Belize as an offshore privacy tax haven

Let’s look at some of the laws this underwhelming but frequently used jurisdiction has. But before we delve into this, let’s point out that the capital, Belize City, has a paved street that is 3 or 4 blocks long. You are in the third world here with numerous internet, power and phone outages. Belize is often hit by hurricanes. Regime stability in Belize is questionable as they had a regime change in recent years and the new regime did not honor the economic citizenships and passports of the previous regime. Food to reflect on how things work in Belize. Also, in Belize, it’s usually a bank that only has an offshore license that can’t do business with the residents of the country, isn’t that too reassuring? More details follow:

The Belize Money Laundering (Prevention) Act, 1996 defines money laundering (in our opinion broadly) as:

Participating, directly or indirectly, in a transaction involving property that is the proceeds of crime, knowing or having reasonable grounds to believe that such property is the proceeds of crime; or receiving, possessing, managing, investing, concealing, disguising, disposing of, or bringing into Belize any property that is the proceeds of crime, knowing or having reasonable grounds to believe that such property is the proceeds of crime. Under Belizean law, money laundering is also considered an offense for the purposes of any law relating to the extradition or rendition of fugitive criminals.

The legislation establishes that any person who participates or tries, helps, instigates, advises or procures the commission of the crime of money laundering, or who conspires to commit it, is guilty of a crime. The foregoing also includes those persons who, at the time of the commission of a crime, acted in an official capacity for or on behalf of a group of persons (whether corporate or not) or intended to act in such a capacity. However, if such persons provide evidence that the crime was committed without their knowledge, consent, or collusion, the charges may be dropped.

The penalty imposed on those convicted of money laundering can be a fine, ranging from US$12,500 to US$50,000, or imprisonment from 3 to 6 years, or a combination of fine and imprisonment.

The Act also creates an offense of disclosure of facts or other information to another person whereby an investigation is likely to be prejudiced (think informing the subject of the investigation) by a person who knows or suspects that a money laundering investigation has been, is being, or is about to be made, punishable by a fine of not more than US$25,000, or imprisonment for not more than 3 years, or both. So don’t expect any Belize bank to tell you that someone is asking questions about your account.

Falsifying, concealing, destroying or disposing of any document or material that may be relevant to a money laundering investigation or to any order issued pursuant to the provisions of this Law is punishable by a fine of not more than US$50,000 or by imprisonment for not more than 5 years, or both.

An application may be made to the Supreme Court of Belize to freeze the property of, or property in the possession or control of, a person who has been charged or is about to be charged with a money laundering offence, wherever such property is located, if the property is alleged to be the proceeds of the crime. Do you think a bank in Belize would like this to happen so they can keep your money for years to come charging interest and not paying interest?

After a person has been convicted of a money laundering offence, the court may order that property, proceeds or instruments derived from, or connected with or relating to, such offense be forfeited and disposed of in a manner directed by the Minister. So if they say you laundered money, you lose your money. Sounds great, right?

However, all prosecutions, actions, trials, or other proceedings brought for any offence, or for the recovery of fines, penalties, or forfeitures, must be brought within 5 years from the date the offense was committed or the cause of action arose.

Reporting Requirements (It Gets Worse!)

In addition to reporting “suspicious transactions” to the Central Bank of Belize, which is required by law, Belizean financial institutions adhere to the “know your customer” principle and also conduct necessary due diligence exercises. This means that the bank in Belize has to tell you if it sees anything that it considers suspicious in their great wisdom and remember that if the government seizes the money, it will probably stay in the bank for a few years collecting interest for the bank. Think about conflict of interest and remember that money laundering is far from clearly defined in the law, it is too broad in scope and can include whatever they want it to include.

The Act provides the following examples of “suspicious transactions”: ‘complex, unusual or large business transactions, unusual patterns of transactions, whether completed or not, all unusual transactions, and significant but periodic transactions, having no apparent economic or legal purpose’. It seems that it covers everything they want. What does a complex transaction or a large transaction mean anyway?

