The following is an address delivered by Hon. Mark Brantley Premier of Nevis and Deputy Chairman of the Financial Services Regulatory Commission, in a video presentation at the opening ceremony of the 14th annual Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) Conference hosted by the Financial Services Regulatory Commission – Nevis Branch on March 11, 2019.
The two-day conference is being held at the Four Seasons Resort, Nevis, with the theme “Conquering the Compliance Divide: Effective vs. Defective – Bridging the Gap in today’s Regulatory Environment.”
Good morning ladies and gentlemen. I am pleased to have been asked once again to address this premier conference on the Regional Compliance Conference.
I start by apologizing to you for appearing only by video. I regret very much not being able to be physically with you this morning. Indeed by the time you view this I will be in Romania speaking to the Romanian government as new president of the European Union (EU) on matters initiated by the EU designed to destroy the financial services sector in our region.
These are challenging times for all of us, and we as a region must mobilize ourselves together to fight for our sovereignty and our right to exist in this world. I assure you that in deliberations in Romania I will be a voice not just for St. Kitts and Nevis but for regional financial centres.
At the outset, I extend warm congratulations to Ms Heidi-Lyn Sutton and her team on organising what looks to be an immensely engaging agenda, and of course on attracting such an eminent personage as Mr. Robert Mazur to Nevis. Mr Mazur, once again welcome to our Queen of the Caribes. I hope that as well as imparting your many useful insights, you will find time to savour the very many delights of Nevis.
As a former legal practitioner, I am sometimes grateful that I am away from the frontlines of the financial services industry which has become more and more the focus of international regulators, who in their never ending quest to rein in their own citizenry, find themselves targeting small island-states as being the bane of their troubles.
Anti-money laundering and Counter Financing of Terrorism have engaged the international community since at least 1990 when the United Kingdom first commissioned a report on the performance of its Overseas Territories that were then emerging as immensely popular and influential international finance centres.
As an independent country St. Kitts and Nevis has not escaped the attention of the European bodies that have themselves emerged as supra national regulators of the financial services industry. We have continually been evaluated and assessed over a long period and we have continually met and exceeded expectations. Especially in Nevis, we have displayed a strong commitment to “conquering compliance.”
Under the watchful eyes of our Financial Services Regulatory Commission, and the able guidance of our very own Heidi-Lynn Sutton, our regulatory regimes have been frequently reviewed and revised to reflect best practice and the highest regulatory standards.
We take great pride in the “largely compliant” rating earned from the Financial Action Task Force (FATF) in 2014 and again in 2018. It is hard won. We know that the cost of compliance for our private sector practitioners is high, and we value their commitment to stand alongside us in our determined efforts to attain and maintain favourable ratings form both the FATF and the Organisation for Economic Co-operation and Development (OECD).
Although we often feel like Sisyphus - continually rolling a boulder uphill - we know that the task will never be done. The price of success is eternal vigilance so like Churchill, we will never surrender.
Our financial services sector is not only an essential pillar of our economy, it is also incredibly vital to our viability as a country. We do not take it lightly and we cannot afford to overlook any measures that will ensure its sustainability.
Very recently we have been challenged to modify our tax exempt status on the basis of criticisms levelled against us by both the Global Forum and the European Union. We moved swiftly, though on short notice on Christmas Eve, 2018, to make the amendments stipulated by them to avoid being black-listed. To date, we have had no formal indication of their deliberations.
Over the years, Herculean efforts on the part of our financial services advisors both here in Nevis and in St. Kitts aimed at fullest co-operation with the European agenda, have consistently stymied our growth. Yet we have persisted in the belief that we can continue to eat little and live long.
Now, however, we are faced with such drastic rationing that even eating little is to become a struggle. Yet struggle we must - against the unfairness of regimes that imposed on us but not on the “big players”; against initiatives that stack the decks against us, and against any suggestion that we fold our tents and simply fade away.
The legitimate expectations of our clients, of our practitioners and of our people are that we will continue to provide opportunities for sophisticated succession planning and wealth management, and thereby continue to provide for the citizens and residents of Nevis a high standard of living, and a wealth of opportunities for personal and professional development in all sectors of our economy.
That commitment means that as a government we must overcome all the hurdles that are thrown up before us as we seek to maintain and grow our financial services sector. Despite my bold declaration here last year, my advisory team has not yet been able to present Cabinet with a viable path to establishing a digital asset business environment in Nevis.
I believe that there is a path for us towards that goal, and I know that they are working diligently to clear the path. I am sure they will deliver shortly.
Returning to the tax situation for a moment, I am heartened to advise that when Caribbean Community (CARICOM) Foreign Ministers met recently in St. Kitts, the question of co-operation with the European agenda was at the forefront of discussions.
Indeed, the CARICOM Secretary-General Ambassador Irwin LaRocque, pointed out that ‘the (EU) requirements for compliance are encroaching on our sovereignty’ - by frontally attacking our economies and attempting to deny us the opportunity to achieve sustainable development.
