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Tracing
the Development of St. Vincent and the Grenadines as an
International Finance Centre
Executive Summary
The financial sector in
Saint Vincent and the
Grenadines
as at
September 2005 is made up
of the following
financial institutions.
The domestic
sector comprises:
The
international finance sector comprises:
-
Six (6)
banks
-
Eleven (11)
international insurance companies
-
Twenty-five (25)
mutual funds
-
Twenty-one (21)
mutual fund managers
-
One hundred
and thirty (130)
trusts
-
Seven thousand,
eight hundred and eleven (7,811) IBCs.
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St. Vincent and the
Grenadines
was a colony of Britain
that became independent
in 1979. Since then it has maintained many of the traditions of
Britain, while developing its own
unique Vincentian civilization. Its parliamentary system of democracy
mirrors that of
Westminster
– as does the evolution
of the two party system in
St. Vincent
. The legal system is that of the common law, with a common Eastern
Caribbean Court of Appeal and the final appeal in the Downing Street Privy
Council.
While the financial services sector is a prominent part of
the investment development strategy of the country, tourism is the prime
income earner, and agriculture generally comes in second. In 2003 the
revenue from the film industry surpassed that of agriculture, with the
filming of Disney’s Pirates of the Caribbean, starring Johnny Depp.
The tourism industry thrives largely on the beauty and prime
sailing destination of the Grenadine islands, as well as the hospitable and
open populace. Islands like Mustique, the Tobago Cays, Bequia,
Union
Island,
Mayreau and Canouan are musts stops for sailors.
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The
island
of
St. Vincent
has a rich cultural
heritage, with historic peoples of the Ciboney, the Arawaks, Caribs, and
Garifuna to name a few.
St. Vincent
has a long tradition of
banking and finance with Barclays Bank being the first international bank
with operations here in 1837 and the first indigenous bank First St. Vincent
Bank set up in 1909. Currently there are two indigenous commercial banks, as
well as five other commercial domestic banks operating in St. Vincent and the
Grenadines
.
Swiss lawyers introduced
St. Vincent and the
Grenadines
to the
international financial services sector in 1976. Three years later the country gained
independence from
Britain
and embarked on the process of nation building –
setting up the foundations of an independent nation state. When the country
was more mature it was able to take a second look at the international
finance industry in 1996 and take the policy decision to move this sector
into the forefront of the national economy. The international finance
legislation was overhauled and a package of financial laws was introduced.
The laws provide the basis for the formation of the following
entities:
The international entities registered in
St. Vincent and the
Grenadines
are
not subject to taxation. Favorable tax laws are common also in the domestic
economy, where there is no capital gains tax, no inheritance tax, no tax on
dividends and corporate tax ranges from 10 – 35%. There is freedom to
repatriate capital and profits up to USD100,000. Amounts exceeding that sum
require approval before repatriation, which is usually given. Also there are
no exchange controls on current transactions under USD100,000.
Regulated and licensed agents and trustees, known in
St. Vincent and the
Grenadines
as Registered Agents,
provide international financial services. The International Financial Services Authority supervises these agents.
St. Vincent and the
Grenadines
has a small, carefully
vetted and properly regulated international private banking sector. At
present there are only six banks licensed to conduct international
banking business. The regulatory body, the International Financial Services Authority, has
concentrated its efforts on ensuring that only banks with a real presence,
and sound business operations and policies, operate in St. Vincent and the
Grenadines. There are no shell banks
licensed in
St. Vincent and the Grenadines. All banks have been and
will be subject to further on-site examinations by the authorities every
12-18 months.
The ECCB promotes and maintains the monetary stability of the
single common currency (the
Eastern Caribbean
dollar) of the group of eight small island economies,
including Anguilla,
Antigua and Barbuda,
Montserrat,
St. Kitts and Nevis,
St. Lucia, and St. Vincent and the
Grenadines.
The ECCB is an organ of the Member governments and it has its
headquarters in St. Kitts and Nevis. The highest decision
making body of the Bank is the Monetary Council comprising ministers of
government from the participating states.
The role and function of the ECCB includes:
All domestic commercial banks in St. Vincent and the
Grenadines
are regulated by the
ECCB.
St. Vincent and the
Grenadines, as a result of
substantive legislative and administrative review over the past two years,
has an anti money-laundering regime that is on a par with the highest of
international standards. The FATF have recognized the substantial progress
made by St. Vincent and the
Grenadines
in this regard. The
following is a list of the legislation introduced to
combat money laundering and terrorist financing:
-
Proceeds
of Crime Money Laundering (Prevention) Act 2001 (Act No. 39 of 2001)
-
Proceeds
of Crime Money Laundering (Prevention) Amendment Act (No. 25 of 2002)
-
Proceeds
of Crime Money Laundering Regulations 2002 (S R & O No. 39 of
2002)
-
Amendment
to the Proceeds of Crime Money Laundering Regulations (S R & O No.
