Atlantic International Bank is winding up its operations - and it has turned to the Central Bank to help it to make an orderly closure. It's a major event for the offshore banking sector, because Atlantic International had the biggest portfolio and the biggest staff amongst international or offshore banks. This comes after the bank was hit hard in November of 2018 when the Federal Trade Commission in the US named it in a civil complaint against a land scam operation, Sanctuary Belize.
Today, the Prime Minister as the Minister of Finance said that because of that FTC action, which also froze its foreign assets, the bank has been forced to close:
Rt. Hon. Dean Barrow- Prime Minister "They are unable, as I understand it, to sustain that campaign, the legal campaign, any longer. That is extremely costly. I gather there may have been an offer from the FDC for a settlement but the amount it involved in any case has killed the bank. So, as I understand it, the bank has asked the Central Bank to intervene and to assist them to wind up the institution. I think it is a great pity. I hope that the winding up will not leave too many of their customers unable to get out the full amount of their deposits. That has to be the primary concern."
Jules Vasquez- Reporter "Are there systemic risks and also what will happen to their, quite significant loan portfolio?"
Rt. Hon. Dean Barrow "Well, again, maybe the person you talked to is the governor of the Central Bank. The liquidator or the receiver, whatever the title is of the official who would be appointed by the Central Bank to preside over the winding up, would have the obligation to auction portions of the loan portfolio or the entirety of the loan portfolio. Although, I suspect they won't do it all in one. That they might break up the portfolio. But clearly that is the going to be one method of proceeding."
Jules Vasquez "But you have lost now two international banks in a calendar year- Choice Bank and now AIBL. It has to have some reputational or some tainting effect on the entire banking sector."
Rt. Hon. Dean Barrow "In terms of Choice Bank, there is, in any event, less of a worry because their clientele, as I understand it, is almost exclusively foreign. So, I am not too concerned about that. AIBL is Belizean and so I have to be more concerned. And to the extent that this is in consequence of the allegations made by the FDC that is worrying. But I don't think there is any systemic risk. I think this is self-contained."
There is no public timeline for the bank's winding up of operations.
AIBL Folds after Eighteen Years in Offshore Banking Sector
There are new details tonight in respect of the crisis at the Atlantic International Bank Limited. We can confirm that AIBL has started a voluntary winding up and representatives from the Central Bank of Belize have been deployed to the bank to ensure that the process is smooth and clients are protected as much as possible. AIBL’s C.E.O. has resigned and the chair of the board from Honduras is in place at the bank. AIBL is the second international bank in Belize to close operations in the past ten months leaving only two banks to handle correspondent banking issues. The situation has been triggered by a multimillion U.S.-dollar land fraud over which the Federal Reserve Commission has come down on the bank. This afternoon, News Five’s Isani Cayetano sat down for a one-on-one with Central Bank Governor, Joy Grant and files the following report.
Isani Cayetano, Reporting
Atlantic International Bank Limited has commenced the process of shutting down its business as an offshore financial institution that has been operating in Belize for the past eighteen years. The decision to voluntarily wind up the company comes amid a particularly worrying state of affairs in which the Federal Trade Commission has come down hard on AIBL for its purported role in assisting and facilitating Telemarketing Sales Rule violations, in respect of the phony Sanctuary Belize real estate venture.
Joy Grant, Governor, Central Bank of Belize
“The situation at AIBL is troubling. It came to our attention that the management of AIBL decided that because of a certain situation that they did not feel that they could continue in operation for much longer. We at the Central Bank, of course, because we have to protect depositors, and when we do that it’s of course protecting the financial system, decided that we would do what is called a special examination and immediately sent in four of our staff who are there to look at what is happening at the bank, provide us here at the Central Bank with data because we have to do an analysis of the data to determine what is the true position of the bank.”
For its alleged involvement in making possible countless transfers in furtherance of this real estate scam, Atlantic International Bank has been facing serious pressure from the FTC which has since mounted legal proceedings against the company.
Prime Minister Dean Barrow
“What has happened is that you can’t win that sort of a fight and to say that it was unfair doesn’t help you. They are unable, as I understand it, to sustain that campaign, the legal campaign any longer, it’s extremely costly. I gather [that] there may have been an offer from the FTC for a settlement, but the amount involved would, in any case, have killed the bank. So, as I understand it, the bank has asked the Central Bank to intervene and to assist them to wind up the institution.”
The role of Central Bank in this undertaking is to ensure that AIBL has sufficient assets to cover all liabilities as part of an intended shutdown. Central Bank Governor Joy Grant explains what the regulator would be seeking.
