Regulator IFSC

IFSC

IFSC – International Financial Services Commission, the financial regulator of Belize, under the supervision of the National Bank of Belize, applies to the offshore areas and is a favourite place of registration of brokers, than FSC (British Virgin Islands)

The regulation of the financial sector on Belize can be divided into two parts:

  • the banking sector is fully subject to the supervision of the National Bank of Belize;
  • non-banking sector (financial institutions, investment, insurance companies, brokers, etc.) falls under the jurisdiction of the IFSC.

This separation allows to differentiate the functions of state regulatory authorities, excluding conflicts of law. By analogy with the FSC fin.controller Belize is the only fully state-controlled, however, multiple preferences to legal entities and loyal to the conditions of registration make the jurisdiction very attractive to investors. However, among professional traders IFSC license is quoted lower than the Cypriot regulator CySEC, that is also attributable to offshore. One reason: the CySEC works by European standards, while IFSC prefers a middle ground, exercising discreet regulation of the financial activities of their wards.

The main tasks of the financial regulator IFSC:

  • positioning Belize as a financial services center, protection and strengthening of reputation of the country as an offshore jurisdiction. In other words, the creation of attractive conditions for brokers and financial companies for registration and financial activities;
  • implementation of regulation and control of providing the customers with quality financial services in international markets;
  • providing consultation to the state regarding the regulation of financial activities in the country, the development of techniques for the correct interaction between all participants of the financial market;
  • the collection, storage, dissemination of information on developments, innovations (both economic and legislative) in the financial services area.

Based on this list of features it is seen that the IFSC acts more like a subsidiary body for brokers and financial companies, than the hard controller controlling each step of the participants of financial relations. The implementation of the regulator’s functions do not imply any strict measures and restrictions (fines and a clear set of work rules), but there is no such important functions, as the fight against money laundering and protection of the rights of clients of brokerage firms (more precisely, these functions are still present, but the emphasis on them is not highlighted and there are just a small number of tools for their implementation).

All these functions are realized through the development of norms and standards in the country’s financial market, the supervision of compliance with the licences. Moreover, the initial licensing, the emphasis is on the fact that the license allows the broker to operate in Belize, and beyond, and only then licensing is needed for supervision. Licensed company are divided by the controller into several categories depending on the field they offer services for:

  • А – international commercial companies;
  • В – trust management;
  • C – international insurance;
  • D – offering services regarding investment schemes, mutual funds;
  • E – offering services in international asset protection;
  • F – securities trading;
  • G – international lending;
  • H – offering brokerage or consulting services;
  • I – offering services of international depositary;
  • J – trade in the currency markets;
  • K – money transfers;
  • L offering the services of a broker in the sphere of money turnover;
  • M – currency exchange;
  • N – offering services for payment processing;
  • O – accounting services.

Thus, to be able to provide customers with several different types of services a financial institution must have multiple licenses. Therefore, we strongly recommend that before you choose a broker to clarify whether he is entitled in principle to provide this service, and check through the list on the IFSC website the validity period.

To obtain IFSC license is relatively simple: just fill out the registration form, pay a nominal fee of 500 US dollars (information as of 01.07.2015) each year to make the membership payment in the amount of $ 2500-5000. The requirements for minimum capitalization are more than loyal in comparison with European and us regulators – 5 000 – 100 000 dollars (depending on the activity, the higher are the requirements for companies providing services in the sector of trading in currencies and securities). The minimum level of capital is a kind of deposit and is located in Bank of Belize and is constantly monitored by the IFSC. Also, as control measures licensees submit monthly financial reporting.

Among the measures in relation to infringers of rules of work, set by IFSC, we will highlight the following:

  • reprimand (not the most effective measure of exposure);
  • a fine of up to $ 5,000 (also more of a symbolic measure, given the small size of the fine and the lack of fork);
  • suspension of license for 6 months (one of several that licensee may have);
  • revocation of license (applied in exceptional cases).

The list of financial services suppliers is constantly updated on the website of the financial regulator, whose licenses were revoked or who were considered as unfair. But there is no possibility for the private client to get to know if the financial performance of the licensee deteriorated or not.

To sum up. IFSC is quite loyal financial regulator. Over the last few years there were no cases of imposing a fine, however, known several cases of fraud, when the brokers “were covered by the” license of IFSC, but was actually not. These companies are listed in the “black list” of the regulator and published on its website. Most brokers working with a large number of customers prefer to be linensed by the European or American regulators, however, for brokers of middle management or for young companies IFSC is the best option for the formation of a reputation of a responsible financial services provider.

Official IFSC website:  http://www.ifsc.gov.bz

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