Financial Crime World

SANCTIONS AND THEIR IMPACT ON FINANCIAL TRANSACTIONS IN SAINT KITTS AND NEVIS

Warning Issued by the United States Government

The United States government has issued a warning to financial institutions operating in the country to be on high alert for suspicious transactions originating from or routed through Saint Kitts and Nevis. The advisory, released by the Financial Crimes Enforcement Network (FinCEN), highlights serious systemic problems with the island nation’s counter-money laundering regime.

Country Overview

Saint Kitts and Nevis is a federation of two islands in the Caribbean Sea with a population of approximately 40,000 people. While most financial activity on the islands takes place in Nevis, which has become increasingly dependent on fees generated by offshore banking registration, the country’s legal and regulatory systems suffer from significant shortcomings.

Key Concerns

  • Limited laws against money laundering: Only narcotics trafficking proceeds are subject to prosecution.
  • No restrictions on individuals with criminal records holding management positions in offshore banks.
  • Lack of effective supervision of offshore companies, including those operating as financial institutions.
  • Failure to verify customer identities or maintain records on customer transactions.
  • Inadequate reporting requirements for suspicious transactions.

Implications of FATF Identification

As a result, St. Kitts and Nevis has been identified by the Financial Action Task Force (FATF) as non-cooperative in the fight against money laundering.

Guidance for US Financial Institutions

The US government emphasizes that banks and financial institutions should not curtail legitimate business with St. Kitts and Nevis but rather exercise enhanced scrutiny on all transactions originating from or routed through the country or involving entities organized or domiciled there.

Reporting Requirements

Financial institutions in the United States are advised to carefully examine available facts relating to any such transaction, particularly those exceeding $5,000 in US dollar equivalent, to determine if reporting is required under suspicious transaction rules. This includes institutions subject to specific reporting rules as well as those with broader reporting obligations.

Protection from Liability

The Treasury Department will consider any report related to a transaction described in this advisory as a report of a suspicious transaction relevant to a possible violation of law or regulation, protecting the institution from liability for reporting.

Future Assistance from US Officials

As St. Kitts and Nevis works to address these deficiencies, US officials stand ready to provide technical assistance to help remedy the country’s counter-money laundering systems.