Saint Kitts and Nevis: Financial Institution Risk Management Takes Center Stage

The island nation of Saint Kitts and Nevis has made significant strides in implementing robust financial institution risk management practices, as outlined in the Common Reporting Standard (Automatic Exchange of Financial Account Information) Act, 2016.

Defining Non-Reporting Financial Institutions

According to Schedule 2 of the Act, Non-Reporting Financial Institutions are defined as entities that present a low risk of being used to evade tax and have substantially similar characteristics to governmental entities, international organizations, or central banks. These institutions include:

Government entities
Broad participation retirement funds
Pension funds
Qualified credit card issuers
Exempt collective investment vehicles
Trusts with reporting financial institution trustees

Excluded Accounts

The Common Reporting Standard (Automatic Exchange of Financial Account Information) Regulations No. 32 of 2016 have established Excluded Accounts, which are accounts that do not require reporting under the standard. Schedule 1 of the regulations outlines the criteria for determining an account as dormant and eligible for exclusion.

Criteria for Exclusion

A dormant account with a balance of USD 1,000 or less is considered an Excluded Account. An account is deemed dormant if:

There has been no transaction initiated by the account holder within the previous three years
No communication between the account holder and reporting financial institution in the past six years
The account meets certain criteria under the reporting financial institution’s normal operating procedures

Implementation and Compliance

The implementation of these regulations is a significant step forward for Saint Kitts and Nevis in promoting transparency and cooperation among financial institutions, while also ensuring that the country remains compliant with international standards on automatic exchange of financial information.

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