2008 saw a wave of new regulations and products introduced in Belize. Gian Gandhi outlines the new measures.
International financial centres are once again coming under pressure from the US Senate Committee on Homeland Security and Governmental Affairs, which has lately accused ‘offshore tax havens’ of being engaged in “economic warfare against the US”. The recommendations of the Committee, which has been investigating tax haven banks and US tax compliance, include a requirement on domestic and foreign institutions to file a statutory report whenever it obtains information that a foreign account is beneficially owned by a US taxpayer. The Committee also calls for penalties for tax haven banks that impede tax enforcement, including giving the US Treasury power to bar those banks from doing business with US financial institutions. As much of the offshore finance industry is located in the Caribbean, the Committee’s recommendations are a cause for great concern for small jurisdictions like Belize, particularly the Damoclean threat of severing the ‘correspondent bank’ relationship.
The offshore finance jurisdictions have responded by further tightening their regulatory systems so as not to give the US revenue authorities an excuse to impose sanctions. Realising that discretion is the better part of valour, Belize has recently adopted certain new measures to further strengthen its regulatory framework, as well as to place new products on the market.
Protected Cell Companies (Registration) Regulations 2008
These Regulations, which came into force on 13 June 2008, prescribe the forms and the fees for the incorporation of Protected Cell Companies (PCCs) and supplement the provisions of the Protected Cell Companies Act. In Belize, PCCs can only be formed for international insurance business or for mutual funds.
The salient features of these Regulations are:
A copy of these Regulations is available online at www.ifsc.gov.bz .
International Money Lending Regulations 2008
These Regulations, which came into force on 21 July 2008, were issued by the International Financial Services Commission of Belize (IFSC) to regulate the business of international money lending by Belizean entities. The objectives of these Regulations are three-fold:
The key features of these Regulations are:
These Regulations are available online at www.ifsc.gov.bz .
Standard Conditions for a Securities Trading Licence
In August 2008, the IFSC issued standard conditions for a licence for “trading in financial and commodity-based derivative instruments and other securities”. These conditions, which are in addition to the capital requirements, fees and other conditions set out in the IFSC (Licensing) Regulations, provide, among other things, that the licensee:
A copy of these conditions is available online at www.ifsc.gov.bz .
Revised International Banking Bill 2008
International (or offshore) banks are often accused of serving as conduits for money laundering and financing of terrorism. Belize has adopted a highly conservative policy in regard to the licensing of offshore banks. Since 1996 when the Offshore Banking Act was first enacted, the Central Bank of Belize (which is the regulatory body for all banks, both domestic and international) has licensed only ten international banks.
In a further effort to enhance prudential standards in compliance with the recently revised international standards and best practices set by the Basel Committee on Banking Regulation and Supervisory Practices, the International Banking Act is being thoroughly revised and a new bill is due to be presented to Parliament as soon as practicable. The new bill:
To give the investors a choice of the vehicle for asset management, Belize has prepared a Foundations bill, which is designed to meet the demands of civil law countries as well as of common law jurisdictions. The bill is currently undergoing the consultative process and is expected to be introduced into Parliament shortly.
Belize – A Stable Investment Environment
During the last 18 years of its history, Belize’s international financial services industry has made rapid strides and has placed the country firmly on the offshore map. Since achieving independence in 1981, Belize has consistently enjoyed a stable democratic government and a safe investment climate. The successive governments in Belize have lent their full support to the development of the offshore services sector with a view to diversifying its hitherto agriculture-based economy. Belize has never been blacklisted by the Financial Action Task Force on money laundering or by any other international agency. Belize is a well-regulated yet user-friendly jurisdiction, which offers attractive incentives to investors consistent with the maintenance of internationally accepted prudential standards. The new Government in Belize, which took office in February 2008, has declared its commitment to the sustained development and enhancement of the international financial services industry, thereby ensuring a safe and stable investment environment.
Gian C Gandhi, S C, Barrister-at-Law, Director General of the International Financial Services Commission of Belize