BELIZE
Summary

Sanctions

None

FAFT AML Deficient

No

Higher Risk Areas:

US Dept of State Money Laundering assessment

Not on EU White list equivalent jurisdictions

International Narcotics Control Majors List

Offshore Finance Centre

Medium Risk Areas

 

Weakness in Government Legislation to combat Money Laundering

Corruption Index (Transparency International & W.G.I.)

World Governance Indicators (Average Score)

Failed States Index (Political Issues)(Average Score)

 

 

ANTI-MONEY LAUNDERING

 

FATF Status

CFATF Statement re AML Strategic Deficiencies: 3 June 2015


In May 2015 the Caribbean Financial Action Task Force (CFATF) acknowledged the significant progress made by Belize in improving its AML/CFT regime and notes that Belize has established the legal and regulatory framework to meet its commitments in its agreed Action Plan regarding the strategic deficiencies that the CFATF had identified. Belize is therefore no longer subject to the CFATF ICRG monitoring process.

 

Compliance with FATF Recommendations

The May 2015 CFATF Plenary recognised that Belize had made significant progress in addressing the deficiencies identified in their 2011 Mutual Evaluation Report and therefore exited the follow-up process.

Belize has addressed the deficiencies noted in the Core and Key Recommendations rated PC/NC (R. 1, 4, 5, 10, 13, 23, 35, 40, SR. I – V) to a level of compliance that is comparable to at least an LC.

 

US Department of State Money Laundering assessment (INCSR)

Belize is categorised by the US State Department as a Country/Jurisdiction of Primary Concern in respect of Money Laundering and Financial Crimes

OVERVIEW

 

Belize is not a key regional financial center, though it has an offshore financial sector. Belize is a transshipment point for marijuana and cocaine. FTZs are routinely used to move money across borders. Belize is vulnerable to money laundering due to the lack of enforcement of its laws and regulations, strong bank secrecy protections, geographic location, and weak investigatory and prosecutorial capacity. The sources of money laundering in Belize are drug trafficking, tax evasion, securities fraud, and conventional structuring schemes.

 

VULNERABILITIES AND EXPECTED TYPOLOGIES

 

The Government of Belize continues to permit financial activities that are vulnerable to money laundering, including offshore banks, insurance companies, trust service providers, mutual fund companies, and IBCs. The Belizean dollar is pegged to the U.S. dollar.

 

Belize has two FTZs. The Corozal Free Zone, the larger of the two with 282 operating businesses, is located in the north on the border with Mexico, and the Benque Viejo Free Zone is located on the western border with Guatemala. Belizean law enforcement agencies strongly suspect there is money laundering and illicit importation of duty free products in the FTZs.

 

There are also large sums of cash suspected to be moving through the FTZs. With the arrival of a new Director General in July 2016, the Belize International Financial Services Commission implemented enforcement of previously-approved fee increases and more stringent due diligence requirements on the offshore financial sector.

The FIU, Customs & Excise Department, and Belize Police Department, who are all actors in the fight against money laundering, face challenges such as political interference, corruption, and human resource and capacity limitations.

 

KEY AML LAWS AND REGULATIONS

 

Belize has made efforts to strengthen its AML regulatory regime. In 2016, Belize enacted amendments to its Money Laundering and Terrorism Act to address terrorist financing matters. In addition, Belize has regulations in place for PEPs in line with international standards.

 

Belize has comprehensive CDD and STR regulations. CDD-covered entities include domestic and offshore banks; venture risk capital; money brokers, exchanges, and transmission services; moneylenders and pawnshops; insurance entities; real estate intermediaries; credit unions and building societies; trust and safekeeping services; casinos; motor vehicle dealers; jewelers; international financial service providers; public notaries, attorneys, accountants, and auditors; FTZ businesses; and NGOs.

 

There are mechanisms in place for information exchanges between the United States and Belize, as well as between Belize and numerous other countries. However, Belize is slow to respond to requests from foreign FIUs. INTERPOL requests are routinely ignored.

 

AML DEFICIENCIES

 

The FIU’s mandate to conduct its AML enforcement responsibilities far exceeds its capacity. This is in large part due to limited human resources and high turnover rates of contractual staff members. Leadership continuity is an issue as there have been three FIU Directors in as many years. In an effort to compensate for staffing deficiencies, the FIU has called upon senior attorneys in private practice to lead the prosecution of serious or complex cases due to the lack of experience of the two prosecutors on staff at the FIU.

 

Belize is making efforts to address its AML deficiencies. The FIU trained both offshore and onshore entities, including international financial service providers, credit unions, and money transfer service providers. Additionally, the FIU conducted outreach and sensitization visits in the Benque Viejo FTZ. The FIU also reportedly conducted 21 on-site compliance examinations of businesses in the Corozal FTZ.

 

ENFORCEMENT/IMPLEMENTATION ISSUES AND COMMENTS

 

In 2016, the FIU signed MOUs with the Belize Police Department, Customs and Excise Department, and the Tax Department. Increased information and resource sharing could enhance Belize’s capacity to address money laundering. Belize has also initiated a national risk assessment with technical assistance from international experts. This will identify money laundering risks and provide a strategic map for further actions.

 

To address issues of corruption within Belize, the country became a party to the UNCAC on December 12, 2016.

 

Belize prosecuted and convicted five people in 2016 for either failure to declare more than $5,000 (the threshold increased to $10,000 in April 2016) in cash when entering or leaving Belize. However, there were no major money laundering prosecutions. Belize has struggled to investigate money laundering and other financial crimes, resulting in a low number of money laundering prosecutions and convictions. The judiciary branch expressed concern about the sustainability of Belizean AML laws since they have not been implemented effectively. Belize investigators and prosecutors need instruction on implementation of these laws.

