What You Should Know About the Ins and Outs of the Belize Banking System

Caye International Bank

Belize Banking SystemWhether you are someone who’s looking for a place to establish offshore accounts for investment purposes, thinking about retiring to an international location, or a business owner who wants to set up a company to manage offshore business transactions, Belize is worthy of consideration. Learning a bit about the present banking system and how it came to be is something you want to do.

Here are some of the essentials that will help you understand the ins and out of the Belize banking system and what it could do for you.

Basic Facts About the Banking Culture in Belize

One of the first things you should know is that there are different types of banking institutions found in Belize. One of them is devoted to commercial banking and is supported by local banks that focus on providing services to the business sector. These commercial banks provide services to business owners who are residents of Belize as well as services for governmental entities, not for profit organizations, and other larger operations.

The second type of institution you will find is known as private banks. These cater to offshore clients. Individuals who wish to establish offshore banking accounts like savings, checking, time deposit, or lifestyle accounts will work with these institutions. The banks also offer an array of other services that make it possible to invest in real estate, buy property in preparation for retirement, and in general offer banking services that most people would recognize with ease.

Thanks to the way the banks have embraced online banking, it’s possible to manage funds with relative ease even when the bank branches are closed. The same holds true when the banks close for major holidays.

One of the top draws for establishing accounts in Belize is the relatively high liquidity requirements imposed on all banking establishments. Currently, that requirement is set at 24%. This figure contributes to the overall stability of Belize’s economy, something that anyone interested in offshore accounts will appreciate.

Citizens of the United States will be interested to know about the relationship between Belize banking and The Foreign Account Tax Compliance Act (FATCA). FATCA is a US act that requires all US citizens living at home or abroad to provide annual reporting on any offshore accounts they hold. Belize is fully compliant with FATCA. That means the banks in Belize have provisions in place to provide the necessary reports to the Internal Revenue Agency.

Central Bank of Belize Act

The foundation for the current banking system is the Central Bank of Belize. Legislation passed in 1982 established both the Central Bank of Belize and specified the responsibilities of the new institution. The primary purpose for establishing the Bank of Belize was to provide a means of managing financial matters within the country and maintain economic stability.

Over the years, the Central Bank has been instrumental in creating mechanisms that eventually led to the laws and regulations governing offshore banking as well as banking services offered within the country. Working to maintain a reasonable currency exchange rate is a prime example.

Establishing and overseeing the different types of banking services, including credit and debit cards, online banking options, investment accounts, and real estate financing, remain key functions of the Central Bank. This entity also ensures that any private banks operating within the country are in full compliance with current banking laws.

International Banking Act

The International Banking Act was one of several laws designed to bolster and broaden the provisions found in the 1977 Banking Act. By the closing years of the 20th century, the 1977 act was viewed as inadequate for broadening the base of banking functions in Belize. It was also seen as not amenable to attracting offshore customers.

With the passing of the International Banking Act, Belize was positioned to provide competitive services to potential offshore customers. That included individuals and the owners of International Business Companies (IBCs). The exact provisions of the act empower the Central Bank with the ability to oversee international banking functions of all the banks operating within the country.

The act further provides the Central Bank with specific regulatory and supervisory authority to handle the oversight and to grant licenses for conducting banking transactions.

Banks and Financial Institutions Act

A companion to the International Banking Act is known as the Banks and Financial Institutions Act. Passed in 1995, this act further established the basis for the creation of offshore banks that are based in Belize. The act also ensured that the Central Bank would have supervisory and oversight authority over those banks. The goal was to ensure all banks offering offshore accounts of any type would remain in full compliance with current banking laws.

As one of the acts passed with an eye to allowing Belize to be more competitive in the offshore banking and investment arena, the Banks and Financial Institutions Act set the stage for what would happen over the next few years. That included building a positive reputation for Belize as both an ideal setting for international banking accounts. A side benefit was offering services to those who would eventually choose to make Belize a permanent residence during their retirement years.

The Offshore Banking Act

This 1996 act built on the foundation already established by the Banks and Financial Institutions Act during the previous year. The provisions found within the Act did not really modify any of the contents of the 1995 Act. Instead, it provided additional definition to the processes necessary for creating and operating an offshore banking institution under Belize laws.

The focus of the Act was intended to limit any confusion about how to go about establishing an offshore bank that would operate in compliance with the requirements already put in place by existing laws and monitored by the Central Bank. In this sense, the Act helped to protect the unity and uniformity of the banking system throughout the country.

How Does the Money Laundering and Terrorism (Prevention) Act Factor In?

One of the myths about offshore banking and investing is that it’s used primarily for illegal purposes. There’s not much evidence that offshore banking is utilized in this manner any more often than various methods used to circumvent the statutes and regulations that govern domestic banking in other countries. Even so, Belize has chosen to enact legislation designed to provide greater oversight into possible abuses of the banking system.

The Money Laundering and Terrorism (Prevention) Act, 2008 is a prime example. This Act establishes and enhances additional means for investigating possible breaches of banking laws. There are also more provisions for prosecuting individuals or entities that are believed to be guilty of engaging in money laundering, utilizing the banking system to fund acts of terrorism, and to pursue anyone engaged in a wider range of financial crimes.

In 2013, the Money Laundering and Terrorism (Prevention) (Amendment) Act, enhanced the range of options for making sure that all transactions were in line with international banking standards. That includes the obligations to avoid engaging in any activity that could constitute money laundering or aiding the funding of a terrorist act.

The 2018 Legislation and What It Accomplishes

More recently, the National Assembly of Belize created and approved of additional legislation that does have an impact on offshore customers. While many of the provisions focus more on IBCs, some of them also stand to have some effect on individual or personal account holders. Passed in December 2018 and taking effect with the beginning of 2019, these three acts are the International Business Companies (Amendment) Act, 2018, the Income and Business Tax (Amendment) Act, 2018, and the Stamp Duties (Amendment) Act, 2018.

There are several benefits that come with these more recent Acts. One is more transparency with banking laws and regulations. These Acts essentially align Belize with other nations that are aggressively seeking to reduce the potential for illegal abuse of banking laws.

Another important benefit is greater alignment with the Organization for Economic Cooperation and Development (OECD). This will help increase the potential for growth of Belize’s offshore banking opportunities.

Taxes related to international accounts and holdings remain competitively low. At present, that would mean actual taxes of 1.75% on holdings of greater than $1.5 million USD and 3% on holdings under that amount.

Setting Up a Private Banking Account in Belize

There are more things that you will want to learn about Belize and the country’s banking system before establishing accounts there. Remember that agents as well as banking professionals are happy to help you understand all laws and regulations that currently govern the system.

The financial service professionals at Caye International Bank on Ambergris Caye island in Belize, can help you identify the account types that will serve you well. Contact us today and begin your journey toward greater financial security.

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This article is copyright © 2019 

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About this author:

Luigi Wewege

Luigi Wewege is the Senior Vice President of Caye International Bank, published author of The Digital Banking Revolution, has co-authored economic research which was presented before the U.S. Congress and currently serves as an Instructor at the FinTech School as well as a Speaker at the Silicon Valley Innovation Centre. He holds an Italian MBA with a major in International Business, as well as a BSBA with a triple major in Finance, International Business, and Management - cum laude from the University of Missouri-St. Louis.

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