Bank of America announced on July 28 that it was suspending international wire transfers to and from banks in Belize.
According to its statement, Bank of America said it is exploring other options for transferring funds to Belize but didn’t provide details. The reason for the suspension of service, the bank said, was to comply with the regulations imposed on Caribbean and Central American regions by large U.S. and European banks, under pressure from the U.S. government. This process has ended Bank of American’s association with a number of Caribbean and Latin American banking institutions.
The move caught U.S. expats in Belize by surprise and threatened to derail several real estate closings that were awaiting wire transfers. Several foreigners said they planned to change banks but others said they believed that all U.S. banks would soon follow suit.
“It’s another example of the U.S. government and banking system restricting the flow of people’s hard-earned money,” said Wilbur Simmons, a U.S. citizen and real estate investor living in Belize.
Bank of America called its action part of a process of “de-risking”, which it described as reducing risk to its bank rating based on standards applied by the Caribbean Financial Action Task Force. If the rating of corresponding banks is good, the Bank of America said it would continue to work with them. But, if the rating is poor, then they will cancel existing agreements with that bank. The latter was apparently the case in Belize.
The de-risking process has serious ramifications for almost all banks in the world. The U.S. dollar is used in banking systems throughout the world and is the major currency for most international trade. At some point, money in the system may return to the United States. If the Justice Department decides that money handled by foreign banks is tainted, it can cut those banks from the banking system and fine the U.S. bank doing business with them.
The Caribbean Financial Action Task Force has created regulations for U.S. correspondent banks to control possible money laundering. Compliance to these regulations, however, is causing many banks in the region to lose their connection to the U.S. banking system.
It is also causing bank customers, like the U.S. expats living in Belize, financial headaches.
The U.S. Justice Department maintains that the action is not targeted at U.S. citizens living overseas.