Belize is a little piece of heaven located on the Eastern coast of Central America. With a population of only slightly above 300,000, Belize’s economy rests on agriculture, tourism, transport, and international trade. By 2000, over 15,000 international business companies registered in Belize to conduct their operations from there. This indicates that one of Belize’s goals was to become a top offshore business destination. Belize is very efficient and fast with registration processing. Under normal circumstances, it only takes them a few days to register a company. The country is flexible by not demanding any residential status on behalf of the company owner. Also, they recognize a company which lists only one director or shareholder, and there is no requirement to appoint a local director. In addition, the names of the directors are not entered into the registry and their identities are not revealed in public documents. Last but not the least, the country exempts the offshore companies from taxes. Many Forex companies used the convenient conditions to their benefit and relocated their companies to Belize.
IFSC and Belize
To ensure smooth business operations, the government appointed a body to regulate the international companies which headquartered in the country. The International Financial Securities Commission (IFSC) is the Belize agency for supervision of the financial market. It is based in Belize, Central America, and serves as an onshore and offshore regulator. IFSC dates back to 1999 when it was established and given legal power to license, supervise, and monitor all regulated companies and market participants. The IFSC works under the regulation of the Belize government. The IFSC was formed right after the new Belize government was established with the goal of developing offshore services. The adoption of the International Financial Securities Commission Act set the basis for promotion and protection of Belize as an international center for financial services. Belize is also devoted to eradicating money laundering as a member of the Caribbean Financial Action Task Force. Many international companies use the privilege to run their business offshore from Belize thanks to the IFSC license, which is easier to obtain than for example an FCA license (in the UK). Belize’s financial services are now very well-known attracting many investors and capital market participants. The IFCS is an independent government agency, which means that it works on its own but under the rules set out by the government. Entities and businesses which apply for the IFSC license have to meet certain criteria like the minimum capital requirements, qualified employees, etc.
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IFSC Role in Forex Regulation
Belize has become a popular destination for many Forex companies (and other financial services companies) because it is easy to establish a company in Belize without having to be a Belize resident. Belize Forex broker companies do not have to pay profit taxes in Belize for earnings made outside the country. These companies mainly have international customers anyway, and therefore, their expenses are reduced to the minimum. Belize laws also work in favor of many broker companies making it hard for government bodies to get to the core of who the owner or shareholders of companies are. Therefore, it is no surprise that many Forex brokers use the simple administration procedure, the tax haven, and secrecy laws to establish a business. The conditions for international companies are more than convenient.
Even if the conditions and requirements are less strict than for example in the EU, the Belize’s IFSC is taking its responsibilities serious imposing certain standards on the Forex companies, like:
- $100.000 of unimpaired capital must be documented by the registered Forex companies
- Separate account for clients’ funds and investments
- Monthly updates of customers on various information regarding any changes made and withdrawals of funds
- Submission of monthly reports to the IFSC including details on unimpaired capital and trade volumes
- Brokers under MiFD (EU financial securities directive), have to provide details on individual transactions as opposed to the IFSC regulated brokers
- Dealing with customer complaints within the scope of their power
We see that IFSC still works on similar principles like EU regulatory bodies and that they make an effort to protect the market from any kinds of malversation. What is more important than laws is the enforcement and implementation of laws. The Forex market is already highly decentralized and leaves a lot of room to malpractice, and traders and investors are always advised to double-check on the broker’s regulation and business conduct. Protection of consumers is not always fully enforced, especially not with offshore brokers who work under more liberal conditions. Nevertheless, many worldwide popular brokers have additionally registered with IFSC even though they are regulated by other regulatory bodies.
What Do IFSC Regulated Brokers Have to Offer?
When it comes to Belize Forex brokers, maybe it is for the best to check whether the broker also has other licenses (like a CySEC, ASIC, or FCA, etc.). It is always trickier to sign with an internationally licensed broker than with brokers with a clear-cut license. What traders might be concerned about are the flexible rules under which companies can be established and operated. Still, if we look at the IFSC requirements imposed on companies after registration, it indicates that brokers are closely monitored not leaving much space for any kind of misconduct. If you are looking for a Belize Forex broker, please make sure to conduct a thorough research. Also, your broker of choice should meet other criteria related to the trading services and tools. The best Forex brokers offer outstanding service packages which provide a flawless environment for trading.