Financial Crime World

Financial Crime Definition in Saint Kitts and Nevis: A Matter of Concern for Financial Institutions

The US Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) has recently issued an advisory warning about financial transactions involving Saint Kitts and Nevis, a federation of two islands in the Caribbean Sea. The advisory highlights significant opportunities for money laundering and the protection of criminal proceeds due to weaknesses in the country’s legal, supervisory, and regulatory systems.

Systemic Problems

FinCEN has identified several systemic problems that create concerns about financial transactions involving Saint Kitts and Nevis:

  • Lack of effective measures: The country lacks adequate measures to prevent and detect money laundering, including criminalizing money laundering beyond drug trafficking offenses.
  • Inadequate customer due diligence: Offshore companies are not required to verify customer identities or maintain records of transactions.
  • Insufficient reporting requirements: There is a lack of reporting requirements for suspicious transactions.
  • Bank secrecy laws: Bank secrecy laws prohibit the sharing of financial information with government authorities.

Consequences

As a result of these deficiencies, Saint Kitts and Nevis has been identified as non- cooperative in the fight against money laundering by the Financial Action Task Force (FATF), an international group dedicated to combating money laundering.

Recommendations for Financial Institutions

FinCEN advises financial institutions operating in the US to exercise enhanced scrutiny over transactions involving entities or accounts in Saint Kitts and Nevis. Specifically:

  • Carefully examine available facts: Financial institutions should carefully examine available facts related to such transactions to determine if they require reporting under suspicious transaction rules.
  • Enhanced vigilance: The advisory emphasizes the need for enhanced vigilance in detecting and preventing money laundering activities.

Technical Assistance

The Treasury Department has pledged to provide technical assistance to Saint Kitts and Nevis officials as they work to address these deficiencies. While the advisory does not suggest that US financial institutions should curtail legitimate business with Saint Kitts and Nevis, it emphasizes the need for enhanced vigilance in detecting and preventing money laundering activities.

Conclusion

The FinCEN advisory highlights the importance of strengthening financial systems and regulations to prevent and detect financial crimes. Financial institutions operating in the US are urged to exercise enhanced scrutiny over transactions involving entities or accounts in Saint Kitts and Nevis, while also working with authorities to address these deficiencies.