Countries/Jurisdictions of Primary Concern - St. Kitts and Nevis
St. Kitts and Nevis (SKN) is a federation composed of two islands in the Eastern Caribbean. As a federation, the AML/CFT and offshore legislation covers both St. Kitts and Nevis; however, each island has the authority to organize its own financial structure. With most of the offshore financial activity concentrated in Nevis, it has independently developed its own offshore legislation.
Due to the high volume of narcotics trafficking around the islands, Saint Kitts and Nevis remains susceptible to corruption and money laundering. The growth of its offshore sector coupled with unusually strong secrecy laws also remains problematic. The economic citizenship program is inadequately regulated, which contributes further to the federation’s money laundering vulnerabilities.
The Eastern Caribbean Central Bank (ECCB) has direct responsibility for regulating and supervising the entire domestic sector of SKN and the offshore banks in Nevis, and for making recommendations regarding approval of offshore banking licenses. SKN’s monetary authority is the ECCB, and its currency is the East Caribbean dollar, used by eight of the nine ECCB jurisdictions. By law, all offshore banks are required to have a physical presence in the federation; shell banks are not permitted. There remains a limited amount of information on the exact number of financial entities in the federation. Internet gaming entities must apply for a license as an international business company (IBC).
Nevis can form an IBC in less than 24 hours, and bearer shares are allowed, though “discouraged.” Bearer shares are authorized if the bearer share certificates are retained in the protected custody of persons or financial institutions authorized by the Minister of Finance. Specific identifying information must be maintained on bearer certificates, including the name and address of the bearer as well as the certificate’s beneficial owner.
For additional information focusing on terrorist financing, please refer to the Department of State’s Country Reports on Terrorism, which can be found at: http://www.state.gov/j/ct/rls/crt/
DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN THE U.S.; OR ILLEGAL DRUG SALES THAT OTHERWISE SIGNIFICANTLY AFFECT THE U.S.: NO
CRIMINALIZATION OF MONEY LAUNDERING:
“All serious crimes” approach or “list” approach to predicate crimes: All serious crimes
Are legal persons covered: criminally: YES civilly: YES
KNOW-YOUR-CUSTOMER (KYC) RULES:
Enhanced due diligence procedures for PEPs: Foreign: YES Domestic: YES
KYC covered entities: Money brokers, exchanges, and lenders; charities and other non-profit organizations (NPOs); pawnshops, jewelers, and dealers of precious metals and stones; banks (domestic and offshore); real estate businesses; insurance companies; credit unions and building societies; money transmission services; venture risk capital firms; accountants; casinos; trust businesses; business corporations; and lawyers
Number of STRs received and time frame: 117: January 1 – November 15, 2013
Number of CTRs received and time frame: Not applicable
STR covered entities: Money brokers, exchanges, and lenders; charities and other NPOs; pawnshops, jewelers, and dealers of precious metals and stones; banks (domestic and offshore); real estate businesses; insurance companies; credit unions and building societies; money transmission services; venture risk capital firms; accountants; casinos; trust businesses; business corporations; and lawyers
MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:
Prosecutions: 1 in 2013
Convictions: 0 in 2013
RECORDS EXCHANGE MECHANISM:
With U.S.: MLAT: YES Other mechanism: YES
With other governments/jurisdictions: YES
SKN is a member of the Caribbean Financial Action Task Force (CFATF), a FATF-style regional body. Its most recent mutual evaluation can be found at: https://www.cfatf-gafic.org/index.php?option=com_docman&task=cat_view&gid=335&Itemid=418&lang=en
ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:
SKN’s legislation incorporates provisions for civil penalties; however, they are applied in an unreliable manner and do not apply to all pertinent financial sectors. The Government of St. Kitts and Nevis should ensure all relevant entities covered under the AML/CFT laws and regulations are subject to sanctions that are proportionate and dissuasive.
The economic citizenship program remains unchanged from 2012. An individual is eligible for citizenship with a $350,000 minimum investment in real estate. The government also created the Sugar Industry Diversification Foundation, after the closure of the federation’s sugar industry, as a special project approved for the purposes of citizenship by investment. To be eligible, an applicant must make a contribution ranging from $200,000 to $400,000 (based on the number of the applicant’s dependents). Applicants must make a source of funds declaration and provide evidence supporting the declaration. According to the government, the Ministry of Finance established a Citizenship Processing Unit to manage the screening and application process. There remains little information on the unit’s oversight effectiveness.
There are no guidelines to provide law enforcement the authority to conduct an investigation based on a foreign request for assistance.
Financial supervision in Nevis remains problematic because of anonymous accounts, secrecy laws, and a general lack of transparency of beneficial ownership of legal entities. The ambiguous regulatory framework regarding customer due diligence makes Nevis a desirable location for criminals to conceal proceeds.
The government should work toward transparency and accountability in financial regulation. Specifically, SKN should determine more precisely the exact number of internet gaming companies present on the islands and provide the necessary oversight of these entities. The government should provide close supervision of its economic citizenship programs and openly report appropriate data.