The last update of the Central Bank of Belize says:
PRESS RELEASE
FOR IMMEDIATE RELEASE
Central Bank Update on Choice Bank Limited
Belize City, 17 July 2018: The Central Bank of Belize wishes to advise that pursuant to Sections 25 & 27
of the International Banking Act Chapter 267, Revised Edition 2011 of the Substantive Laws of Belize, a
bank’s licence is revoked by the Minister of Finance on the recommendation from the Central Bank. The
Prime Minister who currently holds the post of Minister of Finance has been involved from the onset and
continues to be apprised of the situation with Choice Bank Limited.
The Central Bank placed Choice Bank Limited under enhanced supervision in January 2018, after an
on-site examination raised concerns over the Choice Bank Limited’s governance and operations. The
Central Bank implemented time bound corrective actions but Choice Bank Limited remained noncompliant
in a number of instances. Choice Bank Limited’s prepaid card processor also reported that Choice Bank
Limited had failed to properly address AML/CFT compliance issues that dated back more than three years.
This resulted in the prepaid card processor’s suspension on 02 April 2018 (and eventual termination) of
services that supported Choice Bank Limited’s prepaid card business. The management of Choice Bank
Limited then claimed that this caused a run on the prepaid card balances of the bank and they reacted by
suspending customer withdrawal of deposits on 09 April 2018.
Even after the issuance of two sets of preventative measures by the Minister of Finance in May 2018 and
June 2018, both of which were aimed at preserving the assets of Choice Bank Limited and safeguarding the
interests of its customers and depositors, the Central Bank was dissatisfied with the level of compliance.
When Choice Bank Limited failed to comply with the preventative measures, the Central Bank conducted
an unannounced special on-site examination, which commenced on 25 June 2018. The results of the
examination confirmed that Choice Bank Limited was not acting in the best interest of depositors and
customers and Choice Bank Limited’s international banking license was revoked on 29 June 2018.
With the revocation of Choice Bank Limited’s international banking licence, the Central Bank appointed a
qualified liquidator in accordance with the laws of Belize. The current liquidator, Mr. Cedric Flowers and
his team have as a fundamental objective the marshalling of the bank’s assets and customers’ claims in
order to develop a schedule of payments in accordance with the law.
The matter is ongoing and sensitive. As the Central Bank continues with the implementation of actions in
accordance with the laws of Belize, former clients of Choice Bank Limited are asked to follow instructions
issued by the liquidator. The liquidator will oversee all Choice Bank Limited affairs moving forward and
any concerns should be directed to
[email protected]
The Central Bank of Belize’s primary mandate is to promote monetary and financial systems’ stability. The
framework for achieving this is embedded in the Substantive Laws of Belize. The prudential approach to
supervision of the financial system consists of regular on-site examinations as well as consistent off-site
surveillance through information and report gathering from those institutions which fall under the Bank’s
supervisory framework. The actions of the Central Bank, before and during the liquidation process of the
said international bank have been in accordance with these laws.
https://www.centralbank.org.bz/news
On the other hand, Ad Kees sent me a document were Choice Bank explain what happened, so I understand Choice's version is different than Central's version.
Choice Bank press release:
Press Release
For Immediate Release
Choice Bank Limited
(A licensee under the International Banking Act, Chapter 267, Laws of Belize)
June 27th, 2018
The Bank is a Belize international business company duly licensed under the International Banking
Act (“IBA”) to conduct international banking business in Belize and is regulated directly thereunder
by the Central Bank of Belize (“Central Bank”) and ultimately by the Minister responsible for
banks and banking (Minister of Finance).
The Bank has recently experienced a liquidity event which has caused it to restrict client payments
for a period of time. Subject to Central Bank of Belize and Minister of Finance approval for certain
actions, which has not been forthcoming, the Bank intends to re-commence customer payment
operations on about Junes 30th, 2018.
As of the end of December, 2017, as indicated in the Bank’s audited financial statements and further
evidenced in the quarterly financial statements published by the Central Bank of Belize, the Bank
held total deposit liabilities of US$203mn with cash due from banks in the sum of US$136mn.
Further, as of the end of December 2017, the Bank held total equity of US$26mn, exceeding the
minimum statutory required capital of US$3mn by US$23mn and maintained a risk weighted capital
adequacy ratio of 12.4%, in excess of the legal requirement of 10%.
In compliance with Central Bank of Belize requirements that the Bank shall maintain a minimum
aggregate holding of statutory approved liquid assets with a maturity of no more than one year,
which shall be at least twenty four percent (24%) of its total deposit liabilities, the Bank met and
exceeded its statutory approved liquid asset requirement of US$48mn by US$91mn as indicated in
the December 2017 Quarterly Financials, with an overall approved liquid asset ratio of
approximately 68%.
One of the primary areas of the Bank’s international banking business, is the operation and
management of an international payment system through the issuance and management of branded
pre-paid (pre-funded) payment cards, which system is used internationally (primarily in Europe and
North America) to effect payment of salaries and remuneration for employees and self-employed
contractors, including employees/contractors in the adult entertainment sector.
In connection therewith, on June 3, 2008, the Bank entered into a license agreement with
Mastercard International Inc. which permitted the Bank to issue Mastercard branded pre-paid
payment cards internationally.
As of the end of December 2017, the Bank had over 305,000 active Mastercard branded pre-paid
card holders with accumulated balances of approximately US$91.9M
At the beginning of this year approximately 71% of the Bank’s deposits were comprised of deposits
relating to the Mastercard prepaid card business, of which 41% of its deposits consisted of deposits
from clients engaged in the Adult Business.
Towards the end of 2017 and in the early part of 2018, Mastercard indicated to the Bank that it may
restrict the Bank from issuing Mastercard branded pre-paid payment cards (“Cards”) in jurisdictions
that the Bank had hitherto been permitted to issue to, including North America and Europe
(collectively “the Restricted Jurisdictions”). Funds deposited with the Bank to fund/load the
Bank’s prepaid cards business issued in the Restricted Jurisdictions represented more than 90% of
the Bank’s total prepaid card deposits and corresponding assets.
On January 17, 2018, the Central Bank issued a directive to the Bank requiring it to take steps to exit
from the “adult” space in the prepaid card business by the end of 2018. The Bank’s Adult business
had operated without any compliance or related issues since inception, the rationale for the Central
Bank directive is unknown by the Bank. As the Bank shares no correspondent Banks with any other
Belizean Banks the Adult business was not a threat to any other Bank within the jurisdiction.
In February 2018, Mastercard conducted a review of the Bank’s Mastercard-branded activities and in
pursuance of the Adult Space Directive, the Bank communicated such directive to Mastercard as
well as other relevant parties. In furtherance of this review, by letter dated March 15, 2018, despite
the Bank’s efforts to negotiate extensions of deadlines, Mastercard determined that the Bank would
no longer be permitted to issue or maintain Cards in the Restricted Jurisdictions, that it must not
newly issue or reissue any Cards and that as of the end of June, 2018, it must cease reloads of Cards.
MasterCard change of rules applying to Restricted Jurisdictions is not specific to Choice Bank.
During the period of the first quarter of 2018, particularly in the months of February and March,
2018, notwithstanding that there had been no public disclosure of Mastercard’s contemplations, the
Bank experienced abnormally large cumulative withdrawals of deposits from customers primarily in
the pre-paid card section of the Bank’s business signaling in the view of the Bank the onset of a
developing run on the Bank. In February, 2018, deposits fell by over 8% or US$17mn while in