Belize -- Sanctions Compliance Regulatory Overview

Belize, as an international financial services center and a member of the Caribbean Financial Action Task Force (CFATF), is committed to implementing international standards for Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF), including those related to virtual assets and sanctions compliance.

The primary regulatory framework for Virtual Asset Service Providers (VASPs) in Belize is the Virtual Assets and Initial Token Offerings Act, 2021 (VAITO Act), which came into effect in May 2022. This Act brings VASPs under the regulatory purview of the International Financial Services Commission (IFSC) and mandates compliance with AML/CTF obligations derived from international standards, particularly those of the Financial Action Task Force (FATF).

1. Belizean Legal Framework for Sanctions Compliance:

• Virtual Assets and Initial Token Offerings Act, 2021 (VAITO Act):

  • URL: While the specific official government gazette link can be hard to find directly, the Act is published by the Belize National Assembly and is available through legal databases or via the IFSC. A key source for the intent and implementation is usually the regulator's pronouncements.
  • Key Provisions:
    • Section 3: Defines "virtual asset" and "virtual asset service provider" (VASP), bringing crypto entities under regulation.
    • Section 19: Mandates that a VASP (and applicants) must comply with the requirements of the Money Laundering and Terrorism (Prevention) Act (MLTPA).
    • Section 20: Requires VASPs to establish and maintain adequate internal controls, risk management systems, and other procedures for compliance with AML/CTF obligations, including sanctions.
    • Section 21: Grants the IFSC powers to issue directives, guidelines, and codes of practice to VASPs regarding AML/CTF compliance.

• Money Laundering and Terrorism (Prevention) Act (MLTPA) [Revised Edition 2011 & subsequent amendments]:

  • URL: A consolidated version can be hard to link directly, but the Act is foundational.
  • Key Provisions:
    • Overall: This is Belize's principal AML/CTF legislation. It establishes the framework for identifying, reporting, and preventing money laundering and terrorist financing.
    • Terrorism Financing: Crucially, it criminalizes terrorism financing and provides the legal basis for implementing UN Security Council Resolutions (UNSCRs) related to the freezing of assets of designated persons and entities.
    • Obliged Entities: While VASPs are specifically brought under its ambit by the VAITO Act, the MLTPA outlines the general duties for all financial institutions regarding suspicious transaction reporting, customer due diligence, and record-keeping.

• Financial Intelligence Unit (FIU) Belize:

  • The FIU is the central agency responsible for receiving, analyzing, and disseminating suspicious transaction reports (STRs) and other financial information to combat ML/TF. It also provides guidance and oversight for reporting entities.
  • URL: FIU Belize Website

2. OFAC/EU/UN Sanctions Compliance Requirements for VASPs:

• UN Sanctions Compliance:

  • Direct Obligation: Belize, as a UN member state, is legally bound to implement UNSCRs, particularly those related to terrorism financing (e.g., UNSCRs 1267, 1373, 1988) and other proliferation financing.
  • Mechanism: The MLTPA and related regulations provide the legal mechanism for giving effect to these resolutions in Belizean law, including the freezing of assets of individuals and entities designated by the UN Security Council.
  • VASP Requirement: VASPs in Belize are legally required to screen their customers and transactions against the UN Security Council Consolidated List (individuals and entities associated with ISIL (Da'esh) and Al-Qaida) and the 1988 Sanctions List (Taliban), as well as any other persons or entities designated by the FIU or competent authority under the MLTPA in line with UNSCRs.

• OFAC/EU Sanctions Compliance (Indirect but Critical):

  • Extraterritorial Reach: While Belizean law does not directly enforce OFAC (U.S. Department of the Treasury's Office of Foreign Assets Control) or EU sanctions lists as its own, compliance is a practical necessity for any VASP operating globally.
  • Correspondent Banking/Interoperability: Most fiat on/off-ramps for crypto, and many global blockchain service providers, are subject to U.S. or EU jurisdiction. Failure to comply with OFAC or EU sanctions by a Belizean VASP could lead to:
    • Loss of correspondent banking relationships.
    • Inability to access global crypto exchanges or liquidity providers.
    • Reputational damage and blacklisting by international partners.
    • Potential secondary sanctions if dealing with U.S. or EU designated persons/entities.
  • VASP Best Practice: Therefore, reputable Belizean VASPs adopt a best practice approach of screening against the OFAC Specially Designated Nationals (SDN) and Blocked Persons List and the EU Consolidated List of Persons, Groups and Entities Subject to EU Financial Sanctions in addition to the UN lists.

