Your Money and How to Hold On to It in Belize
By Lan Sluder
Excerpted from Easy Belize! How to Live, Retire Work or Invest in English-Speaking Belize, the Frost-Free Paradise on the Caribbean Coast, available for instant download at http://www.escapeartist.com/e_Books/Belize2/Live_In_Belize.html
Belize’s official currency is the Belize dollar, which for many years
has been pegged to the U.S. dollar at a rate of 2 Belize dollars to 1 U.S. dollar.
However, moneychangers often give a slightly higher rate than 2 Belize for 1
U.S. dollar, sometimes as much as 2.2 to 1, or even higher, depending on the
local demand for American greenbacks.
That brings us to a key fact about Belize and your money: Hard currencies, like
the U.S. dollar, Euro and yen, are good. Soft currencies, and the Belize dollar
is one of them, are not so good. The Belize dollar is difficult if not impossible
to exchange anywhere outside of Belize (except at border areas of Guatemala
and Mexico).
For years there has been talk of dollarizing the Belize economy, making the
U.S. dollar the official currency of Belize, similar to what El Salvador and
Ecuador and, to a degree, Guatemala have done, but so far that talk hasn’t
translated into action. There are several possible reasons. For one, the Belize
government is reluctant to do away with its Central Bank and surrender so much
of its financial control to Uncle Sam. That’s understandable. For another,
Belize politicians may think that in a tough economic pinch it’s a lot
easier to just print money than to actually earn it. That’s also understandable.
Technically, according to Belize law, only the Central Bank of Belize, or in
some cases, Casas de Cambio or authorized moneychangers, are permitted to deal
in foreign currencies including the U.S. dollar. But this rule is widely, almost
universally, flaunted in Belize, and businesses routinely take U.S. dollars
in payment for goods and services and have been doing so for decades.
In any event, U.S. dollars (bills, not coins) are accepted everywhere in Belize,
although you often will receive change in Belizean money, or in a mix of Belizean
and U.S. money. Paper-money Belize denominations are the 100-, 50-, 20-, 10-,
5- and 2-dollar bills. Belize coins come in 1-dollar, 50, 25, 10, 5 and 1 Belizean
cent units. The 25-cent piece is called a shilling.
All of which brings us to another key fact about your money and Belize: Keep
the bulk of your liquid assets out of Belize. You will probably want to open
a checking account in Belize to have easy access to spending money and for handling
routine local transactions, such as paying your Belize telephone or electric
bill. And if you are in Belize under the Qualified Retired Persons Incentive
Program (see previous chapter), you are required to deposit money (usually US$24,000
a year) in a Belize bank. But the savvy expat will maintain a banking relationship
in the U.S. or similar country, with the bulk of your demand and deposit cash
accounts there. You can then transfer funds by wire or other means to your account
in Belize, as needed.
The U.S. Embassy in Belize provides this summary of currency regulations in
Belize:
Under the Exchange Control Regulations (Chapter 43 of the Laws of Belize - 1980),
only the Central Bank of Belize and authorized dealers/depositories (i.e., commercial
banks and Casas de Cambio) may deal in foreign currencies. Prospective investors
should note that in order to eliminate the black market for U.S. dollars specifically
and to remedy the growing foreign exchange shortage generally, the government
introduced on April 15, 2002, “Casas de Cambio.” The statutory instrument
amending Belize’s Exchange Control Regulations define “Casa de Cambio”
as “an enterprise in the course of which a person buys from, or sells
to, other persons any foreign currency.”
In order to pay for goods and services procured outside of Belize in a foreign
currency, a foreign exchange permit must be obtained from an authorized dealer
or directly from the Central Bank of Belize.
The permission of the Central Bank of Belize is also required to secure a loan
from outside Belize that involves a foreign currency, and also to service repayment
of foreign debt. According to the Belize Investment Guide, “the necessary
approvals can be easily secured in the case of genuine, approved enterprises.”
Foreign investors are required to register any investments made in Belize with
the Central Bank in order to facilitate the repatriation of profits, dividends,
etc. Officially, no person, other than authorized dealers and authorized depositories,
may retain any foreign currency in their possession without the consent of the
Central Bank of Belize. In practice, however, many local businesses accept payment
in U.S. currency.
Foreign exchange controls can be summarized by the following rules and guidelines:
Residents and non-residents need permission to buy foreign currency for whatever
purpose;
Authorized dealers (i.e., commercial banks) are allowed to sell foreign currency
up to US$2,500 for private travel and up to US$10,000 for business travel per
calendar year; requests in excess of these amounts must be approved by the Central
Bank of Belize;
Exporters are required to register their exports with the Central Bank, guaranteeing
delivery of their foreign exchange earnings;
Authorized dealers may authorize payments for imports, where goods are paid
for through letters of credit or bank collection. They may also authorize payments
for imports against copies of invoices and customs entries, where the documents
show that the goods were obtained on credit;
Belizean residents, who wish to borrow abroad and where debt service will be
in hard currencies, must apply to the Central Bank of Belize for permission
to do so.
