As a result of the GFC and resulting consumer lending fallout, US Legislators decided to clamp down on 2nd tier lenders (and, in particular lenders of last resort such as pay day lenders).
When this happened the progressive International Offshore Financial Centre of Belize saw a business opportunity. The idea morphed into a plan which became Legislation. In short the Belize Offshore Industry Regulators had the foresight to realize that such a business model was never going to go away, that in particular US based business owners would be looking for a new domicile, that IBCs were likely to be used for such purposes and better they offer a Licensing regime to bring such businesses out into the open and thus attract the more serious players.
The legislation ie the INTERNATIONAL MONEY LENDING (SHORT TERM & UNSECURED SMALL LOANS) REGULATIONS, 2008 (a copy of which can be downloaded from this site: https://www.ifsc.gov.bz/legislation/ ) provides that:
- A regulated entity may make loans of not more than $5,000 per loan
- The loan cannot be secured against real estate, motor vehicles or “other tangible personal property”
- The loan must have an initial repayment period of not more than 1 year
- Such loans must be for household purposes and personal expenses only
- Loans can only be made to “consumers”
There are also provisions regarding pre-contractual disclosures. In particular in the Lenders website (or in the loan contract) it must be stated:
- That the loan is designed as a short term cash flow solution & not as a solution for long term financial needs
- Additional fees may accrue if the loan is refinanced
Other features include:
(i) A provision specifically providing that Belize law shall govern the loan regardless of where the Borrower is located
(ii) The identity of the borrower must be proven
(iii) The lender must satisfy the Regulator that at least 2 of its Management Level staff/team members have short term personal lending industry experience
(iv) The Lender must keep in Belize books & records relating to the loans (in hard or soft form)
(v) Not less than 70% of duties & activities relating to the Lenders business must be seen to be carried out from inside Belize (though these can be outsourced)
A Belize international money lending license requires you to form a Belize Company with paid up capital of not less than $US75,000. This amount can be increased by the BeIize FSC depending on your style of business model and your commercial/career background.
PROCEDURES TO FOLLOW WHEN APPLYING FOR A LICENSE FROM THE IFSC BELIZE:-
We will check if the desired name is available and reserve the name. The IBC Registry allows us to reserve the name for 10 days free of charge. Thereafter, we can reserve the name for 90 additional days at a cost of $30. (NOTE – it may take up to one week for the IFSC to give an answer).
(i) Authorized Share Capital.
The authorized share capital depends on the what type of license is desired. For this type of Company the authorized share capital must be not less than $75,000.
(ii) IBC Registry fees
The incorporation fee and annual renewal fee charged by the IBC registry (which is separate from IFSC fees) for a company with $US75k authorised capital is $1,000. The annual renewal payable to the IBC Registry is due January 1 every year, but we usually pay during the month of December before the due date.
(iii) Bearer shares strictly prohibited
All shares must be registered shares. Bearer shares are not permitted. The Memorandum and Articles of Association of the company must state that bearer shares are strictly prohibited.
(iv) Shareholders and directors
A shareholder may be a corporate entity, such as a company from another jurisdiction. However, that company must have physical persons as shareholders and directors. Any additional corporate layers are not allowed.
The company is required to have at least one director. (Trading in Securities and Foreign Exchange Services applicants are required to have two directors, one of which must be a resident of Belize.)
It is a requirement that every license holder keep a capital deposit in a bank in Belize as prescribed by the regulations. For example, a company that holds an International Money Lenders License is required to keep an unencumbered capital deposit of $75,000 in a bank in Belize.
After the bank receives the application form and other required documents, it takes two weeks for the bank to give its initial review. After we’ve addressed any issues raised in the review, it typically takes another two weeks for the account to be approved or declined.
Customer Due Diligence (CDD) requirement (for each beneficial owner/shareholder, director, officer and signatory):
- Photo Identification - Notarized color copy of passport. Only the pages that show identification information, photograph and signature are required.
- References – An original reference letter is required as regards the beneficial owners/shareholders, directors, and signatories to the account. The reference letter should be from a bank (preferred), a practicing attorney or a licensed accountant. References should be recent (not older than three months), prepared with official letterhead, and should indicate the following:
(a) a period of relationship for at least (2) years;
(b) type of relationship conducted;
(c) status of relationship;
(d) clear contact details of the person who signs the letter.
(e) Confirmation of Address – A utility bill issued within the past three months with complete residential address. A P.O. Box address is not accepted.
Note, where documents are issued in any language other than English, they must be translated to English by a certified translator.
The application package must contain the following:
- The application form properly completed and certified, along with the non-refundable application fee of $1,000. The application form must be signed by a director or a shareholder/beneficial owner and the signature must be notarized.
- Certified biographical affidavit of beneficial owner, director/s, and signatories to the bank account. Also required is the certified biographical affidavit of the management of the company. In the case of corporate entities, the beneficial owners, directors and beneficial owners of that entity must also submit certified biographical affidavits.
- Know Your Client (KYC) documentation including:
i. Proof of ID (Notarized passport – same as bank CDD requirement)
ii. Proof of address (notarized recent utility bill)
iii. Curriculum Vitae – showing education and work experience
iv. Professional reference – from a lawyer or certified accountant (similar to the reference required for the bank account application)
v. Bank reference and bank statement (the bank reference must be from a bank where the individual has done business for more than two years.)
vi. World Check report – (we will provide this report)
- Business Plan – Detailed business plan including a three-year financial projection, together with diagram illustrating the company’s corporate structure.
- Detailed Anti-money laundering compliance, Complaints and Internal Control policies and procedures.
- Corporate documents (same as those mentioned in section 2. Company Structure above). As registered agent, we provide a notarized set of copies which we then submit along with the application to IFSC.
- Proposed website name that will be used once the licence is approved.
- Name of external auditor who will prepare the audited financial statements on an annual basis.
- Certificate of Qualification of Directors and Management – At least one person must possess the expertise relevant to the type of licence being sought.
- Letter from either the Director, Shareholder or Beneficial owner of the applicant company indicating awareness of the following:
- That a licensee should not offer services to residents of a country whose laws require such a licence prior to engagement of such services.
- The Standard Conditions attached to the type of licence.
- That the Memorandum and Articles of Association of the company will not be amended to provide for the issuance of bearer shares.
IFSC Evaluation process
In processing applications, the IFSC will conduct its own due diligence of shareholders/beneficial owners, directors and management and will evaluate and assess the following:
- The fitness and probity of each shareholder, director and management
- The viability of the business plan
- The AML/CFT Compliance Policy and Procedures to ensure compliance with the respective law and regulation
- The Complaints and Internal Policies and Procedures to ensure that they are detailed and address all pertinent areas.
It may take up to three months for the IFSC to review the application. At this point, the IFSC may need further clarification of information or request additional information. Once all the information is submitted, the application will be evaluated and it will be determined whether the licence is approved or denied.
Approval of the application
Once the application is approved, a letter will be sent to the Registered Agent requesting payment of the licensing fees and requesting that the company provide the bank confirmation letter. Upon evidence to this effect, the license certificate will be prepared and issued.
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