If financial institutions or their employees, staff, directors, owners or other authorized representatives knowingly fail to report these types of transactions or knowingly make a false or falsified report on such matters, they may be charged with a criminal offence. A financial penalty of not more than US$25,000 may be imposed, and the license of such financial institutions may also be suspended or revoked, if found liable.

The Central Bank of Belize evaluates all reports of “suspicious transactions” and, upon concluding that there are reasonable grounds that a money laundering offense is being committed, has been committed, or is about to be committed, will refer such transactions to law enforcement authorities for investigation and eventual prosecution. Notice that it says that if the Central Bank thinks a crime is going to be committed, they can make a preemptive strike and seize your money in case they think you intended to break the law one day, but haven’t yet.

If there are reasonable grounds to believe that a violation or breach of this Law may have occurred, the Central Bank also has the power to inspect any record of business transactions, ask any questions related to such record, and make notes or copies of all or part of such record during the normal business hours of the financial institution, and may transmit the information to the law enforcement authority. This means that there are no private company records in Belize.

International cooperation

Belize is a member of the Caribbean Financial Action Task Force, an organization of Caribbean States that have joined forces “to develop and share the latest intelligence on money laundering and other financial crime techniques used in the Caribbean region and elsewhere.” This organization works closely with the world’s leading anti-money laundering authority, the Financial Action Task Force on Money Laundering, whose principles Belize also subscribes to.

The legislation makes provisions for cooperation between the court or other competent authority of Belize and the court or other competent authority of another State in matters relating to money laundering offenses in accordance with the Belize Money Laundering (Prevention) Act, 1996, and within the confines of the respective legal systems.

Belize is party to the United Nations Convention on Drugs of 1988 and is a member of the Group of Experts for the Control of Money Laundering of the Inter-American Commission for the Control of Drug Abuse (OEA/CICAD) of the Organization of American States. The United States and Belize signed a Mutual Legal Assistance Treaty (MLAT) in September 2000. Belize also has a Tax Treaty with the US.

Belize has Bearer Share Corporations, but they are not anonymous like Panama and work differently. Here again we see Belize laws full of loopholes to freely invade privacy. Registration of a company in Belize is through a registered agent, not an attorney, so forget about attorney-client privilege. The registered agent does due diligence to get to know the owner or owners of the corporation. The Belize Money Laundering Law and the Belize Code of Conduct require this disclosure of identification. Now here come the gaps. The only document filed for public record with the Registry of Corporations in Belize is the Memorandum and Articles of Incorporation. The Belize Financial Intelligence Unit and the Belize International Financial Services Commission are two organizations in Belize that have free access to corporate records, including property registered with the agent, and they can obtain this information freely, no court order is required and you will not know that your supposedly confidential information was obtained by them and given to other countries who do who knows what with it. You are one small step away from being in a public database and the door for widespread fishing expeditions is wide open.

In Panama, plain and simple, there is no registry with any ownership record for a corporation with bearer shares, so no one can access something that doesn’t exist. It is true that the attorney who formed the corporation in Panama could be contacted, but this would require serious legal proceedings to violate attorney-client privilege, with many causes, and of course the attorney would have a duty to oppose such a court order. Panama has 400,000 corporations registered there, most of which will leave quickly if the courts violate privacy. Each corporation pays $300 a year in taxes, which adds up to $120,000,000 and this is for a country with 2.9 million people. The Panama Canal alone brings Panama about $335,000,000 and requires 9,000 employees. How many people are required to run a corporate registration department? Maybe 200. Panama is highly unlikely to violate corporate privacy. The lawyer in Panama can only have knowledge of the person who formed the company, not of others to whom the corporation has transferred since its formation. It is not necessary to report such transfers and the new owners do not need to be registered anywhere, they just need to have the shares of the corporation physically. The new owners can reside outside of Panama, the new owners can be a corporation, foundation or trust in another country, etc. making the roads extremely difficult, time consuming, expensive and generally not feasible for most people to follow, especially when you consider that no one really knows how many times ownership may have been transferred.

Does this sound like a jurisdiction you’d like to use for something? We consider Belize a simply ridiculous jurisdiction with no guarantees or protections in place, avoid this one.

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