Address by Prime Minister Dr. the Hon. Timothy Harris Financial Services Regulatory Commission Anti-Money Laundering/Countering Financing of Terrorism Seminar St Kitts Marriott Wednesday, October 21, 2015
“St Kitts and Nevis Committed to Eradicate Money Laundering and Financing of Terrorism”
It is indeed a pleasure to be here to participate in this Anti-Money Laundering and Counter Financing of Terrorism (AML/CFT) Seminar organised by the St. Kitts Branch of the Financial Services Regulatory Commission (FSRC). I commend our FSRC for this proactive approach to its mandate. I pledge government’s strongest possible support to ensure an effective anti-money laundering and counter financing of terrorism architecture.
Over the last five years, the evidence suggests that there is a gradual increase in the detection of instances of money laundering in our region. Sadly, we can no longer say that the financing of terrorism is absent from our region as there is growing evidence of the participation of citizens from some regional jurisdictions in terrorist activity around the world. We have heard of nationals of some Caribbean countries who have allegedly joined up with the group, Islamic State of Iraq and Syria (ISIS). Individuals who become involved in terrorist activities not only threaten the countries which are attacked, but become threats to our regional and national security when they are sent home from other countries.
An Affirmation of Support
This is an opportune time for me to reaffirm that the Government is fully committed to supporting the work of the Financial Services Regulatory Commission. Today, it remains the ultimate local agency responsible for ensuring that entities within the financial services industry implement the necessary controls and measures for compliance with our local anti-money laundering and counter financing of terrorism legislation. Many of you operating in the industry may already be aware that the Federation will be subject to the Fourth Round Mutual Evaluation by the Caribbean Financial Action Task Force (CFATF).
The Financial Services Regulatory Commission has been tasked with coordinating the activities of the National Financial Action Task Force (NFATF). The NFATF comprises of representatives from key government entities, in leading the programme as St. Kitts and Nevis prepares for its Fourth Round Mutual Evaluation by the CFATF in the fourth quarter of 2018. This process of mutual evaluations is of extreme importance for the member countries of the CFATF for two basic reasons. Firstly, the resulting reports and data are published and are used to rate countries in context of compliance with international best practice. Secondly, the reports are increasingly used by persons in the international investment arena to make a determination whether to invest in a jurisdiction.
In the final analysis, an unfavourable report for St. Kitts and Nevis due to non-compliance with the FATF recommendations is not an option. Our efforts over the coming months must therefore be channeled into making sure that we are fully prepared, and that we are highly responsive to the various requirements of the CFATF mutual evaluations process. If all of us would commit today to approach this challenge on a united front, I am certain that we can receive higher than satisfactory results at the end of this important process.
The Caribbean region is especially susceptible to the devastating effects of unfavourable evaluation reports as a result of our dependence on correspondent banking relationships. The loss of correspondent relationships with banks in the United States and other international partner jurisdictions and the effects of their implementation of de-risking should be cause for concern by all of us. It is therefore vital for us to maintain partnerships with the CFATF and similar standard setting agencies that can help our country to promote international best practice and provide an important platform of advocacy for protecting our national interests.
Our Unity Government is committed to provide the necessary support to ensure that our Federation has the required mechanisms for Anti-Money Laundering and Counter Financing of Terrorism to avoid any undue reputational damage to our beloved Federation. This includes providing sufficient resources for the effective implementation of the Financial Action Task Force Forty (40) recommendations and improving the areas of low compliance which were identified in the Third Round of Mutual Evaluations by the CFATF. My government’s efforts must be reflective of our commitment to safeguard and secure the financial system in the Federation.
It is no longer acceptable to simply pass the legislation that is required to meet the international standards. The assessments of the CFATF are now focused on testing the level of effectiveness of the laws and regulations. This includes but is not limited to testing the regulatory regime of the FSRC as well as testing the methods being utilised in the respective institutions. The efforts of the regulatory agency and regulated entities must therefore all be channeled into measuring the outcomes of the effective implementation of compliance systems in each organization.
It is in this regard that the FSRC has increased the number of onsite examinations being undertaken annually. In addition to the usual areas of assessment, the process will now include reviewing documents and files of applicants for the Citizenship by Investment Program (CBI) submitted by licensed Service Providers to the Citizenship by Investment Unit. This action is in keeping with the recommendations for improvement to the CBI programme which we are presently adopting. We have a shared interest in preserving the integrity of our financial space.
Cooperation Required
Onsite examinations are important components of the mandate of the FSRC. Your cooperation, as our private sector partners, is of vital importance in this process. The partnership between the FSRC and regulated entities should engender the necessary outcomes to ensure that St. Kitts-Nevis remains largely compliant with international standards.
The recent experiences of negative listings have reinforced the resolve of the Government to strengthen our regulatory regime to make certain that regulated entities develop and implement appropriate compliance systems. These systems require all regulated entities to collect and maintain adequate due diligence information to identify your clients, beneficial owners of accounts, and entities registered in our Federation. Our regulatory framework must therefore be robust and comprehensive. Only then can we continue to challenge the unjustified and unsubstantiated ‘black listings’ such as the ones recently imposed by European Union member countries on some of our CARICOM countries.
The recent passage of the FATCA legislation and the imminent introduction of Common Reporting Standards by the Global Forum will present some human capacity and financial challenges for the Federation to operate within the international guidelines. Today I confirm that the government is committed to working with you to overcome the obstacles that regulated entities may encounter as a direct result of implementation of the required changes.
We are not just the government we are a reliable partner in the progressive development of our beloved country. This workshop is one initiative that demonstrates such a commitment.
The Theme
The theme for today’s Seminar, ‘Recognize Identify Scrutinize Know: What is my Exposure?’ , encourages you to determine the levels of exposure with the various risks identified in your organizations. Each organisation represented here should already have in place an AML/CFT program that is capable of recognizing the areas of risk in your business activities and from the persons with whom you interact. In identifying these risks, the appropriate measures should be introduced into your operations to assess and mitigate them. It is essentially important that you implement all the required measures, which include Know Your Clients (KYC), requesting and maintaining the proper documentation as required by law before entering into a business relationship. Your decisions to conduct business should firstly evaluate and consider the level of risk associated with these persons and entities and the effect that this would have on the integrity of our Federation’s financial systems. The world has been changing before our eyes. Every shadow is a man. We have to be more careful and deliberate in all our dealings. No man is an island and no island stands alone. 9/11 brought us together as our brother’s keeper.
We therefore encourage you to support the efforts of the FSRC in carrying out its mandate to ensure a high level of compliance with international standards. As we prepare for our 2018 Mutual Evaluation, it is expected that the appropriate mechanisms would be implemented to achieve the expected outcome of compliance.
I thank you for your participation. I hope today’s convocation will be productive and useful.
May God Bless Our Country!
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