29 of 2002)
-
Financial
Intelligence Unit Act 2001 (No. 38 of 2001)
-
The
Financial Intelligence Unit (Amendment) Act 2001
(No. 24 of 2002)
-
The
International Business Companies (Amendment) Act 1996 (No. 26 of 2002)
-
The
International Business Companies (Amendment) Act 1996 (No 44 of 2002)
-
International
Trust (Amendment) Act (No. 27 of 2002)
-
Exchange
of Information Act 2002 (No. 29 of 2001 - Repealing the
‘Confidentiality’ Act)
-
Exchange
of Information Order S R & O 2002 No. 48
-
International
Banks Act 2004 (No 40 of 2004)
-
International
Banks (Amendment) Regulations 2002 (S R & O No. 31 of 2002)
-
United
Nations Anti Terrorism Measures Act 2002 (No. 34 of 2002).
The Proceeds of Crime and Money Laundering (Prevention)
Act (PCMLP) 2001, came into force on
December 26, 2001
. The PCMLP criminalizes
the laundering of the proceeds of serious crime. It creates an obligation
to report suspicious transactions to the Financial Intelligence Unit. It
imposes a record keeping and recording requirement for a wide range of
financial institutions and relevant businesses. The PCMLP (section 48)
also provides for the National Anti Money Laundering Committee (NAMLC).
The Proceeds of Crime Money Laundering Regulations (the
Regulations) 2002 set
out the record keeping and reporting requirements of regulated
institutions in detail.
The Financial Intelligence Unit Act 2001 governs the
Financial Intelligence Unit (FIU), which is primarily responsible for the
processing of suspicious activity reports. It is also responsible for
informing financial institutions of their obligations under the PCMLP. The
Director of the FIU, Mrs.
Sharda Bollers, held the post as Assistant Director of Public Prosecutions
in the state before her joining the FIU. She has worked in conjunction
with the Caribbean Anti Money Laundering Programme (CALP) and the US
Embassy in
Barbados
in the setting up of the
Unit.
The FIU, which began operations only on May 6, 2002
has already developed
into a model organization, both in terms of resources and results. As a
result of this, in March 2003 its membership into the Egmont Group
was approved.
Another
significant area of progress that
St. Vincent
boasts is in the establishment of of a National Anti Money Laundering
Committee (NAMLC). The NAMLC has been very active in organizing
educational seminars both for financial institutions and for the
judiciary, the magistracy and crown prosecutors. The NAMLC has hosted most
of these seminars in conjunction with the Caribbean Anti Money Laundering
Programme (CALP). As a result of the work of the NAMLC there is a very
high level of awareness, in particular among the financial sector in St.
Vincent and the Grenadines, of
the obligations of the AML regime and the importance of giving effect to
it.
The Regulatory
Authority - Structure and Function
The International Financial Services Authority was created by
Parliament to institute a new system to manage, direct control and
supervise the international financial services industry in this country.
Its role is clearly defined by the governing
statute – The
Saint Vincent and the Grenadines Offshore Finance Authority Act, 1996.
The business of The Authority is under the direction of a board of directors.
Authority
Members (Board)
The
Composition of the Board also reflects this thinking, as various professional disciplines are
represented:
-
Claude
Samuel - Chairman
-
Sabrina Brewster
- Accountant
-
Justice
Monica Joseph - Retired Judge
-
Maurice
Edwards - Director General, Finance and Planning
-
Dougal James- Executive Director (Ag.), IFSA
-
Stewart Haynes - Actuary
-
Christine
Christopher - Economist
Management Team:
-
Dougal
James
- Executive Director (Ag.),
Commissioner of International Insurances Registrar of Trusts and
Mutual Funds with responsibility for International Banks and Registered
Agents
-
Alyson Samuel -Registrar of International Business
Companies
-
Anetha
Bonadie - Manager Administration
The
Staff
-
Conroy
McBarnett - Systems Supervisor
-
Ival Jack
- Examiner
-
Roxanne Durham - Junior Examiner
-
Natasha Burton-Hunte - Senior Registry
Clerk
-
Alicia Browne - Registry Clerk
-
Vasilka Cato - Data Entry
Officer/Cashier
-
Artudo Jones - Filing Clerk / Office Attendant
-
Debalani Cruickshank -
Compliance Officer
-
Debon Moses - Receptionist/Typist
-
Yolande DeRoche-Balcombe -
Registry Clerk / IT Technician
-
Tamara Toney - Temporary
Registry Clerk
The
Authority is headed by the Executive Director who is also the
Chief Executive Officer of that body.
The day-to-day business of the administration and management of the
International Financial Services Authority, together with the supervisory duties of the Authority,
fall within this portfolio.
The
statutory duties of the Executive Director are outlined in The
Offshore Finance Authority Act, The Registered Agent and Trustee Licensing
Act, the International Business Companies Act, the International
Banks Act, the International Trusts Act, the Mutual Funds Act, and the
International Insurance Act.
The
International Financial Services Authority has been charged with these particular duties:
-
To
administer and oversee the process of licensing Registered Agents, Private Trustees, Financial Fiduciaries, and
Registered Trustees and regulate the activities of Registered Agents and their services to
ensure compliance
-
To
administer and oversee the licensing, regulation and supervision of
International Banks
-
To appoint,
and to supervise the activities of, the
Executive
Director
-
To oversee
the activities of the Registrar of IBCs and the Registrar of International Trusts.
Organizational
Chart
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