It is no secret that Belize is a haven for drug activity. Recently a lot of activity in northern Belize where drug planes have landed and thier cargo of illegal drugs being transported to Mexico has become all too common to Belizeans.
In its recent report the United States Department of State in its International Narcotics Strategy report states this about Belize.
Belize has an offshore financial sector but is not a key regional financial center. Belize is a transshipment point for marijuana and cocaine. FTZs are routinely used to move money across borders. Belize is vulnerable to money laundering due to the lack of enforcement of its laws and regulations, strong bank secrecy protections, geographic location, and weak investigatory and prosecutorial capacity. The sources of money laundering are drug trafficking, tax evasion, securities fraud, and conventional structuring schemes. The Belizean government is increasing staff and training for its FIU. The FIU has a three-year National Strategic Plan and is conducting an AML/CFT national risk assessment (NRA). The FIU also is participating in a gap analysis of Belize’s anti-corruption and AML/CFT capacity.
VULNERABILITIES AND EXPECTED TYPOLOGIES
The government permits financial activities that are vulnerable to money laundering, including offshore banks, insurance companies, trust service providers, mutual fund companies, and IBCs. The IBC Registry has 49,192 registered, active IBCs, and 2,165 trusts are registered at the International Trust Registry. One IBC with an online gaming license can operate in the offshore sector. With the exception of the five international banks regulated by the Central Bank of Belize, the International Financial Services Commission (IFSC) supervises offshore entities.
Belize’s two FTZs, Corozal and Benque Viejo, are on the border with Mexico and Guatemala respectively. Belizean law enforcement agencies strongly suspect there is money laundering, illicit importation of duty-free products, and large sums of cash moving through the FTZs.
As of December 2016, Belize’s gaming sector, regulated by the Gaming Control Board under the Ministry of Investment, Trade, and Commerce, consists of nine casinos or licensed gaming premises, 33 licensed gaming establishments, and three on-line gaming/internet casinos. Each category of gaming entity is subject to different operating restrictions; for example, casinos are the only entities allowed to conduct live games such as poker and roulette. The FIU supervises the gaming sector for AML/CFT compliance.
The director of the IFSC implemented enforcement of fee increases and more stringent due diligence requirements on the offshore financial sector. In September 2017, the IFSC announced a six-month moratorium on new licenses in Trading in Financial and Commodity-based Derivative Instruments and Other Securities (“No. 7 License”). All No. 7 License holders are required to complete a “Declaration of Compliance” certifying they have operated and continue to operate within the Standard Conditions of the License for Trading in Securities.
The FIU, Police Department, and Customs and Excise Department face challenges with political interference, corruption, and human resource and capacity limitations.
KEY AML LAWS AND REGULATIONS
Belize made efforts to strengthen its AML regulatory regime, including amending the Money Lenders Act in 2016 and empowering the FIU to collect information for the NRA to be completed in 2018. As a new signatory to UNCAC, Belize is conducting a corruption-AML/CFT gap analysis under the aegis of the UNODC.
Belize has comprehensive CDD requirements and STR regulations. Belize also has regulations for PEPs in line with international standards.
Mechanisms exist for information exchange between Belize and other countries, including the United States. However, Belize is slow to respond to requests from foreign FIUs. The FIU acknowledges the problem and is hiring two analysts and a quality assurance staffer to respond to requests.
Belize is a member of the CFATF, a FATF-style regional body. Its most recent MER can be found at: https://www.cfatf-gafic.org/index.php/member-countries/a-d/belize.
ENFORCEMENT/IMPLEMENTATION ISSUES AND COMMENTS
Belize took many positive actions in 2017, including increasing personnel and other resources, improving collaboration between agencies, and increasing training and advisory assistance. The FIU continues data collection and analysis for its NRA. The three-year National Strategic Plan identifies goals, additional resources, and personnel needs.
The FIU continued its outreach in 2017, including to DNFBPs. The FIU conducted onsite compliance examinations of two casinos as it focuses on the gaming industry, as compared to 21 onsite examinations in the Corozal FTZ in 2016.
Although the FIU is investigating several cases, the government did not prosecute any money laundering cases in 2017. The low prosecution and conviction figures continue to reflect the lack of robust enforcement efforts. The government should prioritize providing its investigative, prosecutorial, and judicial personnel with the resources and training to successfully fulfill their responsibilities.