St. Kitts Financial Services - Information on Jurisdiction

St. Kitts is a 68 square mile tropical island located in the Eastern Caribbean. It is part of the twin island Federation of St. Kitts and Nevis. It is located in the center of the chain of Caribbean islands, which places it almost in the middle of the body of water separating North and South America. English is the official language spoken in St. Kitts by the population of approximately 33,000 people.

The sources of the laws are the Constitution, legislation passed by the National Assembly, subsidiary legislation; and the common law (adopted from the United Kingdom). There is a three-tiered Court System: - (i) there are two courts of original jurisdiction, the Magistrate’s Court which has limited jurisdiction in civil and criminal matters; and the High Court whose jurisdiction is similar to that of the High Court in the UK; (ii) the Eastern Caribbean Court of Appeal; and (iii) the Privy Council in London (which is the final Court of Appeal).

The rules relating to civil procedure have recently been reformed. One of the most novel changes is that the Court itself now manages all cases. The primary objectives of this have been to ensure that actions proceed to trial as quickly as possible and to reduce the number of cases that need to be resolved by a trial.

St. Kitts has very good infrastructure. In addition, it has a modern international airport, which was substantially rebuilt in 1999. It has a cruise port, which can accommodate the largest cruise ships.

The communications system is thoroughly modern and reliable. Further, with the liberalization of the telecommunications industry, the quality of services being provided and the competitive prices of these services have improved considerably with further improvement expected.

In April 2001 the Marketing and Development Department was established under the Ministry of Finance. The mandate for this department is to promote St. Kitts financial services, carry out market research in order to develop new products, improve on existing products and to deal with international challenges and developments that can affect the financial services industry or the investment climate of the island, e.g. the OECD initiatives.

A very good partnership has developed between the Marketing and Development Department and the private sector. There is regular dialogue concerning improvement of laws and development of new legislation.

For those companies wishing to employ expertise from outside of St. Kitts, the immigration policies accommodate the entry of skilled and qualified persons into the island. The cost of work permits is also extremely reasonable at approximately US$580.00 per annum (exclusive of legal fees). In addition, local labour costs are relatively low compared to many other financial centers.

Further, the Economic Citizenship Programme is a very useful tool in attracting persons to St. Kitts who are interested in retiring in a more relaxed environment. Under this programme, an investment in an approved project renders the investor eligible to apply for citizenship. If the application is granted and the registration fee is paid, the investor is then issued with a Certificate of Citizenship.

St. Kitts has passed modern legislation for companies, trusts, limited partnerships and, most recently, Foundations. In addition, the Merchant Shipping Act, No. 24 of 2002 was passed in 2002. This legislative package is designed to meet the needs of the international financial community and as part of the continuous process of review and development there will be more products and advantages added in the not too distant future.

Provided that all due diligence requirements have been carried out, incorporation of companies can be achieved in 24 hours. The Companies Act provides for the incorporation of ordinary companies, (subject to 35% corporate tax), exempt companies (which are tax free if their business is purely international and not with residents of St. Kitts). These companies can be companies limited by shares, by guarantee or hybrid companies (i.e. companies limited by both shares and guarantee).

The Companies Act has very recently been amended to provide for Segregated Portfolio Companies, which will encourage the use of St. Kitts companies for captive insurance and mutual funds.

St. Kitts has a very developed and professional banking system. There are three international banks (First Caribbean International Bank (Barbados) Limited, Royal Bank of Canada and The Bank of Nova Scotia) and one indigenous bank (St. Kitts Nevis and Anguilla National Bank, which is the largest indigenous commercial bank in the Eastern Caribbean that offers very modern banking facilities and services such as Internet banking and the ability to open foreign currency accounts in Euros, US dollars, Canadian Dollars and Pounds Sterling).

The Confidential Relationships Act 1985 protects the confidential affairs of persons doing business in St. Kitts. Disclosure is permitted only in the event of investigations into criminal offences. This is consistent with St. Kitts’ goal of providing an attractive environment for legitimate business.

The Financial Services Department is the home of the Director General of Financial Services and the Regulator of Financial Services. This Department carries out inspections of regulated businesses to ensure that they are in full compliance with the very well developed Anti-Money Laundering and Counter Financing of Terrorism laws in St. Kitts. Advice and guidance are usually offered to finance businesses that are in need of the assistance.

St. Kitts is not on any FATF or OECD blacklist. When removed from the FATF blacklist in June 2002, St. Kitts received a very good commendation from the President of the FATF for implementing an effective anti-money laundering regime within less than two years.

St. Kitts is part of the OECD Global Forum to discuss the issue of harmful tax practices and measures to help prevent these practices from occurring. The participation of St. Kitts in this forum and on various OECD sub-groups has proven useful in ensuring that its views are represented particularly with respect to guaranteeing that small financial centers around the world are not forced to introduce measures and standards for transparency and exchange of information that are not being practised by OECD member countries themselves, or internationally for that matter. St. Kitts, as well as many other financial centers, committed to the OECD process on the basis of a level playing field.

At present, St. Kitts is seeking to address the problem of arbitrary blacklisting of small financial centers by certain European and South American countries. These lists have been compiled without any proper assessment of the laws and measures in place in St. Kitts (or other small financial centers) relating to transparency and international cooperation. Although many of these lists are put together to compel small countries into compliance, it will not solve the current problem of tax evasion or tax avoidance if all financial centers (in both small developing countries and developed countries) are not given the same treatment. Capital flight will continue to take place and move towards tax havens within OECD member countries if the inequality in treatment persists. Practices such as these do not assist in fostering international cooperation.

St. Kitts is firmly of the view that these countries should make relevant inquiries or do the necessary research into the legislative framework that exists for transparency and international cooperation in countries like St. Kitts before copying outdated OECD blacklists and adopting them in their national laws.

St. Kitts is continuing to focus on the development of its financial services sector and improving its investment climate for the entry of other types of business ventures into the island. The island stands ready and willing to cooperate internationally to eliminate crime and terrorism and is prepared to continue working to ensure that it is recognized as a serious player in the international financial services arena and as a viable place for investment opportunities.