St
Kitts and Nevis has made steady progress
in developing its financial services sector
since securing its removal from the Financial
Action Task Force (FATF) and Organisation
of Economic Cooperation and Development
(OECD) blacklists in 2002, but has had
to develop new legislation and financial
products to ensure that it stayed off
the list.
Nevis
emerged as an offshore jurisdiction after
enacting its Nevis Business Corporation
Ordinance in 1984, based upon American
corporate law of the state of Delaware.
Under the Constitution adopted when St.Kitts
and Nevis became fully independent in
1983, Nevis has its own Legislative Assembly
which swiftly took advantage of its autonomous
powers to pass the Ordinance, which was
followed by Trust, LLC and Mutual Fund
legislation.
Although St Kitts has aimed primarily
at attracting industrial and tourist investment
with very tax-friendly incentive legislation,
Nevis's achievements in attracting offshore
companies inspired St.Kitts to establish
its own offshore regime in 1996 with a
new Companies Act and Trusts Act. Still,
St. Kitts continues to hope that by concentrating
on industrial investment it will develop
a less competitive and consequently more
harmonious relationship with Nevis.
In
an attempt to broaden the Federation's
attractions, the St Kitts government introduced
two new pieces of legislation in 2002:
the Merchant Shipping Act and the Foundation
Act (2003). The new Merchant Shipping
Act makes provisions for the registration
of ships and pleasure vessels in St. Kitts.
Since its launch in February 2005, over
500 ships having been registered with
a total deadweight of over 650,000 tonnes.
The revenue from this activity increased
from ECD250,000 in 2006 to over ECD1 million
for 2007. The St. Kitts & Nevis International
Ship Registry is also finalising plans
to increase its attractiveness to yacht
and pleasure vessel owners, which will
again both assist local owners of such
craft and increase the numbers of such
craft on the Ship Registry.
The
Foundation Act provides for the formation
of private Foundations. The Foundation
Act is expected to enhance the attractiveness
of St. Kitts as an international financial
center through the introduction of a civil
law concept into the traditionally common-law
system.
All
offshore finance businesses in the Federation
need authorisation under the Financial
Services (Regulations) Order, 1997. This
includes deposit-taking business, investment
business, insurance business, trust business
and corporate service provision.
The
Nevis Multiform
Foundations Ordinance came into force
on October 1st 2005. It introduces a flexible
hybrid multiform of foundation into the
Nevis international financial services
regime.
St.
Kitts had 1,680 companies on the register
as of 31st December 2005.
This
section of the 
site describes the most important types
of offshore business activity carried
out from St Kitts and Nevis.
St. Kitts and Nevis Banking
Domestic
banking is regulated by the Banking Act
1991 and non-domestic banking falls under
the Financial Servicers (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 1,350,000 East Caribbean dollars ($500,000),
while for 'restricted' licenses the level
is only 135,000 East Caribbean dollars
($50,000).
The
Confidential Relationship Act, 1985 for
St. Kitts-Nevis offers complete confidentiality
should foreign authorities seek private
banking and financial records. Prison terms
are mandatory for violation of the statute.
The
banking system consists of the Government
owned St Kitts-Nevis National Bank, the
Development Bank of St Kitts and Nevis,
the privately-owned Bank of Nevis and
the Bank of Nevis International, First
Caribbean International, Royal Bank of
Canada, Bank of Nova Scotia, RBTT Bank,
the Nevis Co-operative Credit Union, the
St Kitts Co-operative Credit Union and
the Foundation for National Development.
The National Bank, which is the largest
commercial bank in the Eastern Caribbean
Currency Union has assets in excess of
a billion dollars. By mid-2005 the assets
of commercial banks had reached $3 bn.
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 St. 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.
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St.
Kitts and Nevis Insurance
See Offshore
Business Review – Insurance
for a more general treatment of captive
insurance companies.
Non-domestic
insurance and assurance businesses must
be licensed under the Insurance Act.
The Federation's 1997 Financial Services
(Regulations) Order set the following
minimum net assets for applicants wishing
to engage in insurance business: long-term
and general insurance business, 810,000
East Caribbean dollars ($300,000), reduced
to 540,000 East Caribbean dollars ($200,000)
for long-term but not general insurance,
and further lowered to 270,000 East
Caribbean dollars ($100,000) for general
but not long-term insurance.
In
July, 2004, the Nevis Ministry of Finance
and Development in Nevis announced the
passage of the Nevis International Insurance
Ordinance. The Ordinance is divided
into six sections, and provides for
the licensing and regulation of general
insurance, captive insurance and reinsurance
companies. It is compulsory for insurance
companies to have a physical presence
in Nevis, whether via a resident manager
or a fully trained registered agent,
with adequate knowledge and experience
of the insurance industry.
In
2006, lawmakers on Nevis approved an
amendment to the jurisdiction's insurance
law that clarified and tightened up
certain sections of the legislation
to combat fraud. The Nevis International
Insurance (Amendment) Ordinance, 2006
updated the Nevis International Insurance
Act of 2004, and, according to then
Premier Vance Amory, was drafted to
"eliminate loopholes which could
be exploited by persons who do not really
care what they do in international business."
In
June 2006, St Kitts and Nevis Prime
Minister and Minister of Finance, Dr
Denzil Douglas, revealed on a promotional
trip to Switzerland that the government
would soon introduce captive insurance
legislation. According to Douglas, the
new captive insurance vehicle will be
"extremely competitive", with
low licence fees for small captives
with premiums of less than US$1.5 million.
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St.
Kitts and Nevis Trusts
Trust
management has become an important business
for St Kitts and Nevis.
Like all offshore finance businesses
in the Federation, trust management
companies need authorisation under the
Financial Services (Regulations) Order,
1997. Under the Order, applicants wishing
to establish a trust business handling
both unrestricted and restricted business
must have net assets of 540,000 east
Caribbean dollars ($200,000) or its
equivalent in other currencies, reduced
to 54,000 east Caribbean dollars ($20,000)
for restricted business.
Nevis
trusts are formed under the Nevis International
Exempt Trust Ordinance of 1994, as amended
to September 2000. The Trust Ordinance
includes special provisions to enhance
the use of Nevis as a preferred jurisdiction
for the establishment of Asset Protection
Trusts.
The
St Kitts and Nevis Trusts Act 1996 was
a replacement for the 1961 Trustee Ordinance
modeled after the 1925 English Trusts
Act, and also contains modern asset
protection provisions.
For
fuller details of the St Kitts and Nevis
trust regimes, see Forms
of Company.
For details of fees payable, see Offshore
Legal and Tax Regimes.
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St
Kitts and Nevis Investment Fund Management
(Nevis)
Investment
funds may be formed in Nevis under the
Nevis International Mutual Funds Ordinance
2004. A mutual fund is defined under
the Ordinance as a company incorporated,
a partnership formed, a unit trust organized
or other similar body formed under the
laws of Nevis or any other jurisdiction
which collects and pools investor funds
for the purpose of collective investment.
The
definition includes umbrella funds whose
shares are split into a number of different
classes of funds or sub-funds. It also
includes a fund which has one or more
investors which are mutual funds not
registered or recognized by the Ordinance.
The
Ordinance divides mutual funds into
three classes:
