BASSETERRE, St. Kitts, Apr. 9.2018 –THE Government of St. Kitts and Nevis has taken offense to a report by the United States that brandishes the Federation as remaining susceptible to corruption and money laundering because of the volume of narcotics trafficking around the islands.
In a statement published in the U.S. Department of State’s 2018 International Narcotics Control Strategy Report, Volume II: Money Laundering (2018 INCSR), the US State Department says that the growth of its (St. Kitts and Nevis')offshore banking sector coupled with unusually strong bank secrecy laws also remains problematic.
“Financial oversight in Nevis remains problematic due to SKN allowing the creation of anonymous accounts, strong bank secrecy laws, and overall lack of transparency of beneficial ownership of legal entities.”
In their official response issued today, the government said that “it wishes to register its utter disappointment with the U.S. Department of State’s 2018 International Narcotics Control Strategy Report, Volume II: Money Laundering (2018 INCSR) and takes exception to the grossly misleading, erroneous and offensive statements about the Federation of St. Kitts and Nevis”.
The report, according to the government, makes false claims which are void of any substantive evidence.
They reiterated that it continues to operate in a transparent manner and has in all its interactions with the United States Department cooperated in providing all relevant information.
Responding to the criticisms of unusually strong bank secrecy laws and overall lack of transparency of beneficial ownership of legal entities in the Federation, the Government pointed to Section 69 of the Financial Services Implementation of Industry Standards Regulations 2011 (FSIISR), which prohibits anonymously operated accounts and requires regulated businesses to conduct due diligence, as well as record their findings in writing and keep such findings available.
Additionally, they reminded that the Federation’s Anti-Money Laundering Regulations, 2011, its Anti-Terrorism (Prevention of Terrorist Financing) Regulations, 2011 and its FSIISR with appending Guidance Notes require all regulated entities, including international banks to carry out careful and comprehensive customer due diligence.
Further, the government stated that the Confidential Relationships Act, Cap 21.02 supports the confidentiality provisions in both the Nevis International Banking Ordinance 2014 and the Banking Act 2015, whilst offering the same level of protection given in all other jurisdictions that allow financial institutions to operate.
“Confidential information from banks can, however, be disclosed in connection with a request for information under a Tax Information Exchange Agreement (TIEA) or Double Taxation Convention (DTC), or in pursuance of a regulatory or criminal investigation.”
Moreover, the government noted that it is also important to note that since the passage of the international banking legislation in Nevis in 1996, only one international bank has ever been granted a licence to conduct international banking business from or within Nevis.
According to the government, the said licence was granted in 1998 to a wholly owned subsidiary of a domestic bank which was duly licensed by the Eastern Caribbean Central Bank: ‘There are no offshore banks on the island of St. Kitts. It is therefore disingenuous to imply that there has been “growth in the offshore banking sector”.
