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The changing landscape of Belize’s financial sector—due to amendments to Belize’s laws coming amid pressure from the international community for Belize to implement measures, said to be designed to counter terrorism and money laundering—has necessitated a change in the way banks do business with their customers.

Christopher Coye, president of the Belize Association of Offshore Practitioners, told Amandala last week that the revision in the laws do not just affect the offshore sector, but onshore transactions as well, because obligations that have now been created become more onerous on everyone—and especially those who have bank accounts and who will be subject to more procedures, more monitoring and more requirements. Belizeans, said Coye, will experience the changes on a very personal level. (See article captioned, “NEW FINANCIAL LAWS CAST WIDE NET!” published in the midweek issue of Amandala.)

Stephen Duncan, managing director of Heritage Bank in Belize, said today that bankers are still trying to come to grips with the latest amendment.

Heritage Bank compliance manager, Lourdes Andrade, noted that the anti-money laundering legislation was changed January 2013, so during the 2013 year, the bank had to do a lot staff training and up-scaling. With the changes just implemented in 2014, they have to undertake another round of training and up-scaling.

Duncan said that the changes to anti-money laundering and terrorism laws are “a tall order.”

“We now have to take that and dissect it and do two things from it: train staff and put processes in place to ensure compliance,” he said, expressing the hope that there will be no further changes for at least a few years.

The changes have affected something as basic as identification, Duncan said. He noted that while in the past, ID copies held on file were adequate and did not have to be updated upon expiry of the card, the new measures require that once a customer ID expires, the customer’s ID on the file has to be updated. This has meant that banks have had to put processes in place to now track those IDs, and for all those hundreds of thousands of accounts in the financial institutions in Belize, banks have had to go back and log those expiry dates, so that when they expire, the system issues an alert.

The changes are costly to the bank at a time when Duncan said they cannot afford them. He said that they have been coming under pressure from the Government to reduce fees, prices and costs.

“We have now this contrast – this conflict. The logical explanation is that if banks are putting on costs to meet these regulatory and legislative requirements, they have to generate additional income,” Duncan said.

He told us that although diversification can help offset some expenses, it is still the same 350,000 people (the Belize population) who have to pay for it at the end of the day, no matter how the pie is sliced.

For bankers, serious penalties on the books—which extend to possible imprisonment—have forced them to become more stringent.

“Banks will become more rigid than in the past, because they will not want to be caught out with fines and imprisonment and it becomes very personal. It is not just the institution, but also the individual who works with the banks who made the error, is exposed. So banks will become rigid, and understandably so,” said Duncan.

Andrade notes that people who fall under the new designation of Politically Exposed Persons (PEPs) are considered higher risk than normal persons because of the high office they hold, and so they would be subject to additional reporting measures.

She said that any doubt about the source of funds, because a customer refuses to provide information, and the bank suspects that the funds are not from where the customer indicates they are from, would trigger a report to the Financial Intelligence Unit (FIU), which is the competent authority, and the FIU would then work along with the police to prosecute the case in court.

Under existing law, money laundering includes the mainstreaming of funds from an array of illegal activities ranging from assassinations to the sale of products which violate another person’s intellectual property rights – such as the sale of bootleg DVDs and knockoff fashion goods and cosmetics falsely claiming to be brands for which patents are registered.


Marty Offline

Days ago, parliament passed a raft of legislation which elected officials said were being tabled to avoid financial sanctions which could be recommended against Belize by the Financial Action Task Force (FATF) when it meets in Paris, France on Monday, February 10.

Parliamentarians expressed the view that the legislation, sparked by recommendations coming to Belize from the Caribbean Financial Action Task Force, means the imminent demise of Belize’s offshore sector, and while the emphasis of their concerns was on the offshore enterprises, less emphasis was placed on how the legislation would impact the wider Belizean community – most of whom don’t do business in the offshore sector.

Speaking with Amandala on Friday evening, Christopher Coye, president of the Belize Association of Offshore Practitioners, said that while the raft of new legislation would indeed have an impact on the offshore industry, the sector has gone through challenges before and it has not only survived, but prospered.

He wanted to emphasize, though, that, “These aren’t laws limited to the offshore sector. These are laws that apply to the entire populace.”

Coye said that if you look at the Money Laundering and Terrorism (Prevention) Act, which was amended by one of the new pieces of legislation, you will see types of businesses that are subject to reporting obligations under this Act.

He noted that under the existing laws, people can be arrested for taking more than $10,000 cash outside of Belize and not reporting or declaring it.

“This law applies to everybody and the obligations that this law creates become more onerous on everyone—and especially those that have bank accounts – local and offshore – will be subject to more procedures, more monitoring, more requirements. You will experience it on a personal level,” Coye said.

In commenting on the legislation amendments last week, Prime Minister and Minister of Finance and Economic Development Dean Barrow agreed with concerns of the Opposition People’s United Party that a clause that refers to “politically exposed persons” who will have more reporting requirements is, in his view, unnecessarily wide—but, he said, “…it is there because it seems we change anything—even a word—in the templates handed to us at our peril” – referring to potential problems with the international agencies pressing Belize to implement the laws.

According to Barrow, the new reporting requirements on commercial banks are also “extremely onerous,” and they will have to hire accountants to comply.

“They [the financial agencies] say it is all in [an] effort to achieve greater transparency to stop transnational crime… They are going so far that for small counties such as ours, some of their measures will result in retarding our democracy,” Barrow said.

He spoke of a current member of the Belize Social Security Board, who is by virtue of SSB’s shareholding in the Belize Electricity Limited (BEL), also on BEL’s board.

One commercial bank—even before passage of this bill—has adopted this ridiculously wide definition which meant that that member who is on SSB, appointed by them but who is a lifelong public servant, has had to face more stringent financial reporting requirements, Barrow said.

“It has resulted in people telling him he has to fill out all these declarations, they want to know if you bought the dog yesterday and for how much you buy that dog… He has said he will resign! ‘Why should I be put through the wringer in this fashion?’” Barrow detailed.

He said that the social partner appointees – union members, the Belize Chamber of Commerce members and others – will now be thinking twice before accepting appointments to these statutory bodies.

The bills were debated in Parliament this week and received bipartisan support; however, Coye told our newspaper that offshore practitioners did not get a chance to see the bills before they were taken to the House of Representatives. They were later able to access them online on the website of the National Assembly at http://www.nationalassembly.gov.bz/index.php/hor-lowerhouse/bills-and-resolutions-before-the-house.

He noted that the main money laundering amendment, which is the most important bill tabled and passed, is 86 pages long and has to be read in concert with existing legislation: the money laundering legislation of 2008 and of 2013, which can be found on the website of the Financial Intelligence Unit: www.fiubelize.org.

“If you think operating an account is onerous now, this will make it more onerous, because of additional procedures that are required upon banks – in terms of monitoring activities,” he said.

However, it is not just banks that will have to adjust their procedures, but also credit unions and money transfer agents.

As for the offshore sector, Coye said that they will have to adapt, since clients will still have demand for their services.

“There is a demand for this type of service across the globe and this has not disappeared. This law does not make that disappear, but creates a different infrastructure within which the service providers have to operate,” he said.

Amandala understands that there are 100 A-list registered agents in Belize, 54 licensed international trustees, and 20 international insurance providers.


Diane Campbell Offline
Thank you Uncle Sam. Not.


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