Belize -- Travel Rule Implementation Regulatory Overview

Belize has made progress in bringing Virtual Asset Service Providers (VASPs) under its Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) framework, but significant gaps remain, particularly concerning the full implementation of the FATF Travel Rule.

The primary source for this information is the FATF Mutual Evaluation Report (MER) of Belize, published in May 2023, which assessed the period up to late 2022.

Here's a breakdown of the status:

Status of FATF Travel Rule Implementation in Belize

1. Adoption (Legal Framework):

• Yes, in principle, VASPs are covered by AML/CFT laws. Belize has amended its primary AML/CFT legislation to include VASPs as reporting entities.
• Specific Legislation:
  • Money Laundering and Terrorism (Prevention) Act (MLTPA): Amended to designate VASPs as reporting entities subject to AML/CFT obligations.
  • International Financial Services Commission Act (IFSC Act) and relevant Regulations: Amended to bring VASPs under the scope of licensing and supervision by the International Financial Services Commission (IFSC).
• However, specific Travel Rule implementation guidance is not yet adopted. The FATF MER explicitly states that Belize has not yet issued specific guidance or regulations detailing how the Travel Rule should be implemented by VASPs.

2. Effective Date:

• The amendments to the MLTPA and IFSC Act to cover VASPs were put in place prior to the assessment period of the May 2023 FATF MER (i.e., before late 2022).
• There is no effective date for specific Travel Rule implementation guidance because such guidance has not yet been issued.

3. Threshold Amounts:

• No specific threshold amounts for the Travel Rule have been established in Belize.
• Since detailed regulations or guidance for the Travel Rule's implementation are absent, there are no prescribed values (like the FATF's recommended €1,000 equivalent) for when VASP-to-VASP data sharing is required for virtual asset transfers.
• General AML reporting thresholds for suspicious transactions would apply, but these are distinct from the Travel Rule.

4. Which VASPs Are Covered:

• VASPs, as broadly defined by the FATF (and presumably adopted into Belizean law via the MLTPA and IFSC Act), are covered as reporting entities. This typically includes entities that:
  • Exchange between virtual assets and fiat currencies.
  • Exchange between one or more forms of virtual assets.
  • Transfer virtual assets.
  • Safeguard virtual assets or instruments enabling control over virtual assets.
  • Participate in and provide financial services related to an issuer's offer and/or sale of a virtual asset.
• These entities are subject to licensing and supervision by the IFSC.

5. Technical Implementation Requirements:

• None specifically issued for the Travel Rule. The FATF MER highlights this as a major deficiency.
• VASPs are generally expected to comply with standard AML/CFT requirements such as customer due diligence (CDD), record-keeping, and suspicious transaction reporting (STR). However, the specific technical requirements for collecting, storing, and transmitting originator and beneficiary information for virtual asset transfers (as per the Travel Rule) have not been detailed.

6. Penalties for Non-Compliance:

• VASPs, as reporting entities, are subject to the general penalty provisions under the MLTPA and the IFSC Act for non-compliance with AML/CFT obligations.
• These penalties can include:
  • Administrative fines.
  • Suspension or revocation of licenses issued by the IFSC.
  • Potential criminal prosecution for severe breaches, especially those related to money laundering or terrorism financing offenses.
• FATF Concern: The MER noted that while the legal framework for penalties exists, the overall effectiveness of sanctions applied to reporting entities (including VASPs) for AML/CFT breaches has historically been low.
• Since the Travel Rule's specific implementation is not yet regulated, there are no penalties directly tied to its non-adherence, but failure to adhere to general AML/CFT requirements (e.g., inadequate CDD for a transaction that would fall under Travel Rule if implemented) would be subject to existing penalties.

Key Takeaways from FATF Mutual Evaluation Report (May 2023):

• FATF Rating: Belize was rated Partially Compliant for Recommendation 15 (Virtual Assets and VASPs), indicating significant deficiencies.
• Major Deficiency: The FATF specifically pointed out that "Belize has not yet issued specific guidance or regulations detailing the implementation of the Travel Rule for VASPs, including how to collect, store, and transmit required information."
• Recommendation: The FATF urged Belize to "issue guidance for VASPs on the implementation of the Travel Rule."

In summary, while Belize has brought VASPs under its AML/CFT regulatory umbrella, the critical step of issuing specific guidance and regulations for the implementation of the FATF Travel Rule, including thresholds and technical requirements, has not yet been taken.

References:

• FATF Website - Belize Country Page:

  • https://www.fatf-gafi.org/content/fatf-gafi/en/countries-regions/a-g/belize.html
  • Navigate to the "Mutual Evaluation Report (May 2023)" for the full details.

• Financial Intelligence Unit (FIU) Belize: (While not directly detailing Travel Rule, the FIU is the primary AML/CFT authority and would issue such guidance).

  • https://fiubelize.org/

• International Financial Services Commission (IFSC) Belize: (The regulator for licensed VASPs).

  • https://ifsc.gov.bz/

Belize will need to address these deficiencies to improve its compliance with FATF Recommendation 15.