Bank formation: Banking Charter/ Bank License in Belize

With the assistance of partner law firm in Belize, we are able to assist our clients in the realization of a bank formation and charter (A-License). Bank formations are subject to the regulations and oversight of the Central Bank of Belize. As is the case in other formations the initial step is the foundation of a corporation with a permanent establishment in the Belize, which in turn acts as the company entity in the formation process of the bank. The bank formation fees are scheduled according to the services provided (compare below). Upon request, we will assume all services in conjunction with our partner law firm in Belize or the respective country in which the bank is to be formed:

-formation of the company, registration of the company in the registry, domiciliation, opening of a bank account

-application for a bank charter/license, submittal of all applications to the competent authority, direct communication with the competent government agencies

-viable business plan (business plan, profit & loss plan), general terms and conditions of the bank, and customer agreements according to the provisions and/or Bank Act formation provisions

-homepage of the bank

-online banking software and electronic interfaces

-SWIFT connection, SWIFT code, and IBAN

-credit card provider connection

- proper place of business in Belize

-to the extent necessary: Provision of an authorized agent in Belize

-connection to “recognized auditing/accounting firm” according to the Bank Act formation provisions

-Visa regulations, alien's residence permit (if required)

-Upon request, i.e. if required: Representation or establishment of the bank for example in Germany according to Section 53 of the German Banking Act

-Required Initial Capital:

-A Class "A"-Bank must have initial (share capital) capital of at least $3,000,000 US in appropriate securities (cash or other values, such as stocks among other possible securities).

-A Class "B"-Bank must have initial (share capital) capital of at least $1,000,000 US in appropriate securities (cash or other values such as stocks among other possible securities).

In both cases, the Central Bank of Belize can require additional capitalization of an offshore bank. The respective initial (share capital) capital is not required to be deposited at the Central Bank of Belize; rather it can be deposited at any established bank in Belize or in any bank abroad.

^[1][1] The Belize lawmakers increased this amount drastically in relation to the original 1996 version of the law from $200,000 US to the present amount .

^[2][2] Any additional conditions are however only expected, if the intended business operations of a bank could be subject of any concern.

^[3][3] In this case it is recommended, however, that the initial capital is first deposited at a bank operating in Belize as a fixed term deposit and that the interest revenue be used to cover running expenses and used for the distribution of dividends, if any. On the other hand, any regular international bank can be used to maintain said bank accounts.

- Personal Prerequisites of Management/Managing Director:

• -no criminal record, no indication that management/the Managing Director has participated in any criminal act involving fraud, embezzlement or breach of fiduciary duties
• -.. was not a director of a bank whose license was revoked
• -   is not insolvent or insolvency is not pending
• -   is not a certified public accountant for banks according to the Banking and Financial Institutions Act
• -   no economic conflict of interest exits with regard to the bank and no economic conflict of interest exits on behalf of his wife, children or siblings with regard to the bank.

The "International Banking Act, Chapter 267 (revised edition 2003)" is the legal basis on which the formation of an offshore bank in Belize is based.  According to this act anyone can form such a bank, referred to in the act as an "international bank", based on a corresponding charter/license granted by the Central Bank of Belize. Offshore banks have been operating in Belize for quite a few years. They offer their services to any international interested party from English speaking foreign countries.
The banking legislation in Belize is exceedingly modern. This is due to the Belize government’s interpretation and in-depth knowledge of international offshore legislation, which is the basis of the country’s contemporary national banking laws .

So-called Class “A” banks and so-called Class “B” banks can be formed on the basis of the International Banking Act.

A Class “A" bank is essentially equivalent to a common bank, which can conduct common bank transactions at an international level.

According to Belize law a Class “B” bank is a bank, which can, in fact, conduct common bank transactions, Class “B” banks are, however, prohibited from maintaining fixed term deposits for the general public, and are also prohibited from issuing cash bank checks. Furthermore Class “B” bank activities are exclusively limited to affiliated companies and persons!

