On-shore VASP in Belize

Virtual Asset Services Act, 2023 (VASA)

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

Financial Intelligence Unit Act

Financial Intelligence Unit (FIU) of Belize

Role: The FIU is the central national agency responsible for receiving, analyzing, and disseminating suspicious transaction reports (STRs) to law enforcement agencies.

Identification and Verification:

Legal Persons/Arrangements (e.g., companies, trusts):

Identify and verify the identity of the beneficial owner(s) – any natural person(s) who ultimately owns or controls the customer, directly or indirectly, through more than 25% of the shares or voting rights, or otherwise exercises control over the entity.

Purpose and Intended Nature of Business Relationship: Understand the purpose and intended nature of the business relationship (e.g., why the customer wants to use the VASP's services, expected transaction volumes and types).

Source of Funds/Wealth: For higher-risk customers or transactions, VASPs must take reasonable measures to establish the source of funds or source of wealth.

Continuously monitor the business relationship and transactions to ensure they are consistent with the VASP's knowledge of the customer, their business, and risk profile.

Regularly update customer information, especially for high-risk customers.

Risk-Based Approach: VASPs must apply a risk-based approach to CDD, meaning that the intensity and nature of CDD measures should be commensurate with the money laundering and terrorism financing risks identified. This involves:

Simplified CDD (SCDD): For lower-risk situations, if permitted by regulations.

Enhanced CDD (ECDD): For higher-risk situations, such as customers from high-risk jurisdictions, Politically Exposed Persons (PEPs), or complex transactions. This includes obtaining additional information, increased frequency of monitoring, and requiring senior management approval for establishing or continuing relationships.

Belize's Virtual Assets Services Act, 2024 remains in force, but its security, operational resilience, and risk management sections are now supplemented and partially superseded by the Digital Asset Services Licensing Regulations, 2025, which imposes a new licensing framework that overrides earlier provisions.

International Financial Services Commission (Virtual Assets) Regulations, 2024

Application Process: Submission of a detailed application to the Financial Services Commission (FSC), formerly the IFSC.

Fit and Proper Test: Directors, senior management, and significant shareholders must undergo a "fit and proper" assessment, considering their competence, integrity, and financial soundness.

Minimum Capital Requirements: VASPs must meet prescribed minimum paid-up capital requirements, which are stipulated in the Regulations and vary depending on the services offered.

Business Plan: Submission of a comprehensive business plan detailing operations, organizational structure, internal controls, risk management framework, technology infrastructure, and security measures.

AML/CFT Compliance: Robust Anti-Money Laundering (AML) and Counter-Financing of Terrorism (CFT) policies and procedures must be in place, compliant with Belizean laws (e.g., Money Laundering and Terrorism (Prevention) Act) and international FATF standards. This includes customer due diligence (CDD), record-keeping, suspicious transaction reporting, and internal controls.

Risk Management Framework: Detailed policies for identifying, assessing, monitoring, and mitigating risks associated with virtual asset services, including technological, operational, cybersecurity, and market risks.

Corporate Governance: Establishment of sound corporate governance arrangements, including clear lines of responsibility, oversight by the board, and internal audit functions.

Information Technology (IT) & Cybersecurity: Implementation of robust IT systems and cybersecurity measures to protect virtual assets, client data, and operational integrity.

Separate Accounts: A licensed VASP providing custody services must hold client virtual assets in accounts separate from its own assets.

No Commingling: Client assets must not be commingled with the VASP's proprietary assets.

Trustee Capacity: The VASP must hold client virtual assets in trust or a similar fiduciary capacity, ensuring they are protected in the event of the VASP's insolvency or bankruptcy.

Record-Keeping: Detailed and accurate records of all client virtual assets must be maintained, clearly identifying ownership.

Financial Resources: VASPs are expected to maintain adequate financial resources, including sufficient capital, to cover operational risks and potential liabilities.

IFSC Discretion: The IFSC may, at its discretion, impose specific insurance or bonding requirements on individual licensees based on their business model, scale of operations, and risk profile.

Robust Security Measures: Licensed VASPs must implement stringent security measures to protect virtual assets from theft, loss, or unauthorized access. This includes cybersecurity protocols, cryptographic security, access controls, and data integrity.

The primary regulator for financial services in Belize, including licensing and oversight of investment businesses, securities dealing, and collective investment schemes, is now the Financial Services Commission (FSC), which replaced the International Financial Services Commission (IFSC).

Financial Intelligence Unit (FIU): Responsible for anti-money laundering (AML) and countering the financing of terrorism (CFT) supervision, including for entities dealing with virtual assets.

Belize does NOT have a general capital gains tax.

If crypto activities are deemed a "business" (e.g., frequent trading, operating an exchange, mining as a commercial venture) and are carried out by an entity subject to local taxation, then the profits would be subject to Business Tax and potentially Income Tax. However, if such a business is structured as a Belize International Business Company (IBC), its profits are exempt from all taxes in Belize.

Businesses (Companies & Sole Proprietors):

Corporate Income Tax: Companies incorporated in Belize are subject to corporate income tax on their taxable profits. The standard corporate income tax rate is 25%.

Services Related to Cryptocurrency: Services facilitating crypto transactions or provided by crypto businesses (e.g., exchange fees, platform fees, custodial services, advisory services related to crypto) would likely be considered taxable services and subject to the standard GST rate (currently 12.5%).

AML/CFT: While not directly tax, businesses dealing with virtual assets may also fall under Anti-Money Laundering/Countering the Financing of Terrorism (AML/CFT) regulations administered by the Financial Intelligence Unit (FIU) of Belize, requiring customer due diligence and suspicious transaction reporting.

As of the latest information, Belize does NOT have any specific tax legislation focused solely on cryptocurrency or virtual assets.

Belize offers conditional investment pathways, such as a $500,000 investment residency program, but does not grant a universal right to participate in any investment; foreign investors face restrictions including no private land ownership and mandatory registration with exchange controls.