Banks and Banking in Belize
Belize has five commercial banks, not including offshore banks. Three are based
in Belize – Alliance Bank, Belize Bank and Atlantic Bank — and two,
First Caribbean Bank(formerly Barclays) and ScotiaBank, are large multinational
banks with branches in Belize. The local banks are small, about the size of
a small-town local bank or savings and loan in the U.S. Belize also has several
credit unions and small mortgage lending institutions.
Most expats find that banking is a little different in Belize. In most cases,
you can’t just sashay in to your local bank office and open an account.
You usually will be asked for references, including a letter from your former
bank. There is no standard format for this reference letter, but it should state
something along these lines: “Mr. Jones is currently a customer of our
bank and has maintained a satisfactory banking relationship here since 1985.
His savings, time and demand deposit accounts with us current total about US$150,000.”
The letter should be on the institution’s letterhead and signed by an
officer.
Commercial banks in most cases also require that you have official residency
status of some sort before you can open banks (the offshore banks in Belize
are just the opposite – you can’t be a citizen or resident and bank
there.)
Banking hours are shorter in Belize, typically only until 1 or 2 p.m. most days,
and in other cases banks close for lunch. Many bank offices have modern conveniences
such as ATM machines, but they may be out of order as often as they are working,
and nearly all (Barclays/First Caribbean is the current exception) accept only
ATM cards issued in Belize. At present, some expats living in Northern Belize
cross over into Mexico where they can use their American-issued ATM cards, though
they get funds in pesos. This situation with ATMs may be changing soon –
look for ATM machines in tourist areas that accept foreign ATM cards.
While bank personnel in Belize are usually very friendly – this is Belize,
after all – you can’t always say the same about bank policies, especially
for loans. Loan interest rates are high. Even as the U.S. prime rate was at
4%, Belize banks were getting 14% to 18% or more on business loans and even
higher on some personal loans. And the hidden fees and charges can add several
percentage points to the loan interest. Modern consumer protection laws haven’t
all made it to Belize yet.
In November 2003, the Belize Central Bank, concerned that the loan to deposit
ratio at Belize banks was approaching 98%, told member banks to reduce the number
of new loans or to stop making new loans entirely until the ratio improved.
Here are the basic facts, including contact information for the main offices,
about each bank in Belize:
Alliance Bank of Belize is the newest of the commercial banks
in Belize. It has offices in Belize City, Big Creek and San Pedro. It is associated
with Glenn D. Godfrey who also operates Provident Bank, an offshore bank. Main
Office: 106 Princess Margaret Drive, Belize City; tel.: 501-223-6783, fax 223-6785.
www.alliancebank.bz
Belize Bank traces its history back to 1902 when it was founded
as the Bank of British Honduras. It is owned by Carlisle Holdings Ltd., (NASDAQ:
CLHL, London: CLH), an billion dollar-plus (revenue) outsourcing company with
cleaning and support operations in Britain and the U.S. Carlisle also held a
majority interest in Belize Telecommunications, Ltd. which in late 2003 it announced
it would sell to a company based in St. Thomas in the U.S. Virgin Islands. Carlisle
is 75%-owned by chairman Lord Michael Ashcroft, a British billionaire and Conservative
party officer who holds dual citizenship in the UK and Belize. Belize Bank bills
itself as the largest commercial bank in Belize, with a 46% share of deposits
and 48% share of loans in Belize. It has 12 offices around the country —
in Corozal Town, the Corozal Free Zone, Orange Walk Town, International Airport,
Belize City (2), Belmopan, San Ignacio, San Pedro, Dangriga, Big Creek and Punta
Gorda. Belize Bank has assets of more than US$250 million and had operating
income of nearly US$25 million in fiscal 2003. Main office: 60 Market Square,
Belize City; tel. 501-227-7132, fax 227-2712; www.belizebank.com
Belize Bank also has an international banking division.
Atlantic Bank was founded in 1971. It is majority owned by
Sociedad Nacional de Inversiones, S.A., a Honduran company, along with some
individual stockholders in Belize and Honduras. Atlantic Bank, with assets of
around US$100 million, has 9 offices in Belize — in Corozal, the Corozal
Free Zone, Belize City (2), International Airport, Caye Caulker, San Pedro,
Placencia and San Ignacio. Main office: Atlantic Building, Freetown Road; tel.
501-223-4123, fax 223-3907; www.atlabank.com
Atlantic Bank’s international banking operation is Atlantic International
Bank.
