Grenada Legal Background
The
main statutes governing offshore activity
in Grenada are as follows:
International Companies Act (as amended, 2002)
International Insurance Act 1996 (as amended,
2002)
International Trusts Act 1996
Offshore Banking Act 2003
International Financial Services (Miscellaneous
Amendments) Act 2002
Grenada’s
Money Laundering Prevention Act of 1999 established
a Supervisory Authority over the financial
sector, and imposed customer identification
requirements on banking and other financial
institutions. The Proceeds of Crime (Amendment)
Act of 2003 extends anti-money laundering
responsibilities to a number of non-bank financial
institutions.
The
Grenada International Financial Services Authority
(GIFSA) monitors and regulates both onshore
and offshore financial institutions, in some
areas sharing supervision with the Eastern
Caribbean Central Bank (ECCB); it also issues
certificates of incorporation to IBCs. In
2007, GIFSA was renamed the Grenada Authority
for the Regulation of Financial Institutions.
Legislation implementing the new regulatory
body was defeated in the Senate in 2005; however,
the legislation was reintroduced and enacted
in 2006.
In
June 2001, Grenada established a Financial
Intelligence Unit (FIU) headed by a prosecutor
from the Attorney General’s office.
The FIU can provide information concerning
SARs to any foreign FIU. Grenada has cooperated
extensively with US law enforcement in numerous
money laundering and other financial crimes
investigations. As a result, several subjects
in the United States were successfully prosecuted.
Grenada became a member of the Egmont Group
in June 2004.
During
2003, Grenada passed the Exchange of Information
Act No. 2 of 2003, which strengthened the
government's ability to share information
with foreign regulators. A Mutual Legal Assistance
Treaty and an Extradition Treaty have been
in force between Grenada and the United States
since 1999. Grenada also has a Tax Information
Exchange Agreement with the United States.
To
strengthen the supervision of the nonbank
financial sector, including the insurance
sector, cooperatives, offshore financial services,
and money remitters, the government enacted
the Grenada Authority for the Regulation of
Financial Institutions (GARFIN) Act in May
2006. The Act provides for the creation of
a single regulatory agency responsible for
regulating and supervising all nonbank financial
institutions and services in Grenada. The
Eastern Caribbean Central Bank has responsibility
for the supervision of domestic banks, and
will continue to do so. GARFIN came into operation
in 2007.
According
to the US State Department, as of December
2006, Grenada had one inactive offshore bank,
one trust company, one management company,
and one international insurance company, and
was reported to have over 20 internet gaming
sites. There are also nearly 6,000 international
business companies (IBCs).
At
the time of writing, the domestic financial
sector includes six commercial banks, 26 registered
domestic insurance companies, two credit unions,
and four or five money remitters.
The
following sections describe the main offshore
activities carried out on Grenada.
Grenada
Banking
The
principal legislation is the Offshore
Banking Act 2003, which provides a comprehensive
framework for the licencing and supervision
of offshore banks. Before a licence is
granted by the Minister of Finance, routine
checks are made of the applicants. There
two types of licences, class 1 (unrestricted)
and class 11 (restricted).
Banking
confidentiality is statutory. Section
28 (1) of the Offshore Banking Act in
particular sets out the general rule that
"no person who has aquired knowledge
in his capacity as director, manager,
secretary, officer, employee or agent
of a licensee or as Registrar or a person
authorised under subsection 21 (4) to
assist him, shall disclose to any person
or governmental authority the identity,
assets, liabilities, transactions or other
information in respect of a depositor
or customer of such licensee." Confidentiality
and secrecy in Grenada's offshore financial
services sector is strictly enforced and
both criminal and civil consequences are
visited on those who disclose confidential
information. The Act states that any person
who contravenes the confidentiality provisions
commits an offence and shall be liable
on summary conviction to a fine of one
hundred thousand dollars or imprisonment
for a term not exceeding two years or
to both such fine and imprisonment.
Disclosure
of information by a Grenada licensed offshore
bank is only permitted in those cases
which are expressly provided for in the
law. Such cases include a disclosure:
-
with written authorization of the depositor;
-
for the purpose of performance of the
person's duties within the scope of his
or her employment or in conformity with
the provisions of the Offshore Banking
Act;
-
when required to make the disclosure by
any court of competent jurisdiction within
Grenada.
Grenada Insurance
The legislation which deals with this area
of offshore business is the International
Insurance Act (No.37 of 1996).
The
Act provides for the licencing of international
insurance companies, which are not permitted
to operate domestically.
The
Act also provides for the formation of captives.
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Grenada Gaming
In 1998 The International Betting Act came
into force in Grenada, making provision for
the granting of International Betting licences
in a regulated framework.
An
application for a license to conduct international
betting must be made to the Registrar of Offshore
Services.
Application
for a license under the Act may require an
examination of the financial status and history
of the Applicant Company and any of its directors,
associates or affiliate and the character
and experience of the directors thereof. The
objective is to ensure that Grenada is maintained
as a clean and transparent jurisdiction.
Licencees must maintain a principal office
in Grenada and must conduct their business
in a way that is consistent with the interest
of persons placing bets. A deposit of at least
EC$1m must be permanently maintained in a
licensed bank in Grenada.
A
licensee under the Act pays a 2% (at the time
of writing) tax on the gross receipts derived
from betting each month to the Comptroller
of Inland Revenue.
Examination
by the appropriate authority may be done at
any time without prior notification.
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