Banking And Corporate Services In Belize, A Primer
The banking system in Belize is stable and heavily regulated. Strict rules are in place that insist on a level of capitalization and liquidity unheard of in U.S. and European banks.
Belize offshore banks must retain a liquidity ratio of 24%, over 2,000% higher than many U.S. and European banks currently hold.
Banks in Belize can only lend out money that they have taken in as deposits; they don’t artificially create money like western banks issuing loans and creating capital from the process.
Due to this, Belize has never had a bank failure.
Financial Institutions In Belize
- Local Banks: You’ll find several domestic banks in Belize, which generally only deal in Belize currency transactions. I recommend Atlantic Bank, the most helpful and easy to deal with.
- Credit Unions: For Belizeans and certain permanent residents, credit unions can offer lower borrowing rates and other perks. Credit unions are member-owned so the benefits of banking with them accrue to members (you), not shareholders.
- Offshore Class A Banks: Atlantic International Bank and Caye Bank are examples of Class A offshore banks. They deal in foreign currency and only with nonresidents of Belize (if you do acquire residency, you can retain usage of your accounts, but the mechanism between banks varies). Offshore banking licenses can be attained from the Central Bank if you have the correct management and funding in place.
- Offshore Class B Banks: Class B banks are non-retail banks, can only deal with qualified clients, and are not for personal use. Capitalization and licensing requirements are lower than Class A banking requirements.
Opening Accounts: Opening bank accounts in Belize has become more arduous since the advent of FATCA, but it can still be done remotely. U.S. clients are welcome in any of Belize’s banks.
Requirements: Generally, you’ll need two bank references, or one bank and one professional reference. The references must mention the length of time you have conducted business with the referrer, the type of business the referrer knows you to be in, the average balance of your account (the low five-figure range, between US$5,000 and US$10,000, etc.), and that the account has been handled satisfactorily.
Correspondent Banks: Belize weathered quite a storm two years ago when all major U.S. banks went through an intense process of “de-risking” due to the draconian punishments promised by FATCA. Many banks lost their correspondent bank (banks they use to wire money internationally) and U.S. bank accounts were up in the air for quite a while.
Luckily, new correspondent banks were found and all is well for now… For one bank in particular, it’s business as usual—or, in fact, better than usual—as many of the competitors in other jurisdictions couldn’t find new correspondent banks and went out of business.
Company Formations: If you are nonresident and don’t have a work permit, you’ll find it hard to open a local domestic bank account to make local transactions easier and cheaper. To do this, you can incorporate a local 250 Company and use this company to handle your local business and bank accounts.
Local 250 Companies are the preferred entity to handle business locally, but you can still have offshore entities higher up in your corporate structuring to allow you to hold foreign currency and to allow privacy and liability protection.
Local 250 Not For Profits: If you want to operate a charity or church in Belize this is the recommended structure for it.
International Business Companies (IBCs): IBCs are great structures for doing business internationally, provide great asset protection, secrecy, and allow you to claim your full Foreign Earned Income Credit if you’re living and working outside the States.
Offshore Limited Liability Companies (LLCs): These offshore structures are useful pass-through entities for tax purposes. They offer protection and certain anonymity and are often used to get your self-directed IRA offshore and into your control.
Trusts: Belizean International Trusts are seen as some of the best in the world in that you can give away assets to the trust but still retain control and full benefits of those assets.
Trump’s new tax legislation has narrowed the benefits that U.S. citizens can receive from holding assets offshore; retained earnings can no longer be deferred in most situations, affecting the usefulness of IBCs for U.S. citizens.
Offshore trusts avoid this issue because once the assets are in the trust they are not yours, therefore they’re not subject to your income-tax calculations. Offshore entities still offer great asset protection and privacy for U.S. clients and their tax structuring provides some benefits. Non-U.S. citizens can also benefit from the major tax advantages of operating offshore.