Financial Crime World

Title: St. Kitts and Nevis Cracks Down on Financial Crimes: An In-depth Look at the Proceedings of the Financial Services Regulatory Commission

St. Kitts and Nevis, the tiny Caribbean islands, have taken significant strides in the global battle against financial crimes. The government’s commitment to upholding international standards has led to the enactment of several key legislations to combat money laundering, terrorism financing, and other financial crimes. In this article, we delve into the intricacies of St. Kitts and Nevis’ regulatory framework and the role of the Financial Services Regulatory Commission (FSRC).

Key Legislation

  • The Proceeds of Crime Act, Cap 4.28: Serves as the cornerstone of St. Kitts and Nevis’ regulatory framework, offering comprehensive coverage for all serious offenses, including money laundering.
  • The Anti-Terrorism Act Cap.4.02: Implements measures to suppress and eliminate international terrorism, criminalizing the offense of terrorism and providing for appropriate actions against individuals involved.
  • Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) legislation: Applies to all regulated businesses operating in St. Kitts and Nevis, with the FSRC as the regulatory and supervisory body.

Risk-based Supervision Framework

Since May 2015, the St. Kitts and Nevis Branches of FSRC have adopted a Risk-based Supervision Framework (RBS) for on-site and off-site examinations. During these assessments, entities’ compliance with relevant legislation, including their AML/CFT requirements, is scrutinized.

Assessing Compliance

The FSRC examiners evaluate policies and procedures to ensure the successful identification of risks and adherence to AML/CFT legislation. Critical aspects include the identification, verification, and maintenance of customer and beneficial ownership (BO) information for legal entities and legal arrangements:

  1. Customer and BO Information: Regulated entities must make this information available to competent authorities and those conducting AML/CFT due diligence.
  2. KYC and CDD documentations: FSRC examiners assess BOs’ KYC and CDD documentations, including passports, identity cards, proof of address, and sources of funds.
  3. Account openings and records: Comprehensive assessments involve the evaluation of customer risk assessments, source of funds and wealth declarations, account opening files, accounting records, corporate documents, and registers.

Finding Impact

FSRC examiners’ findings significantly impact the intensity and frequency of monitoring. Entities performing satisfactorily require less frequent checks than entities with weaknesses and deficiencies.

Enforcing Guidelines and Regulations

Some enforcing guidelines and regulations in St. Kitts and Nevis include, but are not limited to:

  • Anti-Money Laundering Regulations 2011
  • Anti-Terrorism (Prevention of Terrorist Financing) Regulations 2011
  • Financial Services (Implementation of Industry Standards) Regulations, 2011
  • Anti-Terrorism De-Listing Procedures Regulations, 2011

The Role of the Financial Intelligence Unit (FIU)

The FIU plays a pivotal role in St. Kitts and Nevis’ financial crime landscape. They:

  1. Receive, collect, and analyze reports of suspicious transactions from regulated businesses.
  2. Maintain a database to detect money laundering and terrorism financing activities.
  3. Share their findings with competent authorities and international partners.

All regulated businesses are required to report suspicious transactions to the FIU, with non-compliance resulting in an offense under the Proceeds of Crime Act Cap 4.28. The FIU performs investigations on suspicious transactions and maintains a database to detect and prevent money laundering and terrorism financing activities in St. Kitts and Nevis.