In this regard, the lawmakers have crafted legislation, which stipulates that Class “B” banks exclusively conduct business on an international basis, i.e. not within the country of Belize. Furthermore the Central Bank of Belize can tighten or loosen the scope of the Class “B” bank business activities defined in the bank license.
Offshore banks do not pay any taxes in Belize, neither on profit, dividends, or sales. Offshore banks in Belize are not subject to any currency and foreign exchange/translation transactions supervision or regulations.

A bank license is valid for an unlimited period of time and can only be withdrawn by the Central Bank Belize on the grounds that the bank has violated the respective restrictions/limitations or conditions set forth in the granted license or the bank has violated the Banking Act as such.

The banking company must maintain a proper office in Belize as defined by a permanent establishment and must employ a minimum of three persons at a permanent establishment. In this regard, no additional requirements exist with regard to business premises and employees; this ensures additional leeway for management. Management can be located at any location outside of Belize.

The application for the granting of a bank charter/license is to be submitted to the Central Bank of Belize. The Central Bank of Belize receives detailed information on the type and scope of the desired banking activities of said bank.

Application:

The application includes the following documents: (this list is not exhaustive)

(1) Shareholder’s agreement of the bank company notarized by a notary public,

(2) Contribution receipt for the initial (share capital) capital,

(3) Name and address of the partners and the director, in the case of legal entities the company/corporate structure and its shareholders,

(4) Bank company credit report,

(5) Detailed business and financial plan of the Bank company,

(6) Detailed information pertaining to Bank company’s subsidiaries or interests in companies,

(7) Detailed information regarding any offices the company maintains abroad or intends to maintain,

(8) Provision of the names and addresses of external company auditors or third-party companies which perform such audits for the company,

(9) Provision of references or declarations of suretyship of other companies or third-parties

Regardless of the mandatory application documents that are to be provided to the Central Bank of Belize, the Central Bank of Belize can at any time during the active approval process initiate an investigation or audit to determine if the statutory criteria relating to the granting of a bank charter/license have been met and will be met in the future-

The decision process with regard to the granting of an offshore bank charter/license takes place in five steps with and through the Central Bank of Belize.

(1) Introductory Meeting:

The applicants or their representatives are summoned by the Central Bank of Belize to introduce themselves and present their project. The Central Bank of Belize submits the application forms at this introductory meeting.

(2) Pre-filing meeting:

The applicant or its representative should contact the president of the Central Bank to arrange a pre-filing meeting. The purpose of the pre-filing meeting is to address open issues or any ambiguities with regard to the charter/license. The objective of this meeting is to address and remove any potential obstacles to the charter/licensing procedure.

During this pre-filing meeting the contact person of the Central Bank of Belize is made known to the applicant.

(3) Formal application, acceptance, and processing:

At the point the application documents have been submitted, the contents of which were described above, the application for a bank charter/license will be processed.

A processing fee is due with the submission of the all required application documents.

The Central Bank first determines if the submitted documents are complete and, if required, requests the submittal of any missing documents; otherwise the application cannot be processed. This is followed by the review of the application documents with regard to content according to the following criteria.

(4) Recommendation and Decision to Approve or Reject a License:

After the application documents have been reviewed, the Central Bank of Belize will present its decision in the form of a preliminary notice.

(5) Organization of the New Bank

Provided a positive answer is given by the Central Bank of Belize in the form of a preliminary notice, the bank company is obligated to guarantee the organizational framework of the new bank and to comply with the relevant laws, ordinances and other provisions. This guarantee is an appendix to the permit, if granted, and must be furnished within a set period defined by the Central Bank of Belize.
The prerequisites have now been met and the bank charter/license can be granted.

This routine formation process can be completed within 6 to 9 months.

To operate the bank however said bank requires a correspondent bank, i.e. a common bank, which transact all general public bank transactions. The offshore bank maintains its bank accounts at said correspondent bank.  These bank accounts are always registered and maintained under the name of the offshore bank. The funds of class “B” customers are then transferred to these accounts. The identity of the customer cannot be traced by third parties; the customer’s identity remains fully anonymous, and if need be the customer’s identity is only known to the Class “B” bank.