Financial Crime World

Title: St. Kitts and Nevis Citizenship-by-Investment Program Under Scrutiny: FinCEN Warns of Financial Crimes and Sanctions Evasion

FinCEN Advisory: St. Kitts and Nevis (SKN) Passports and Potential Financial Risks

The Financial Crimes Enforcement Network (FinCEN) has released a new advisory (FIN-2014-A004) for financial institutions, urging them to be vigilant when dealing with individuals using St. Kitts and Nevis (SKN) passports. The warning came as a result of concerns over the potential misuse of the SKN Citizenship-by- Investment (CBI) program.

Concerns Over St. Kitts and Nevis CBI Program Abuse

According to FinCEN, certain individuals are exploiting the CBI scheme sponsored by the Federation of St. Kitts and Nevis to acquire SKN passports for fraudulent purposes:

  1. Masking identity for sanctions evasion
  2. Engaging in financial crimes

Iranian nationals are among those suspected of obtaining SKN passports under this scheme.

Lax Controls on St. Kitts and Nevis CBI Program

Despite public promises to tighten controls, FinCEN has identified several issues with the SKN CBI program:

  1. Inadequate checks on applicants
  2. Suspension of Iranian nationals from the program failing to prevent illicit access

These issues may make it easier for sanctions evaders and other illicit actors to obtain an SKN passport.

Financial Institution’s Response: Conducting Rigorous Customer Due Diligence

FinCEN encourages financial institutions to take the following steps to mitigate potential risks:

  1. Use alternative or additional forms of government-issued identification
  2. Employ non-documentary methods to confirm the applicant’s true identity and country of origin
  3. Be aware of OFAC obligations when questioning potential customers using SKN passports
  4. Report suspicious activities, including reports related to SKN passport holders with the term “SKN Passport” in the appropriate fields, as a Suspicious Activity Report (SAR)

Reporting Obligations and Suspected Cases

Institutions must report the following suspected activities to FinCEN:

  1. Illegal activities
  2. Concealing such funds
  3. Attempts to evade Bank Secrecy Act regulations

The advisory emphasizes that financial institutions should not view this as an attempt to undermine their relationships with the Federation of St. Kitts and Nevis but rather a means to address financial crime risks.

Questions and Comments

Financial institutions with questions or comments regarding the advisory can contact the FinCEN Resource Center at:

  1. (800) 767-2825 or (703) 905-3591