Thursday, August 27th 2015. BMG: Heritage Bank International, like Atlantic International Bank before it, has received word that their corresponding ties with Bank of America (BOA) is also being terminated as part of the bank’s “de-risking” process.
Heritage International is just the latest financial institution in Belize to face such consequences as a result of international financial institutions cutting ties with perceived high-risk jurisdictions. Interestingly though, several weeks ago after Atlantic International had its ties cut, Central Bank Governor Glen Ysaguirre denied reports that Heritage or any other institution would be facing the same outcome.
Ysaguirre, at the time, conceded that financial institutions are under constant review and said that while he could not say if any other banks were at risk to lose their corresponding ties, there is always a possibility. He did add, though, that some banks in the country have more than one corresponding bank that they do business with, which would lessen the blow of losing one.
Belize Bank was the first to have its corresponding ties cut as a measure of international financial institutions “de-risking”. After Belize Bank’s corresponding ties were cut clients were unable to wire money to the US and the Central Bank provided “nesting” services by offering its own corresponding services so clients would still be able to wire money.
Some banking insiders were concerned that the Central Bank offering such nesting services could have adverse effects on Belize. While the US legislation governing these enhanced due diligence measures grants exception to foreign Central Banks, some have suggested that Belize’s Central Bank is increasing it’s risk factor by providing nesting accounts for a bank that is considered too risky to do business with.
Prime Minister Dean Barrow had met with BOA officials in April and, at the time, said he was assured that no other banks in Belize, onshore or offshore, would have their corresponding ties terminated. As it was explained to him, BOA was simply de-risking, a consequence of increased pressure on financial institutions in America and Europe to ensure that proceeds from money laundering does not make its way into legitimate accounts and also to ensure that citizens of those jurisdictions do not evade taxes.
In June, the Prime Minister also responded to a European Union (EU) blacklisting saying international players have been trying for a while to close in on smaller jurisdictions offering offshore services and said the latest blacklisting is just a continuation of the actions they have been taking. He also cryptically added that he has no doubt that sooner or later they would succeed in closing down smaller offshore sectors but said he wouldn’t be surprised to see it happen. He said, though, that Belize has been preparing for some time for any such eventuality.
With Atlantic International and Heritage International, both offshore banks, losing their corresponding ties in matter of months it certainly seems this may be the case if each bank cannot find a replacement international bank to provide corresponding services.