The EU has gone further than the OECD in its compliance demands and it’s blacklisting of CARICOM Member States offends the very principles of self-reliance and “mobilisation of domestic resources recommended by the United Nations Addis Ababa Action Agenda (AAAA)”.
The EU’s joint and several approaches to what they have unilaterally defined as “tax good governance” fall only a very little short of interference and disregard for the sovereignty of the States they deem non-co-operative.
A small window of opportunity for dialogue has arisen with Romania’s Chairmanship of the EU. I am pleased to report that the St. Lucian Prime Minister Mr. Allen Chastanet and a delegation of CARICOM Ministers was received by the Romanian Prime Minister in Romania three weeks ago, and they were able to engage with the Romanian Minister of Finance in “constructive dialogue about the EU’s tax good governance principles”.
Prime Minister Chastanet made the point that the EU initiatives were injurious to the Region’s economies, and reiterated the commitment of the Region’s Governments to the application of best practice and global standards in the governance of our financial services sectors.
We welcome the opportunity, previously denied to us, for dialogue with the EU and will continue to advocate strongly for some amelioration of the positions adopted in Brussels which have coerced us into a level of cooperation that may not be our own best long-term interests.
In that regard, I recognise that here in Nevis there continues to be some anxiety over the question whether “Nevis companies” are or will become liable to any form of tax. The amendments passed hurriedly on the Eve of Christmas 2018, were forced on us at the last possible moment because the Forum on Harmful Tax Practices (FHTP) indicated only days before the deadline, that Nevis Companies were in fact in focus for their purposes after having asserted for months that it was only the St. Kitts regime for tax exempt companies that concerned them.
We had only days over the Christmas holidays to draft and adopt legislation that would give them comfort that the Nevis tax regime would meet their test as not being harmful to tax revenues of their Member States. Notwithstanding our swift action to adopt the amendments, the FHTP has not yet given us the benefit of a response.
Notwithstanding, the introduction by several CARICOM Member States of legislative measures adequate to maintain protection of their financial services sectors while addressing the so-called “harmful tax practices”, they have been black-listed.
For Nevis, the FHTP’s failure to respond is particularly disconcerting because the question of corporate tax is a matter that has to be dealt with at the Federal level. We cannot implement any tax measures on our own in Nevis.
At the level of the Federal Cabinet of which I am honoured to be a member, we are awaiting guidance from the Ministry of Finance and the Inland Revenue Department as to what direction we can take in order to address the FHTP and EU concerns. We have contracted the professional services firm of Ernst &Young to guide us on this matter.
The current position, as introduced by the December amendments, is that all IBC’s and LLC’s incorporated after January 1, 2019 are taxable at the current corporate tax rate of 33 percent for Corporate Income Tax.
However, I continue to lobby assiduously at the level of the Federal Cabinet for a speedy implementation of changes to the Income Tax Act, so as to bring clarity and comfort to you and your clients. It is my intention to ensure that whatever regime is implemented, we must ensure the future viability of this sector.
All these measures are being introduced to ensure that we remain competitive. Our closest neighbour and competitor the British Virgin Islands (BVI) has the added disadvantage at this time of a difficult relationship with the UK which is embroiled in its own issues.
I note that we have several delegates today from the BVI. We’re very pleased to have you join us for the conference, but tell me this. What do we need to do to encourage you to set up physical presence here? I am extremely open to dialogue on that score, and hope that by joining forces, in a sense, we can repel the onslaught of the marauders who are threatening our peaceful survival.
I say to our friends from the BVI that Nevis stands ready to assist as a stable jurisdiction with a longstanding financial services legislative and regulatory framework, a fiercely independent judiciary and a commitment to the rule of law recently ranked globally by the World Justice Project as number 30 of 126 countries and 2nd in the Caribbean only to Barbados. We are open for business.
The Nevis Regulator has submitted a budget for digitisation and upgrade of the Registry system to allow for an entirely electronic capability to deliver incorporation registration and post incorporation services. In addition the training budget has been increased to allow for even deeper capability across the board.
If we are to license and regulate Digital Asset Business such that we can generate significant revenue streams, then we must invest in the intellectual capital of our team. We will shortly conduct an audit of skills needed to upgrade our service capability and will take the necessary steps to effect the changes recommended.
My Administration is pleased to continue supporting this conference and the training opportunities it represents for our industry professionals. We recognise and accept that regulatory compliance is an essential element for the viability and sustainability of the financial services sector, and we value the good reputation that we have gained though the diligent work of our Regulators in this regard.
The programme prepared for the next two days is impressive and speaks to the high regard in which Ms. Sutton and her Team are held internationally. I take this opportunity to commend her again and to assure her and her team of our unstinting support.
I thank you and wish you two days of enlightenment and trust that you will find time to see a little more of Nevis than these four walls.
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