International Financial Services Commission
In recent times, Belize has constructed a financial system that has made the country a favorite among investors. The country’s reputation of incorporating new technological solutions and following global economic changes makes it extremely investor friendly. However, where there’s investment, there’s a risk of financial misconduct. Thus, the country needed to establish regulatory bodies that would prevent or minimize such behavior.
One of those bodies is the International Financial Services Commission (IFSC), which controls the Belize offshore industry. As the country has become a favorite location for online brokerages, they seem to be the IFSC’s primary interest area. The commission was established on May 3rd, 1999. The enactment of the International Financial Services Commission Act (IFSCA) is what preceded it. In 2000, the regulatory body was up and running at full functionality.
The current head of the IFSC also serves as the Financial Secretary of Belize. Below them is the Director General of the Commission, also serving as Chief Executive Officer of the Commission. The Director General also has the additional role of ex-officio Deputy Chairman of the Commission.
The IFSCA imposed multiple responsibilities on the IFSC, including the protection, promotion, and enhancement of Belize’s international financial services center role. However, looking at those three words, you’d get a gross oversimplification of what the International Financial Services Commission does. Let’s plunge a bit deeper and take a more detailed look at the commission’s functioning and goals.
IFSC’s Vision, Mission, and Core Values
The vision of the IFSC is to create a thriving financial services center where different entities can compete on even grounds. Naturally, that implies the entities act fairly, promoting and conducting good business practices.
The commission’s mission is to support the evolution of Belize’s sector of financial services. It strives to achieve that by product enhancement, professional skills, market expansion, and effective regulatory practices.
However, the IFSC also has a mandate which establishes its core functions. Those functions determine a large portion of how the watchdog acts. With our previous statement of protection, promotion, and enhancement, we have only scratched the surface, so we should go into more detail now.
- The promotion and development of Belize’s status as a center for international financial services.
- The protection and enhancement of the country’s reputation as an offshore financial center.
- Supervising and regulating international financial services
- The formulation of regulatory policies; Advising and assisting the government in regulating financial services.
- The collection, storage, and dissemination of factual and timely information regarding the services to parties it may concern.
To ensure it can carry out those functions smoothly, the IFSC works with other national and international departments and agencies. Internally, it cooperates with the Belize Tax Services, Central Bank, Attorney General’s Ministry, and the Financial Intelligence Unit. However, the IFSC also plays a role in preventing international money laundering and terrorist financing. As such, the commission facilitates Belize’s inclusion in the Organization of Economic Cooperation and Development and the Caribbean Financial Action Task Force.
International Financial Services Commission
and Online Brokers
While the IFSC covers a broad area of financial services, its presence is most apparent in the online brokerage world. Belize is a popular location for online brokers and analyzing the commission’s relationship with them provides clarification about its functions.
The first requirement the regulator has is an acceptable level of unimpaired capital. Initially, the limit was $100,000, which some deemed as quite low for financial institutions that handle potential millions in customer funds. The critics turned out to be correct, as the IFSC raised its limit recently, which now sits at $500,000.
Next, the commission requires the separation of company and customer funds. That prevents financial entities from draining customer accounts to keep their operations running. Thus, it’s a layer that prevents malicious firms from damaging customers. On top of that, companies must send monthly reports to their clients to verify the validity of their operations. Lastly, the firms need to secure a formal way for customers to submit complaints in cases of foul play.
Additionally, the companies IFSC watches over need to submit reports that include trade volumes and unimpaired capital. However, many have criticized the commission because they feel the reports do not need to be comprehensive. Additionally, the regulator has earned somewhat of a negative reputation as being too lenient.
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