SAINT KITTS AND NEVIS: BANKS FACE SCRUTINY OVER MONEY LAUNDERING CONCERNS

Financial Institutions Warned to Exercise Enhanced Scrutiny

A recent advisory from the US Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) has warned financial institutions in the United States to exercise enhanced scrutiny on transactions involving the Federation of St. Kitts and Nevis.

Systemic Problems Create Opportunities for Money Laundering

The warning comes as a result of systemic problems within the island nation’s legal, supervisory, and regulatory systems that create opportunities for money laundering and the protection of crime proceeds. According to FinCEN, St. Kitts and Nevis has been identified by the Financial Action Task Force on Money Laundering (FATF) as non-cooperative in the fight against money laundering.

Concerns Highlighted by FinCEN

The lack of effective supervision over offshore companies, including those that operate as financial institutions
The absence of requirements for offshore companies to verify customer identities or maintain records related to customer transactions
The prohibition on government authorities from obtaining financial information about customers’ identities and transactions
The failure to report suspicious transactions

Legitimate Business Not Affected

While the advisory emphasizes that legitimate business with St. Kitts and Nevis should not be curtailed, financial institutions are urged to carefully examine any transaction involving the island nation or its entities for potential money laundering concerns.

St. Kitts and Nevis Takes Corrective Action

In response to these concerns, St. Kitts and Nevis has indicated an awareness of the deficiencies and has committed to taking corrective action through a legislative program aimed at addressing and resolving the issues noted by FATF. The country has also signed a mutual legal assistance treaty with the United States.

US Officials Offer Technical Assistance

US officials have expressed their readiness to provide technical assistance to St. Kitts and Nevis officials as they work to remedy the deficiencies in their counter-money laundering systems.

In related news, the US Department of Justice announced last week that it had filed charges against several individuals accused of money laundering and other financial crimes connected to the island nation. The case is ongoing.