 

While the Government of Belize has made advances in its recent legislative and regulatory work, it should also provide more professional development training for current staff and provide additional human resources to effectively enforce its AML regime. The loosely monitored offshore financial sector and FTZs continue to be concerns. Furthermore, the historically low prosecution and conviction figures reflect the lack of robust enforcement efforts. The government should prioritize providing its investigative, prosecutorial, and judicial personnel with the resources and training to successfully fulfill their responsibilities.

 

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SANCTIONS

There are no international sanctions currently in force against this country.

 

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BRIBERY & CORRUPTION

 

Index

Rating (100-Good / 0-Bad)

Transparency International Corruption Index

50

World Governance Indicator – Control of Corruption

52

 

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INVESTMENT CLIMATE - Executive Summary (US State Department)

Over the last few decades, growth in Belize has focused on tourism, agriculture, and petroleum. Active petroleum reserves have begun to decline, but exploration continues. Tourism and agriculture continue to have room for expansion. U.S. businesses recently have made significant investments in tourism and agriculture as well as petroleum exploration. Investors have enjoyed success recently with business process outsourcing (BPOs) as well.

Belize continues to fare poorly in international surveys of openness and ease of opening a business. Some investors remain concerned about the Government’s failure to compensate the owners of the electricity and telecommunications companies that were nationalized in 2011 and 2009, respectively. Belize continues to offer attractive incentives for investors, though investors have noted they seem to be administered in an ad hoc rather than formal or comprehensive manner. Some investors as well as some Belizeans also complain about the insecurity of land title.

 

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FURTHER REPORTS

September 2014 - IMF Report: Belize: 2014 Article IV Consultation-Staff Report - Extract: -

 

‘In May 2013, the CFATF issued a public statement noting that Belize was making insufficient progress in addressing identified deficiencies. It recommended that Belize enact legislation and issue relevant guidelines to address the deficiencies. Between January and October 2013, the authorities made several legislative amendments. Nevertheless, a number of deficiencies remained and the CFATF issued a statement in November 2013, calling on member countries to consider taking counter measures against Belize. The CFATF planned to refer Belize to the Financial Action Task Force (FATF) International Cooperation Review Group (ICRG) if sufficient progress was not made in implementing the agreed Action Plan by May 2014.

 

In February 2014, Belize approved six laws and three regulations, including (i) comprehensive amendments to the Money Laundering and Terrorism Prevention Act (MLTPA), which included the establishment of the National Anti-Money Laundering Committee as a statutory body to advise the Minister of Finance and co-ordinate national AML/CFT efforts;9 (ii) Amendments to the Financial Intelligence Unit Act to strengthen its operational independence, enhance security of tenure for the FIU Director and minimise opportunity for political interference; and (iii) New regulations to more fully articulate the supervisory regime applicable to Designated Non-Financial Business Professionals (DNFBPs) and to set out details regarding the constitution and procedures of the National Anti-Money Laundering Committee. Other reforms contributed indirectly to the objectives of the program.

 

Following the enactment of the new legislation, the CFAFT public statement of May 2014 noted that Belize had made significant progress in addressing its deficiencies. The public statement recommends that Belize continue to work with the CFATF to ensure that its reform process is completed, by addressing its remaining deficiencies, and continue implementing its Action Plan. Belize will be required to report on further progress to the CFATF in November 2014.

 

Belize received AML/CFT technical assistance (TA) from the Fund through the AML/CFT Topical Trust Fund. The overall objective of the project was to assist the CBB to (i) strengthen its AML/CFT regulatory and supervisory framework and practices for domestic and offshore banks by the introduction of a risk-based approach (RBA) to AML/CFT supervision and (ii) enhance the analytical and operational capability of the FIU. With respect to work undertaken with the FIU, staff drafted guidance for reporting entities on suspicious transaction indicators, developed a financial analysis operations manual, a template for financial intelligence products and policies and procedures for the financial intelligence function. Staff also assisted the FIU and CBB in drafting a memorandum of understanding to facilitate collaboration and information exchange on AML/CFT issues. Due to limited resources and capacity, not much progress has been made in implementing the reforms that were initiated under the TA project, in particular in terms of RBA supervision and the development of the operational capacity and independence of the FIU.

 

The authorities are encouraged to continue strengthening and effectively implementing their AML/CFT framework. If the authorities are to effectively implement the changes brought about by the recently introduced laws and regulations, it will be important to ensure that the CBB, the FIU and all agencies that play a part in national AML/CFT arrangements are properly resourced. In addition, transparency and regulation of international business companies and trusts should be strengthened.’

 

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30 July 2013  -  IMF Report:  Belize: Staff Report for the 2013 Article IV Consultation

Extract: -

'The central bank’s ongoing effort to introduce a risk-based approach to AML/CFT supervision, with Fund’s technical assistance, is welcomed. However, weaknesses within the International Financial Services Center (IFSC), particularly the lack of regulation and supervision of the international business companies’ (IBCs) sector, raise significant concerns on their potential misuse for money laundering and terrorist financing both in Belize and abroad. While the authorities shared these concerns, given the private sector’s involvement in the management of the IBC registry, additional actions in this field would require a wholesale change in the legal structure, which the authorities are urged to undertake to further strengthen the overall AML/CFT regime of Belize.'

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