St Kitts and Nevis (WINN): Does St. Kitts and Nevis have adequate legislation in place to regulate the financial sector and prevent money laundering?
The United States and the government of St. Kitts and Nevis strongly differ on the issue.
The federation is taking issue with the US Department of State’s 2017 International Control Strategy Report that deals with money laundering and financial crimes.
Its vulnerability assessment of St Kitts and Nevis’ financial sector on the matter of economic criminal activity is rubbing the Team Unity Administration the wrong way.
According to the report, the country’s Citizenship By Investment programme has been abused by foreigners for illegal purposes, particularly money laundering.
The US Department of State concedes that recent efforts have been made by the government to improve the CIP.
But it faults the programme’s investment plan that the report contends still lacks the necessary vetting standards and accountability for individuals after they received the passports.
Responding to that criticism, the Team Unity government points out that St Kitts and Nevis is collaborating with several international law enforcement agencies to improve the program.
Basseterre insists that it currently has one of the most vigorous vetting procedures in the world.
The US report states that there are currently no policies in place for local law enforcement agencies to investigate crimes based on a request for foreign assistance.
But the government says that claim is false, and points to St. Kitts and Nevis having signed a treaty in 1997 with the U.S on that very matter.
It says too that several laws exist that allow for cooperation with foreign entities in financial crime investigations.
Also, the federation’s Financial Intelligence Unit reportedly collaborates regularly with outside forces to assist in Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) investigations.
For its part, the US narcotics control report also claims that the current number of financial institutions in the federation is unknown.
The government counters though, that St. Kitts and Nevis branches of the Financial Services Regulatory Commission report on licensed financial entities present within the country, as well as provide the relevant contact information on their website.
The figure shown there is 3,419.
The authorities also point to the Eastern Caribbean Central Bank also publishing their existing records of licensed financial entities in St. Kitts and Nevis.
Singled out in the US report is Nevis, which it says has an overall lack of transparency and proper regulation in its financial sector.
The report states that this makes it an ideal location for criminal activity.
The government response – that the Financial Services Regulatory Commission reports of on-site examinations conducted annually, ensure that financial entities are compliant with the Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) Regulations.
In making its case, the government says the 2011 Financial Services Implementation of Industry Standards Regulations has several policies intended to ensure both business and customer due diligence are conducted in regulated financial entities.
The Team Unity administration argues that this provision contradicts the quote in the US Department of State’s financial crimes report that refers to the “damning and unsubstantiated charges of anonymous accounts, strong bank secrecy laws and overall lack of transparency of beneficial ownership of legal entities in the Federation”.
In relation to the remarks on strong bank secrecy laws, the government explains that the laws that protect the confidentiality of banking information does not hinder regulatory or criminal investigations or prevent information from being disclosed.