is three years imprisonment. Other legislation to combat money laundering include the Money Laundering Prevention Guidance Notes; the Financial Intelligence Unit Act, 2002; the Misuse of Drugs Act; The International Financial Services Practitioners Regulations (Code of Conduct), 2001 (IFSCR); Money Laundering Prevention Regulations, 1998 (MLPR); and the Offshore Banking Act, 2000, renamed the International Banking Act, 2002 (IBA). In 2006, there were no major money laundering cases to report, and the effectiveness of the anti-money laundering regime in Belize remains unclear.
The Central Bank of Belize supervises and examines financial institutions for compliance with anti-money laundering and counterterrorist financing laws and regulations. The banking regulations governing offshore banks are different from the domestic banking regulations in terms of capital requirements. Banks are not permitted to issue bearer shares. Nevertheless, all licensed financial institutions in Belize (onshore and offshore) are governed by the same legislation and must adhere to the same anti-money laundering and counterterrorist financing requirements. To legally operate from within Belize, all offshore banks must be licensed by the Central Bank and be registered as IBCs. Before the Central Bank issues the license, the Central Bank must verify shareholders' and directors' backgrounds, ensure the adequacy of capital, and review the bank's business plan. The legislation governing the licensing of offshore banks does not permit directors to act in a nominee (anonymous) capacity.
The Central Bank issued Supporting Regulations and Guidance Notes in 1998. Licensed banks and financial institutions are required to establish due diligence ("know-your-customer") provisions, monitor their customers' activities and report any suspicious transactions to the financial intelligence unit (FIU). Belize law obligates banks and other financial institutions to maintain business transactions records for at least five years when the transactions are complex, unusual or large. Money laundering controls are also applicable to nonbank financial institutions, such as exchange houses, insurance companies, lawyers, accountants and the securities sector, which are regulated by the International Financial Services Commission. Financial institution employees are exempt from civil, criminal or administrative liability for cooperating with regulators and law enforcement authorities in investigating money laundering or other financial crimes. Belize does not have any bank secrecy legislation that prevents disclosure of client and ownership information.
The reporting of all cross-border currency movement is mandatory. All individuals entering or departing Belize with more than $10,000 in cash or negotiable instruments are required to file a declaration with the authorities at Customs, the Central Bank and the FIU.
The FIU of Belize is an independent agency presently housed at the Central Bank. Current laws do not provide for the funding of the FIU, and the FIU has to apply to the Ministry of Finance for funds. The funding allocated to the FIU for fiscal year 2006 was approximately $200,000. Due to financial constraints, the FIU is not adequately staffed and existing personnel lack sufficient training and experience. On November 5, 2005 the director of the FIU resigned, leaving the FIU with only four employees; the new FIU director did not begin until July 2006.
As of October 15, 2006, the FIU had received 34 suspicious transaction reports (STRs) from obligated entities. Of the 34 STRs filed, 13 became the subject of investigations. The Director of the Public Prosecutions Office and the Belizean Police Department are responsible for investigating all crimes. However, the FIU also has administrative, prosecutorial and investigative responsibilities for financial crimes, such as money laundering and terrorist financing. Although the FIU has access to records and databanks of other GOB entities and financial institutions, there are no formal mechanisms for the sharing of information with domestic regulatory and law enforcement agencies. The FIU is empowered to share information with FIUs in other countries. On several occasions, the FIU has cooperated with the United States' FIU and other U.S. law enforcement agencies.
Belize criminalized terrorist financing via amendments to its anti-money laundering legislation, The Money Laundering (Prevention) (Amendment) Act, 2002. GOB authorities have circulated the names of suspected terrorists and terrorist organizations listed on the UN 1267 Sanctions Committee's consolidated list and the list of Specially Designated Global Terrorists designated by the United States pursuant to E.O. 13224 to all financial institutions in Belize. There are no indications that charitable or nonprofit entities in Belize have acted as conduits for the financing of terrorist activities. Consequently, the country has not taken any measures to prevent the misuse of charitable and nonprofit entities from aiding in the financing of terrorist activities.
Alternative remittance systems are illegal in Belize. However, Belizean authorities acknowledge the existence and use of indigenous alternative remittance systems that bypass, in whole or in part, financial institutions. Therefore, Belizean authorities monitor such activities at the borders with Mexico and Guatemala.
Belizean law makes no distinctions between civil and criminal forfeitures. All forfeitures resulting from money laundering or terrorist financing are treated as criminal forfeitures. The banking community cooperates fully with enforcement efforts to trace funds and seize assets. The FIU and the Belize Police Department are the entities responsible for tracing, seizing and freezing assets, and the Ministry of Finance can also confiscate frozen assets. With prior court approval, Belizean authorities have the power to identify, freeze and seize assets related to terrorist financing or money laundering. Currently, the GOB's legislation does not specify the length of time assets can be frozen. There are no limitations to the kinds of property that may be seized, including any property--tangible or intangible--which may be related to a crime or is shown to be from the proceeds of a crime. This includes legitimate businesses. However, Belizean law enforcement lacks the resources necessary to trace and seize assets.
The Belize Police Department reported that during 2006, the only assets forfeited or seized were firearms and ammunition, on which no value is placed. Assets forfeited and/or seized in 2005 totaled approximately $120,000. GOB authorities are considering the enactment of a Proceeds of Crime law, which will address the seizure or forfeiture of assets of narcotics traffickers, financiers of terrorism, or organized crime. Currently, the GOB is not engaged in any bilateral or multilateral negotiations with other governments to enhance asset tracing and seizure. However, the Government of Belize actively cooperates with the efforts of foreign governments to trace or seize assets relating to financial crimes.
Belize has signed a Mutual Legal Assistance Treaty with the United States, which provides for mutual legal assistance in criminal matters. Amendments to the MLPA preclude the necessity of a Mutual Legal Assistance Treaty for exchanging information or providing judicial and legal assistance to authorities of other jurisdictions in matters pertaining to money laundering and other financial crimes. Belize is a party to the UN International Convention for the Suppression of the Financing of Terrorism, the UN Convention against Transnational Organized Crime, and the 1988 UN Drug Convention. The GOB has signed, but not yet ratified, the Inter-American Convention against Terrorism, and has neither signed nor ratified the UN Convention against Corruption. Belize is a member of the Organization of American States Inter-American Drug Abuse Control Commission (OAS/CICAD) Experts Working Group to Control Money Laundering and the Caribbean Financial Action Task Force. Its FIU became a member of the Egmont Group of financial intelligence units in 2004.
The Government of Belize should increase resources to provide adequate training to those entities responsible for enforcing Belize's anti-money laundering and counterterrorist financing laws, including the financial intelligence unit and the asset forfeiture regime. Belize should take steps to address the vulnerabilities in its supervision of its offshore sector, particularly the lack of supervision of internet gaming facilities. Belize should immobilize bearer shares and mandate suspicious activity reporting for the offshore financial sector.
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|Title Annotation:||Country Reports|
|Publication:||International Narcotics Control Strategy Report|
|Article Type:||Country overview|
|Date:||Jan 1, 2007|