Saint Kitts: Law of Offshore
Domestic banking is regulated by the Banking Act 1991 and non-domestic banking falls under the Financial Services (Regulations) Order 1997. Nevis has its own Offshore Banking Ordinance 1996.
Two types of banking licenses are granted under the Federation's 1997 Financial Services (Regulations) Order. 'Unrestricted' licenses require minimum financial resources of ECD1,350,000 (USD500,000), while for 'restricted' licenses the level is only ECD135,000 (USD50,000).
A licensee must within 3 months of the end of each of his financial years:
- prepare annual accounts in accordance with generally accepted accounting principles, audited by an independent auditor;
- deliver to the Director General the annual accounts together with written confirmation from an independent auditor that the annual accounts have been prepared as required under the preceding paragraph and whether or not the auditor's certificate for such accounts is unqualified and if qualified, the nature of the qualification;
- deliver to the Director General a certificate of compliance issued by an independent auditor that the information set out in the application for an authorisation, as modified by any subsequent notification of change, remains correct and gives an accurate summary of the business of the authorised person.
Fees for banking licences are as follows:
- on filing of first application (not refundable) - for all applications, USD1,000;
- on granting or renewal of authorisation for an unrestricted business, USD8,000, and
- for a restricted business, USD4,000.
The Confidential Relationship Act, 1985 for Saint Kitts and Nevis offers complete confidentiality should foreign authorities seek private banking and financial records. Prison terms are mandatory for violation of the statute.
The Nevis Offshore Banking Ordinance 1996 defines offshore banking as follows:
- Receiving of foreign funds through the acceptance of foreign money, deposits payable upon receipt demand or after a fixed period or after notice;
- The sale or placement of foreign bonds certifcates, notes or other debt obligations or other securities, or
- Any other similar activities involving foreign money or foreign securities, and
- Either in whole or in part using foreign funds so acquired for loans, advances and investments whether in Nevis or elsewhere.
Licences under the Banking Ordinance are issued to eligible companies or qualified foreign banks. An eligible company must be a wholly owned subsidiary of a local bank regulated by the Eastern Caribbean Central Bank that is licensed under the Banking Act to do business in Nevis. A qualified foreign bank is a foreign bank that is licensed under the Banking Act, or is foreign bank with minimum capitalization and assets, as prescribed by the Minister, that is not licensed under the Banking Act but is licensed to do domestic banking in its jurisdiction of incorporation.
An eligible company must be incorporated under the Companies Act as a company limited by shares, and must have objects or business activity restricted to offshore banking from within Nevis. It must have at least one director who is a citizen of Saint Kitts and Nevis with a residence in Nevis. The minimum Authorised Capital must be at least ECD2 Million, of which not less than ECD1 Million has been Subscribed and Paid Up in cash, such cash being deposited in an account maintained by the Permanent Secretary at the Eastern Caribbean Central Bank.
Not later than four months after the close of its financial year, a licensee must forward to the Permanent Secretary copies of its balance sheet and profit and loss account and the full and correct names of the directors of the licensee. The balance sheet and the profit and loss account must bear on its face the certificate of an auditor.
The Minister may by order exempt a licensee in respect of its business from all or so much of any duty payable under the Customs Act in respect of any goods imported by the licensee in respect of its business as the Minister deems expedient, if the licensee in respect of its business satisfies the Minister that the goods concerned are not being made or manufactured in Nevis, are essential as equipment or fixtures for doing business from within Nevis and are not merely goods that will be used up or expended in the ordinary course of business.
Where the Minister is satisfied that a licensee must use the services of specially qualified persons in order to do its business effectively from within Nevis and that (a) it is unable to acquire those services in Nevis, and (b) it is unable to retain or hire those services from outside Nevis without special tax benefits being made available the Minister may authorise an offshore benefit provision for the employment of those specially qualified persons.
An offshore benefit provision is one whereby a prescribed percentage of an employee's or contractor's salary or fees from a licensee (a) is exempt from any duty or tax in Nevis; (b) may be paid in a foreign currency; (c) may be paid in some other prescribed manner in another currency or otherwise; notwithstanding the provision of any other law to the contrary.