“Look at the liquidity of the bank, look at the queues for payments, et cetera and we are doing that now.”
“What is the extent of the involvement of Central Bank in respect to what we are coming to understand as a voluntary liquidation of this company?”
“That is an interesting question because the act, the DBFIA [Domestic Banks and Financial Institutions Act], and of course the IBA [International Banking Act] talk about liquidation and there are two ways, voluntary windup or liquidation. Now in the voluntary windup what we have to do as Central Bankers is look at the figures provided to us and we have been getting figures on a weekly basis for a few months because the law says that you can only do a voluntary windup when you have enough assets to pay all liabilities.”
The termination of the company, says PM Barrow, is regrettable. Most importantly, he added, is that clients are able to withdraw the totality of their deposits.
Prime Minister Dean Barrow
“I hope that the winding up will not leave too many of their customers unable to get out the full amount of their deposits. That has to be the primary concern, apart from the fact that as I said it was a functioning bank, I thought an effectively functioning bank and it diminishes certainly our international banking climate that they now have to exit. But the immediate concern is to be sure that depositors are treated as fairly as possible.”
What is equally worrisome is the fact that this is the second offshore financial institution to be shuttered in Belize within the span of approximately ten months, albeit under different circumstances. The first was Choice Bank Limited.
“Absolutely, but I want to make it clear that the two situations are completely different. But no there is always the perception as to well this is about a year for two banks. So I take this opportunity to say that this financial system is sound. We at the Central Bank will do everything in our power to make sure that the right decision is taken in every situation.”
News Five understands that former Chief Executive Officer Ricardo Pelayo has since resigned from AIBL and that the operation is presently being overseen by a chairman from Honduras. Reporting for News Five, I am Isani Cayetano.
Atlantic International Bank Limited (AIBL) goes belly up
This week, Belize got the disquieting news of the closure of another bank, Atlantic International Bank Limited (AIBL).
Last year, the doors of Choice Bank, another offshore bank, were closed, and now, just several months later, the troubled AIBL has gone belly up. AIBL, fortunately, is not related to one of Belize’s biggest banks, Atlantic Bank Limited.
The troubles for AIBL, which is largely Belizean-owned, began as far back as 2016 when the bank got caught in the “de-risking net” and lost its correspondent banking relationship with the Bank of America. The bank was able to find another relationship with another correspondent bank to move money for their clients.
The bank was barely out of the woods when it was faced with another problem of huge proportions: it was accused of helping to facilitate the Sanctuary Belize real estate scam that was shut down by the US Federal Trade Commission.
AIBL had to defend itself against allegations about its association with a multi-million dollar real estate scam that was run by Sanctuary Belize. The principals of Sanctuary Belize reportedly received tens of millions of dollars from investors in the USA for luxury homes the company promised to build in southern Belize.
When the investors came to Belize, however, they found out that they had been hoodwinked.
In a story we ran in November 2018, titled “PM Mum on Sanctuary” (by Rowland Parks), the PM told us that he and the Central Bank had thought long and hard on whether “we should make any public statement, because it was, and still is, an extremely delicate situation.”
He expressed the hope that Atlantic International Bank Limited would be able to work through its difficulties with the US federal agency.
“Atlantic Bank International has a stellar reputation and all Belizeans should wish the bank well”, Barrow told us.
The bank faced a civil suit in the US, and reports are that it was able to fend off allegations of having some knowledge of what was going on at Sanctuary, but the smear on its reputation that came from being near to the Sanctuary Project and the pressure from the US federal agency proved too heavy a load to carry in the end.
In an interview with the press today, PM Barrow said that it was a pity that the US federal agency went after the bank, and although they didn’t find any persuasive evidence against AIBL, the bank was not able to sustain its legal campaign any longer. PM Barrow said the bank had asked the Central Bank of Belize to intervene and help them to wind up their operations.
PM Barrow said that the Central Bank would work to ensure that depositors were “treated as fairly as possible”, and that hopefully, most of the bank’s customers would get back their full deposits.
Barrow told the press that he did not see AIBL’s failure causing any systemic risk for the country’s banking system, because “when the banking community looks at the facts, they will see [that the bank’s failure] was not because of infrastructural laxity on the part of the regulator.”
