Photo Credit: Financial Services Commission
For Part 1 of this story, see here.
By Aaron Humes:
How does it work?
A beneficial owner is a person who ultimately owns or controls a legal entity or interest, even if their name is not on the official paperwork. As in the case of Good Lee Limited, a lack of beneficial ownership transparency allows the real person or persons behind a company to remain in the shadows.
In Belize, as long as the beneficial owner has a registered local agent, their identity can remain cloaked – known only to their agent, which is usually a law firm or a financial services company. The Financial Intelligence Unit (FIU) advises agents: “If you are a financial entity, a securities dealer, a life insurance company, broker or independent agent, or a money services business, you have to take reasonable measures to obtain beneficial ownership information about entities in certain circumstances.”
The FIU says agents must ascertain “the name, address and occupation of all the individuals that own or control, directly or not, 10 [percent] or more of the entity.” For corporations, “beneficial ownership information also includes the name and occupation of all the corporation’s directors.”
The GFI report says the requirement of registered agents “ensures a higher level of accuracy and integrity in the data collected,” while acknowledging “it also introduces a dependency on these agents’ diligence and integrity. Any lapses in their verification processes could lead to gaps in the registry’s completeness and reliability.”
Far from the former $25 fee for requesting business records via email, an application fee of US $500 for individuals and US $1,000 for entities is now required to even request beneficial ownership information. Vasquez said such financial barriers could deter legitimate inquiries.
According to Amaya, one rationale behind the shift to the online system BOR was to combat corporate and identity theft. She said Deputy Registrar Santiago Gonzalez, in an interview with her, noted instances in which individuals had stolen Social Security numbers and other identification for fraudulent purposes. However, he clarified that no fraud allegations have been made against members of the press.
The Belize Bar Association has reportedly voiced concerns privately but is cautious about publicly challenging the government. In December 2022, Belizean journalists, recognizing the urgent need for reform, committed to presenting a united front by drafting a letter to the Prime Minister, emphasizing their collective stance on elevating the standards of corporate transparency. In following up with Amaya and Vasquez for this story, there have been no substantial changes to Belizean’s beneficial ownership laws to date.
“Never truly know.”
A May 2023 GFI factsheet reviewing the Brads/Good Lee case noted that “… three of its directors are companies registered in St. Lucia and Dominica; neither jurisdiction has publicly available information on beneficial owners. Because the beneficial owner(s) of BGGL are unknown, the Belizean government never truly knew with whom they were doing business, presenting the potential for fraud as well as conflicts of interest.”
Non-compliance with beneficial ownership obligations can result in significant fines – up to $100,000 for companies. It is unclear whether anyone has ever been fined for violating Belize’s beneficial ownership rules.
To this day, the beneficial owners of Good Lee Limited remain anonymous – at least to the Belizean public. And, because St. Lucia operates under similarly opaque beneficial ownership rules, their identities are unlikely to be revealed in the foreseeable future.
But as long as the Government was getting its money, what was the harm to Belize?
GFI consultant Katherin Alfonso said the public in general, and journalists in particular, have a right to review beneficial ownership details: “The Companies Registry is important to be open to everyone, because you are doing business with people, you have clients, someone wants to hire a Belizean company – they would like to have the information of the company beforehand, they will need to do their due diligence so that this is something for improvement of the country from an economic perspective,” Alfonso said.
Open registries, she added, identify businesses that may have owners or beneficiaries with criminal backgrounds and help journalists identify cases of corruption – which she noted do not typically emerge from the authorities – the Government, police, and other enforcement agencies.
The question still to be answered is: Will Governments, present and future, be held to account for whom they choose to do business with? The answer is important to a nation seeking to eliminate corruption and place all who live and work in it on a level playing field.
This article was made possible through the support of Global Financial Integrity, a Washington, D.C.-based think tank focused on illicit financial flows, corruption, illicit trade, and money laundering, and was facilitated by the Belize Network of NGOs. The views and opinions expressed in this article are those of the author and do not necessarily reflect those of the supporting organizations or their partners.
The post Perfect Secrecy: Laws Keep People in The Dark About Businesses Operating in Belize (Part two of two) appeared first on Belize News and Opinion on www.breakingbelizenews.com.
