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ST. KITTS AND NEVIS: Bank Secrecy Laws and Financial Crimes Exposed

A recent advisory from the Financial Crimes Enforcement Network (FinCEN) has raised concerns about the misuse of St. Kitts and Nevis’ Citizenship-By-Investment program to facilitate financial crimes, including money laundering and terrorist financing.

Background

The Citizenship-By-Investment program grants citizenship to foreign investors who invest in real estate or contribute to a sugar industry foundation. However, FinCEN believes that several Iranian nationals designated by the Office of Foreign Assets Control (OFAC) have obtained passports issued through this program.

Exploitation and Lack of Controls

FinCEN claims that despite measures taken by the St. Kitts and Nevis government to improve controls on who can participate in the program, these measures remain ineffective. The advisory notes that a 2013 suspension of Iranian nationals from participating in the program has not prevented them from obtaining passports.

Recommendations for Financial Institutions

Financial institutions are being advised to conduct risk-based customer due diligence to identify and prevent the misuse of St. Kitts and Nevis passports for financial crimes. This includes:

Verifying customers’ identities using government-issued identification or non-documentary methods
Conducting ongoing monitoring of transactions and reporting suspicious activities

Filing Suspicious Activity Reports (SARs)

The advisory also warns financial institutions about the potential need to file a SAR if they suspect that a transaction is related to illegal activity or designed to evade regulations.

Context and Expert Insights

FinCEN emphasizes that this advisory is not intended to affect normal relationships between US-based financial institutions and St. Kitts and Nevis, but rather to highlight the illicit finance risks posed by the Citizenship-By-Investment program.

“St. Kitts and Nevis’ lack of effective controls has made it an attractive haven for illicit actors seeking to launder money or evade sanctions,” said a financial expert. “It’s crucial that financial institutions take steps to identify and prevent these types of transactions.”

For more information on the St. Kitts and Nevis Citizenship-By-Investment program, contact the FinCEN Resource Center at:

(800) 767-2825
(703) 905-3591

Financial institutions wanting to report suspicious transactions should call the Financial Institutions Toll-Free Hotline at:

(866) 556-3974