3. Sanctioned Entity Screening Obligations:

Belizean VASPs are legally required to:

• Implement a Risk-Based Approach: Develop and maintain a comprehensive AML/CTF program, including sanctions screening, proportional to their identified risks.
• Customer Due Diligence (CDD) / Enhanced Due Diligence (EDD): Conduct thorough CDD on all customers, identifying beneficial owners. EDD is required for higher-risk customers and transactions.
• Screening Against Sanctions Lists:
  • Mandatory: Screen all customers (new and existing) and relevant parties to transactions against the UN Security Council Consolidated List.
  • Highly Recommended (Industry Best Practice/Practical Necessity): Screen against the OFAC SDN List and the EU Consolidated List, given the global nature of virtual asset transactions and the international financial system.
• Ongoing Monitoring: Continuously monitor customer accounts and transactions for red flags, including potential links to sanctioned entities or high-risk jurisdictions.
• Freezing of Assets: Immediately freeze any virtual assets (or fiat currency held by the VASP) belonging to a sanctioned person or entity identified on a UN sanctions list (or any other list as directed by the FIU/IFSC) and report the freeze to the FIU without delay.

4. Geographic Restrictions:

Belizean law does not impose blanket geographic restrictions on where VASPs can operate, beyond those arising from UN sanctions. However, VASPs are expected to:

• Risk Assessment: Conduct thorough jurisdictional risk assessments.
• FATF High-Risk Jurisdictions: Pay particular attention to countries identified by the FATF as "High-Risk Jurisdictions subject to a Call for Action" (e.g., North Korea, Iran) or "Jurisdictions under Increased Monitoring" (FATF grey list). Transactions involving these countries should trigger enhanced due diligence.
• OFAC/EU Sanctioned Countries: Avoid facilitating transactions with, or offering services to, individuals or entities in comprehensively sanctioned jurisdictions (e.g., Cuba, Iran, North Korea, Syria, regions of Ukraine controlled by Russia, by OFAC standards) to prevent exposure to secondary sanctions.
• Internal Policies: Implement internal policies to restrict or prohibit services to certain high-risk jurisdictions based on their own risk appetite and international obligations.

5. Penalties for Violations:

Penalties for violations of AML/CTF and sanctions compliance obligations in Belize are significant and are outlined in both the VAITO Act and the MLTPA:

• Virtual Assets and Initial Token Offerings Act, 2021:

  • Section 36: Imposes administrative fines on VASPs for non-compliance with the Act or conditions of their license.
  • Section 37: Criminalizes operating as a VASP without a license, with penalties including fines (e.g., up to BZ$100,000 for an individual, BZ$500,000 for a body corporate) and/or imprisonment (up to 5 years).
  • Section 38: Specifies penalties for providing false information to the IFSC (fines up to BZ$50,000 or imprisonment up to 2 years).
  • License Revocation: The IFSC also has the power to suspend or revoke a VASP's license for serious or persistent non-compliance.

• Money Laundering and Terrorism (Prevention) Act:

  • Fines and Imprisonment: Provides for substantial fines and terms of imprisonment for offenses related to money laundering, terrorist financing, and non-compliance with reporting or due diligence obligations. These can range from tens of thousands to hundreds of thousands of Belize dollars and several years of imprisonment, particularly for senior management and beneficial owners.
  • Asset Forfeiture: Assets involved in or derived from criminal activities, including ML/TF, are subject to forfeiture.

6. Country-Specific Sanctions Lists that Apply to Crypto:

Belize itself does not maintain a unique "crypto-specific" sanctions list. Its sanctions regime is integrated into its broader AML/CTF framework and is primarily driven by:

• UN Security Council Resolutions: Belize domestically implements sanctions imposed by the UN Security Council (e.g., against individuals and entities linked to terrorism or proliferation). These lists are generally published and updated by the UN and then reflected in domestic directives or legislation.
• No Belizean Crypto-Specific List: There is no separate Belizean list that specifically targets crypto addresses or individuals solely for crypto-related offenses. Sanctioned individuals or entities, regardless of how they transact, would fall under the general sanctions regime.

Legal References with URLs:

• International Financial Services Commission (IFSC) Belize: This is the primary regulator for VASPs. Their website often contains guidance and information on regulated entities.
  • URL: IFSC Belize Official Website
• Financial Intelligence Unit (FIU) Belize: Provides AML/CTF guidance and handles STRs.
  • URL: FIU Belize Official Website
• UN Security Council Consolidated List:
  • URL: UN Sanctions Committee Website
• OFAC Specially Designated Nationals (SDN) List:
  • URL: OFAC SDN List
• EU Consolidated List of Persons, Groups and Entities Subject to EU Financial Sanctions:
  • URL: EU Sanctions Map (Consolidated List)
• FATF Recommendations: The global standard for AML/CTF, including for virtual assets.
  • URL: FATF Recommendations

Disclaimer: This information is for general informational purposes only and does not constitute legal advice. Cryptocurrency sanctions and regulations are complex and subject to change. It is essential for VASPs operating in Belize to seek independent legal counsel to ensure full compliance with all applicable laws and regulations.