A New Destination for Offshore Banking
Editor’s Note: Welcome to the “Escape the Chaos: Best of Sovereign Investor Daily” series. All this week we are highlighting some of our best articles that focus on key tips and tricks for moving offshore, information on countries that support your expatriation and wealth protection goals, and much more.
Recently the government of Belize has run TV commercials in the U.S. promoting what is indeed an idyllic Caribbean vacation spot. I often have been asked about Belize; is it a suitable haven for offshore banking, asset protection and residence?
I’ve visited twice, and although folks there are very friendly, Belize qualifies as a third world country in many respects, unfortunately in regards to some offshore financial matters.
Fresh proof of my view on Belize’s third-world status was supplied on September 9. U.S. authorities disclosed civil and criminal charges against a major Belize-based offshore operation that allegedly allowed 100 or more U.S. investors to knowingly manipulate penny stocks, launder hundreds of millions of dollars back into the U.S., and evade U.S. taxes.
Six men (none of them citizens of Belize) and related companies were indicted in U.S. federal court, charged with running the alleged $500 million scheme over the last five years. The U.S. SEC also filed civil charges for federal securities law violations.
The indictment came after a two-year undercover investigation by the Federal Bureau of Investigation, with an undercover agent posing as a stock promoter and meeting in Belize with the alleged conspirators and setting up offshore entities. Court-approved wiretaps led them to over 100 U.S. clients who are expected to be charged.
In this age of the Foreign Account Tax Compliance Act (FATCA), after a decade of U.S. IRS and OECD anti-offshore vendettas, it is difficult to comprehend how any American can be so stupid as to engage in such schemes.
Channel 7 News in sleepy Belize City gave a running account of scores of local police working with the FBI in a day-long raid on the offices of those charged, noting all this commotion was: “…a strong message to Belize’s offshore sector, which the U.S. has been gradually choking with increasingly oppressive legislation, basically forced upon the government. And, now, Belize police are doing the enforcement side.”
Belize: Beyond the News Headlines
Belize is a small country of only 341,000 souls in Central America, bordering the Caribbean Sea, between Guatemala and Mexico. Although Belize has the second highest per capita income ($8,700) in Central America, the average income figure masks a huge income disparity between rich and poor.
In a sincere effort to bolster the economy in 1992, the Belize National Assembly enacted major legislation with the goal of making the country a competitive offshore banking and financial center. Drafters combed tax haven laws worldwide and came up with a series of minimal corporate and tax requirements, which — if you get the right honest advice — could well fit your offshore banking needs.
More than 5,000 companies and trusts are registered there. But as I said in The Passport Book, the Belize banking sector is tiny. Those with firsthand experience complain that the local banks are less than competent and careless with account information.
Under pressure from the U.S. and the Organization for Economic and Community Development (OECD), Belize compromised what used to be very strict banking secrecy. There is an anti-money laundering law, and in 2003 a Mutual Legal Assistance Treaty (MLAT) with the U.S. was hailed by the U.S. Senate as “a major advance for the U.S. in its efforts to combat criminal activity including organized crime, terrorism, and international drug trafficking in the Caribbean and Central America.”
Two decades ago, Belize officially sold passports and citizenship. It was easy to obtain a genuine Belize passport by fraudulent means, paying a few hundred American dollars to local police, a government official or a lawyer with connections. They, in turn, would certify that the “applicant” was known to them as having been a Belize resident for at least five years. The program was abolished in 2002. In 1998, the Retired Persons Incentives Act was enacted and its honest administration has made Belize a successful retirement haven for a number of foreign citizens, many from the U.S. and U.K.
A local Belizean commentator in the aftermath of the U.S. indictments warned: “The days to come will tell how the extradition proceedings go, but we are very much in new territory with this very direct crackdown on Belize’s offshore sector.”
Fortunately, Belize has in place excellent laws governing corporate, trust, insurance and banking, along with a strong anti-money laundering law and mutual treaties allowing tax information exchange. Costs are lower for services, such as offshore banking, and there are reliable professionals on whom we have done due diligence. I recommend:
Barrow & Williams
Julie-Ann Ellis-Bradley JD
Equity House, 84 Albert Street
P.O. Box 617, Belize City, Belize
Tel: +501 227–5280
Belize Bank International Ltd.
Ms. Shakira Tsai, Marketing Manager
Matalon Business Center, Coney Drive, 2nd Floor
Belize City, Belize
Tel.: + (501) 227 0697
Bob Bauman JD
Chairman, Freedom Alliance