Financial Crime World

Title: St. Kitts and Nevis: Assessing Money Laundering and Terrorist Financing Risks in the Twin-Island Nation

Importance of Financial Integrity and Security

Honorable Vincent Byron Jr., the Attorney General of St. Kitts and Nevis, underscores the significance of financial integrity and security as the twin-island nation confronts international pressures. In response, the country conducted a National Risk Assessment (NRA) for money laundering and terrorist financing to evaluate and strengthen its financial services landscape (1).

National Risk Assessment for St. Kitts and Nevis (2018)

Conducting the National Risk Assessment

In early 2018, St. Kitts and Nevis carried out its National Risk Assessment as part of the Fourth Round Mutual Evaluation process by the Financial Action Task Force (FATF). This collaborative effort by key domestic stakeholders required extensive labor to assess the country’s vulnerabilities to money laundering and terrorist financing offenses (1).

Contributors

Key stakeholders involved in the NRA process included branches of the Financial Services Regulatory Commission (FSRC), the Ministry of Finance and its Financial Intelligence Unit (FIU), the Customs and Excise Department, the Inland Revenue Department, the White Collar Crime Unit (WCCU), the Attorney General’s Chambers, the Department of Planning, and the Legal Department of Nevis, among other relevant government departments and agencies. Representatives from the various financial institutions and entities of the Private Sector also contributed to the process (2).

Political System of St. Kitts and Nevis

Background and Structure

St. Kitts and Nevis, an independent democratic nation, gained independence in 1983. Federal elections occur every five years, and elections for the Nevis Island Administration are held at the same interval. The present constitution provisions for a separation of powers among the executive, parliament, and judiciary, granting Nevis limited autonomy in specific areas through the Nevis Island Administration (NIA) and a deputy governor general (3).

Economy of St. Kitts and Nevis

Key Sectors and Priorities

The country’s economy is primarily reliant on four sectors: Tourism, Agriculture, Manufacturing, and Financial Services. Though the economy has shifted from agricultural to service-oriented, efforts to diversify and achieve sustainable development continue. Tourism contributes approximately 15% to St. Kitts and Nevis’ Gross Domestic Product (4).

Growth in Tourism

Since 2014, the tourism industry has shown substantial growth, with a total of 1,290,635 visitors and an increase in total visitor expenditure by EC$455.11 million (4).

Other Sectors

Manufacturing, consisting mostly of small to middle scale assembly plants, contributes approximately 6.5% to the country’s GDP (4).

Competent Authorities and AML/CFT Framework

Robust Framework

St. Kitts and Nevis has established a comprehensive AML/CFT framework to address money laundering and terrorist financing risks. The Financial Services Regulatory Commission (FSRC) acts as the primary regulatory body, overseeing the implementation of the National Framework. The FIU, the central national agency responsible for receiving, analyzing, and distributing Suspicious Transaction Reports (STRs), collaborates closely with the WCCU to deter instances of money laundering and related offenses (5).

Committees and Ongoing Improvements

Working groups and committees have been established to review and address any gaps in the AML/CFT legislation and ensure compliance with FATF recommendations. These efforts have led to significant progress in addressing identified gaps and ongoing training for relevant authorities and regulated entities (5).

References:

  1. St. Kitts and Nevis – Fourth Mutual Evaluation Report October 2019, FATF.
  2. St. Kitts and Nevis National Risk Assessment October 2018, FATF.
  3. Ministry of Foreign Affairs, Trade and Commerce of St. Kitts and Nevis, “Elections and Political System.”
  4. World Bank, [St. Kitts and Nevis – Data].
  5. Eastern Caribbean Central Bank, “AML/CFT Regulatory Framework.”