First Caribbean International Bank (formerly Barclays) was
formed in 2003 by the merger of the Caribbean operations of Barclays, the giant
U.K-based financial service firm, and those of another large bank, Canadian
Imperial Bank of Commerce (CIBC). Operations in 15 Caribbean countries including
Belize are being rebranded as First Caribbean International Bank. First Caribbean
has assets of around US$10 billion. In Belize, First Caribbean has 5 offices,
in Belmopan, Belize City (3) and Dangriga. Main office in Belize: Albert Street,
Belize City; tel. 501-227-7129, fax 227-8572; www.firstcaribbean.com
ScotiaBank, formerly Bank of Nova Scotia, is a large Canadian
bank with operations in the Caribbean, Latin America and Asia and with assets
of more than US$300 billion. In Belize, it has offices in Corozal Town, Orange
Walk Town, Belize City (2) and Dangriga. Main Belize office: Albert Street,
Belize City, tel. 501-227-7027, fax 227-7416; www.scotiabank.com
Belize Bank has twelve offices in Belize; Atlantic, eight; ScotiaBank, six;
First Caribbean, four; Alliance Bank, three. Bank offices typically are open
8:30 a.m. to 2:30 p.m. Monday-Thursday and 8 a.m. to 4 p.m. on Friday.
Banks in Belize have ATMs at many of their branches. However, as of this writing
only Belize Bank ATMs -- of which there are 10 around the country -- accept
ATM cards issued outside Belize -- they must be on the PLUS or CIRRUS networks.
First Caribbean ATMs also (usually) accept ATM cards issued outside of Belize.
Even if you find a bank ATM that takes your card, your PIN number may not work.
You can also usually get a cash advance on your Visa or MasterCard bank card
by swiping it at the ATMs of any of the banks in Belize.
Offshore Banks
In addition to commercial banks in Belize serving local customers, Belize has
developed a small but growing community of offshore (or international banks
as they like to be called.) banks. These offshore banks were authorized by the
Banks and Financial Institutions Act, 1995, and the introduction of the Offshore
Banking Act, 1996, and the Money Laundering (Prevention) Act, 1996. By law they
cannot serve customers who are citizens of or legal residents of Belize. The
1995 legislation defines an offshore banking as “receiving, borrowing
or taking up foreign money exclusively from non-residents at interest or otherwise
on current account, savings account, term deposit or other similar account and
which according and subject to arrangement is repayable on the check, draft,
order, authority or similar instrument of the customer, and investing the foreign
money so received by lending, giving credit or otherwise exclusively to non-residents;
or carrying on exclusively with non-residents such other activities as are customarily
related or ancillary to offshore banking.”
There are two categories of Belize offshore banks: “A” Class - Unrestricted
and “B” Class - Restricted.
“A” Class – Unrestricted
The holder of an “A” Class offshore banking license needs to establish,
maintain, and operate a business office in Belize. It is permitted to transact
offshore banking business through its business office in Belize without restrictions
on that business. Annual license fee: US$20,000. Authorized and paid up capital
of at least US$3 million must be maintained if the license is for a local company,
or US$25 million in the case of a foreign bank.
“B” Class - Restricted
A holder of a “B” Class offshore banking license also needs to establish,
maintain, and operate a business office in Belize, but it is limited to transacting
only such offshore banking business as is specified in its license. “B”
Class offshore banks cannot solicit or accept deposits from the general public,
and cannot provide any current deposits or checking accounts to depositors.
Annual license fee: US$15,000. Authorized and paid up capital of not less than
US $1,000,000 must be maintained if the license is for a local company, or US
$15,000,000 in the case of a foreign bank.
Several offshore Class A banks are in operation in Belize. These banks are regulated
by the Belize Central Bank, have physical offices in Belize and offer various
services including international bankcards and demand, savings and time deposit
accounts. Accounts maintained with these banks are not subject to local taxes
or exchange control restrictions. International banks tout their privacy for
their customers, although if the Belize courts find that funds in the banks
are proceeds of crime the banks are required to release the identity of the
account owner. Funds are transferred into and out of Belize in foreign currencies
with no conversion to Belize dollars taking place. However, these banks are
prohibited from doing business with Belize citizens or official residents. Here’s
information on the larger offshore banks in Belize:
Atlantic International Bank: Owned by Atlantic Bank, this bank
offers demand deposit accounts with a minimum of US$1,000, personal savings
accounts paying around 2% interest, time deposits with a minimum of US$20,000,
credit cards and investment/brokerage accounts. Other services include offshore
trust services, establishing International Business Companies (IBCs). Main Office:
Cleghorn St. & Freetown Rd., Belize City; tel. 501 223-0681, fax 223-3528;
e-mail services@atlanticibl.com www.atlanticibl.com
Provident Bank and Trust: This bank, with an office in Belize
City, is associated with Glenn D. Godfrey, a prominent and powerful attorney
in Belize, and his companies. Established in 1998, it says it the largest international
(offshore) bank in Belize, with assets of US$93 million in 2001 and claims that
it controls 80% of the international banking business in Belize. Demand deposits
may be opened with a minimum of U$1,000, savings accounts with US$5,000 and
time deposits with a minimum of US$25,000. The bank also offers on-line banking,
credit cards (interest rate of 1.5% per month on balances) and other services.
Main Office: 35 Barrack Road, Belize City; tel. 501-223-5698, fax 223-0368;
e-mail: services@providentbank.bz www.providentbelize.com