After months of silence, and taking major blows from the US Federal trade Commission - Atlantic International Bank's Acting Chairman today sent out a release that is a kind of like a white flag of surrender. The release refers to the Federal Trade Commission's suit in Maryland targeting all the players the Sanctuary Belize real estate scam. The release says, quote, The FTC, for reasons unknown, also named Atlantic International as a defendant. Although the US Federal Trade Commission did not claim that AIBL was involved in any of the alleged telemarketing violations it asserted that AIBL: had somehow aided and facilitated the wrongdoing by offering the bank's services to prospective purchasers of lots in the developmentâ€¦.to the alleged wrongdoers. The bank maintains its innocence in this matter," close quote.
And here's where the white flag comes in: The statement says, quote, "as a consequence of this, the Bank of New York suspended the processing of wires to and from AIBL and this suspension prevented AIBL from servicing its customers need for Belizean dollar.s. This in turn has driver a large number of withdrawal requests, which in turn has required that our institution turn to the Central Bank of Belize," end quote.
That means they have turned to the Central Bank for protection and, as the Prime Minister said, are winding up operations. Their portfolios - which are significant - are expected to be auctioned off to other banks in what is hoped to be an orderly wind-up. Atlantic was the largest international, or offshore bank in Belize. It is not related to the Atlantic domestic bank.
Revocation of Atlantic International Bank Limited’s Banking Licence
Video message from the Governor of the Central of Bank of Belize the revocation of banking license from Atlantic International Bank
The Central Bank of Belize (Central Bank) wishes to advise that on 12 April 2019, the Prime Minister as the Minister of Finance, on the recommendation of the Central Bank, revoked the Unrestricted "A" Class International Banking Licence of Atlantic International Bank Limited in accordance with Sections 25 and 27(1) of the International Banking Act, Chapter 267, Revised Edition 2011 of the Substantive Laws of Belize (the Act). This prohibits Atlantic International Bank Limited from carrying on further international banking business.
The situation unfolded on 8 November 2018, when the United States Federal Trade Commission named the Atlantic International Bank as a Defendant in a case involving alleged fraud related to certain transactions for the sale of land in a property development known as Sanctuary Belize. The Federal Trade Commission then sought and obtained in these proceedings, a temporary restraining order against certain of the bank’s liquid assets in the United States. Atlantic International Bank Limited has experienced challenges meeting its liquidity requirements due, it appears, to the reputational damage caused by being named in the said proceedings. Atlantic International Bank Limited experienced an unusual and increasing level of withdrawal requests. This led to customers facing extended delays in accessing their funds, which in turn led to a worsening of the bank’s liquidity position.
In response to the said challenges, the Central Bank placed Atlantic International Bank Limited under enhanced supervision on 13 November 2018, and subsequently issued two sets of remedial actions aimed at preserving the bank’s capital. The Central Bank closely monitored the execution of these actions through increased reporting requirements and continuous dialogue.
A series of actions unfolded in the week of 25 March 2019. The Board of Directors of Atlantic International Bank Limited informed the Central Bank of a worsening liquidity position and the resignation of its Chief Executive Officer, Mr. Ricardo Pelayo. Further, the bank through its Board of Directors, expressed the view that Central Bank’s intervention was required.
To safeguard the interest of depositors, customers, and other stakeholders, the Central Bank immediately escalated its oversight regime and undertook a special on-site examination to assess Atlantic International Bank Limited’s financial position. The assessment revealed that Atlantic International Bank Limited’s liquidity position continued to worsen.
The Central Bank determined that Atlantic International Bank Limited was no longer viable and continues to work diligently towards timely winding up of Atlantic International Bank Limited in accordance with the statues provided under Part XI of the Domestic Banks and Financial Institutions Act.
The Central Bank has appointed a liquidator, Mr. Julian Murillo. He will have full power and authority over the operations of Atlantic International Bank Limited as prescribed under the Laws of Belize. Former clients of Atlantic International Bank Limited are asked to follow instructions issued by the liquidator and any concerns should be directed to him. After the liquidation of the bank’s assets, Mr. Murillo will move to distribute these assets in a fair and equitable manner in accordance with the legal priorities.
This is the second bank in the international banking sector to have its licence revoked in the last ten months. However, the circumstances leading to the revocation of the international banking licences of these two banks are different and cannot be attributed to any issues of general application to the nation’s financial sector. In both cases, albeit for different reasons, the situations were made untenable due to actions that originated outside of Belize.
The Central Bank reminds the public that it has a mandate to protect depositors and it is taking steps to do so. Further, the Central Bank continues to be extremely vigilant in its oversight responsibilities to ensure that Belize’s financial sector remains vibrant.
Going forward, additional information will be posted on the websites for both Atlantic International Bank Limited and the Central Bank.