Tonight there is concern in Belize's banking sector after Atlantic International Bank was named in a civil complaint by the United States Federal Trade Commission. As we reported, the FTC yesterday shut down Sanctuary Belize, which is described as "the largest overseas real estate investment scam the FTC has ever targeted." Sanctuary Belize is a 14,000 acre development which was set up as an elaborate scam by American principals. It took in over $100 million dollars from investors, but never delivered lots in what was supposed to become a luxury development in Southern Belize. Many US investors were duped and, now, the FTC has asked a US court to stop the scheme and recover hundreds of millions of dollars to compensate the jilted U.S. investors. And that means freezing the foreign accounts of Atlantic International Bank. We understand that even their payroll account was frozen - and there was some uncertainty today as to how the staff would be paid. The bank is headquartered at the foot of the Belcan Bridge in Belize City. They told us today they would issue a statement but none has been forthcoming.
Now, this isn't the Atlantic Bank we're all used to. This one operates in the offshore sector - meaning Belizeans can't have accounts there. It only offers banking services to foreign consumers, mostly Americans.
It is similar in name only to the domestic Atlantic Bank - which is currently the biggest bank in Belize. And what the bankers call "reputational risk" is an issue. That's because Atlantic domestic is one of the few banks which still has a correspondent banking relationship with the all-important Bank of New York Mellon. But now that Atlantic International has become the first foreign bank which the FTC has ever brought an action against, the Bank of New York may consider reviewing its arrangements with the domestic Atlantic Bank - which would spell crisis for Belize's banking sector. Atlantic Bank Domestic says that as of 2011, it has had no ownership ties with Atlantic International.
But there is still concern across the banking sector because of what bankers call "contamination" - which is that any suggestion of less than above board banking practices - can cause related parties to be tainted. This is a very real risk because the FTC says that Atlantic International Bank assisted and facilitated the Sanctuary Belize scam.
It's a cause for great concern throughout the banking sector - and today the Deputy Governor of the Central Bank Kareem Michael told us that the Central Bank is monitoring the situation very closely and is in touch with all parties including the FTC. It also caused many Americans who have accounts at the Bank to get jumpy because of frozen accounts.
So, a lot of uncertainty tonight - and, as we said, we're waiting for a comment from the Atlantic International Bank or the Central Bank. We'll keep monitoring the situation.
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