Deposit Protection in Belize

Bank Account Holders in Belize: Protect Your Account Balance and
Qualify for Deposit Insurance Repayment When Banks Fail or Stop

Belize is a relatively small Caribbean country with a population of just over 400.000. The country is an independent parliamentary constitutional monarchy headed by the Queen of England. The financial sector comprises around 1,5 times the GBP and the value of the local currency, the Belize Dollar, is pegged to the USD. The economy is fueled by tourism, transport and (financial) services. Banking in Belize is the exclusive domain of licensed and supervised commercial banks and credit unions. Commercial banks either cater the local market or have a more international character by (exclusively) working with non-resident account holders and offshore companies.

Banking and Finance in Belize 

Banking law and financial supervision in Belize is maintained by the Central Bank of Belize and regulation is distinguished by the Domestic Banks and Financial Institutions Act for domestic banks where the International Banking Act applies to international and offshore banks. Legally, international banks can only serve non-resident persons, international business corporations that refrain from activities in Belize, and companies with a locally approved EPZ status. AML compliance and supervision is a shared responsibility of the Central Bank and the FIU.

The infrastructure of the Belizean financial sector is simple, straightforward, yet unsophisticated. Bank deposits are primarily reinvested in loans to local people and businesses. To facilitate and manage international transactions, the banking and finance industry relies on an expensive cross-border ecosystem of financial intermediation and correspondent banking. For several years, the position of Belize in the global financial system has been under pressure. Main reasons include, the increasing costs of global banking and regulatory compliance, low volume and profitability of business, imbalances between the size of the offshore financial sector and local regulation thereof. As part of a de-risking strategy, many of the correspondent banks terminated their relationship with Belizean banks making it more difficult to transact in foreign currency.

Efficient and Affordable International Financial Centers 

Most international business people want to focus on building their business instead of managing peripheral matters. They seek to limit restrictions and maximize corporate efficiency at a reasonable cost. Sometimes even outside of the boundaries of their home country. International financial centers and offshore jurisdictions provide these entrepreneurs with flexible and convenient rules on licensing, administration, and taxation. Economic distress and other financial challenges brings out important distinctions between standard company structures in the more traditional business environments and international financial centers.

High tax jurisdictions have a social and protectionist view on society and provide financial safety nets for persons in (temporary) need. Public spending is funded by taxation. Offshore jurisdictions may provide international business corporations that exclusively engage in activities outside of the jurisdiction with a special tax exempt status. Consequently, not all international financial centers have similar protective measures for local residents and international businesses operating in the jurisdiction.

Bank Deposit Protection in Belize

Financial stability and sector profitability are crucial to the viability of a payment system and the entire financial system of a country. Although supervised financial institutions in Belize have a stable capital adequacy ratio, there are in general weak buffers and some banks are unable to meet insufficient provisioning of their loss absorption capacity. The financial system contains a high level of non performing exposures and was plagued by a correspondent banking crisis in 2015 that triggered a capital outflow of bank customers in need of international payment services.

Due to the thriving offshore financial sector where financial service providers do not always have a physical presence in Belize, bank supervision and AML compliance remains challenging. The growing importance of the integrity and stability of the global financial system appoints financial institutions as the gatekeepers of this very financial system. Professional market players wish to avoid being reprimanded by their local supervisor or the public and thus assess the risks involved in any collaboration with other jurisdictions. Risk management and de-risking strategies of the international community have hit the financial sector in Belize particularly hard.

The overall stability of the financial system in Belize is warranted. However, some vulnerabilities and weaknesses exist. The bank Deposit Insurance Act therefore provides via the domestic Deposit Insurance Fund (DIF) a transparent and reliable safety net for insurable deposits held at domestic banks. The fund contributes to financial stability by protecting insured deposits held at domestic banks and credit unions.

Membership of the DIF is compulsory for all domestic banks and credit unions that are licensed or registered under the Domestic Banks and Financial Institutions Act. Members pay the fund initial contributions, annual premiums, charges, fees and extraordinary premiums when such is required. A sizable fund must be maintained to absorb shocks in one of the fund members and reimburse insured deposits to eligible account holders.

The Belizean DIF shall pay a maximum compensation of 20.000 Belize Dollar to an insured depositor of a fund member when this member fails or ceases trading. Compensation is paid to eligible creditors within one month after the payout event is announced. Payout events commence when a liquidator is appointed, winding up procedures are initiated, or when the license is revoked or the registration canceled. Excluded from DIF coverage are financial institutions, insurance companies, public authorities, and persons that have contributed to or benefited from the closure of the member institution.

Belize IBC’s with Foreign Bank Accounts 

The International Business Companies Act allows persons who reside outside of Belize to incorporate an International Business Company in Belize. A Belize IBC is not allowed to carry on business with persons resident in Belize. The company also cannot own local real estate or carry on activities that require a license such as banking, investment, insurance or trust business unless such a license is granted by a local authority. Belize IBC’s can retain local banking services from one of the specialized institutions incorporated under the International Banking Act.

Bank deposit protection in Belize applies to domestic banks and credit institutions. Since beneficiaries of an IBC require direct access to international markets, they often use foreign financial institutions to handle their banking affairs. The Belizean International Business Companies Act has no territorial effect. This means that the owners of a Belize IBC must adapt to the rules of Belize and the jurisdiction where they retain (financial) services. This may lead to conflicts when laws in different countries differ. The same applies to local deposit guarantee schemes, so it is advisable when your bank is in trouble to be cautious. As we operate in most international financial centers and offshore jurisdictions, we welcome you to contact us to discuss your case and determine the appropriate route for recovery.

Contact us for More Information 

This website is an initiative of Legal Floris LLC. Since more than a decade, we have helped international creditors recover money when their bank fails or their investments disappear. Due to our vast experience in dozens of bank failures in different countries we are able to maximize repayments and minimize risks for our clients. Contact us right now to find out how we can help you too to reclaim your account balance if your bank stops operating:

Call: 00357 25 057 544 or 001 646 513 2855
Email: [email protected]
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