Financial Crime World

St. Kitts and Nevis Faces Challenges in Fighting Money Laundering

Overview

A recent report has highlighted significant shortcomings in St. Kitts and Nevis’ efforts to combat money laundering (ML). Despite having a well-established technical framework for investigating ML, the country’s Financial Intelligence Unit (FIU) reports that the number of Suspicious Transaction Reports (STRs) submitted by financial institutions and Designated Non-Financial Businesses and Professions (DNFBPs) remains low.

Challenges in Reporting Obligations

  • Many financial institutions and DNFBPs lack a clear understanding of their reporting obligations, leading to a lack of STRs being submitted.
  • Despite the FIU distributing typologies and advisories to these entities to help them identify potential ML activities, there is still a lack of awareness and guidance.

Concerns over IT System Security and Independence

  • The security and independence of the FIU’s IT system are concerns, as it is overseen by an officer external to the FIU who is employed by the Ministry of Finance.
  • This raises questions about the integrity and effectiveness of the system in detecting and reporting suspicious transactions.

Progress in Investigating ML Cases

  • The WCCU, a unit of the Royal St. Christopher & Nevis Police Force, has conducted six ML investigations in 2019 and 2020, and two more in the first three months of 2021.
  • However, these investigations have not been aggressive enough, with no ML investigations targeting foreign predicates or corporate entities.

Prosecution Rates and Confiscation Proceedings

  • The country’s prosecution rates are a concern, with eight prosecutions before the court for self-laundering ML at the time of the onsite visit, but none resulting in convictions.
  • There is still no dedicated unit within the WCCU or DPP for conducting confiscation proceedings or asset forfeiture under POCA.

Recommendations

  • Improve guidance, awareness, and feedback mechanisms to encourage more STRs being submitted by financial institutions and DNFBPs.
  • Prioritize aggressive ML investigations and improve prosecution and confiscation processes to effectively combat money laundering.
  • Establish a dedicated unit within the WCCU or DPP for conducting confiscation proceedings and asset forfeiture under POCA.

Conclusion

St. Kitts and Nevis needs to address these challenges to improve its efforts in combating money laundering. With a focus on improving guidance, awareness, and feedback mechanisms, prioritizing aggressive ML investigations, and strengthening prosecution and confiscation processes, the country can better protect itself against this serious financial crime.