St. Kitts and Nevis: Offshore Business Sectors

St Kitts and Nevis has made steady progress in developing its financial services sector since securing its removal from the Financial Action Task Force (FATF) and Organisation of Economic Cooperation and Development (OECD) blacklists in 2002, but has had to develop new legislation and financial products to ensure that it stayed off the list.

Nevis emerged as an offshore jurisdiction after enacting its Nevis Business Corporation Ordinance in 1984, based upon American corporate law of the state of Delaware. Under the Constitution adopted when St.Kitts and Nevis became fully independent in 1983, Nevis has its own Legislative Assembly which swiftly took advantage of its autonomous powers to pass the Ordinance, which was followed by Trust, LLC and Mutual Fund legislation.

Although St Kitts has aimed primarily at attracting industrial and tourist investment with very tax-friendly incentive legislation, Nevis's achievements in attracting offshore companies inspired St.Kitts to establish its own offshore regime in 1996 with a new Companies Act and Trusts Act. Still, St. Kitts continues to hope that by concentrating on industrial investment it will develop a less competitive and consequently more harmonious relationship with Nevis.

In an attempt to broaden the Federation's attractions, the St Kitts government introduced two new pieces of legislation in 2002: the Merchant Shipping Act and the Foundation Act (2003). The new Merchant Shipping Act makes provisions for the registration of ships and pleasure vessels in St. Kitts. Since its launch in February 2005, over 1,000 ships have been registered with a total deadweight of over 1,400,000 tonnes.

The Foundation Act provides for the formation of private Foundations. The Foundation Act is expected to enhance the attractiveness of St. Kitts as an international financial center through the introduction of a civil law concept into the traditionally common-law system.

All offshore finance businesses in the Federation need authorisation under the Financial Services (Regulations) Order, 1997. This includes deposit-taking business, investment business, insurance business, trust business and corporate service provision.

The Nevis Multiform Foundations Ordinance came into force on October 1st 2005. It introduces a flexible hybrid multiform of foundation into the Nevis international financial services regime.

This section of the site describes the most important types of offshore business activity carried out from St Kitts and Nevis.

St. Kitts and Nevis Banking

Domestic banking is regulated by the Banking Act 1991 and non-domestic banking falls under the Financial Servicers (Regulations) Order 1997. Nevis has its own Offshore Banking Ordinance 1996.

Two types of banking licenses are granted under the Federation's 1997 Financial Services (Regulations) Order. 'Unrestricted' licenses require minimum financial resources of ECD1,350,000 (USD500,000), while for 'restricted' licenses the level is only ECD135,000 (USD50,000).

The Confidential Relationship Act, 1985 for St. Kitts-Nevis offers complete confidentiality should foreign authorities seek private banking and financial records. Prison terms are mandatory for violation of the statute.

The banking system consists of the Government owned St Kitts-Nevis National Bank, the Development Bank of St Kitts and Nevis, the privately-owned Bank of Nevis and the Bank of Nevis International, First Caribbean International, Royal Bank of Canada, Bank of Nova Scotia, RBTT Bank, the Nevis Co-operative Credit Union, the St Kitts Co-operative Credit Union and the Foundation for National Development.

At the end of 2010, the National Bank, which is the largest commercial bank in the Eastern Caribbean Currency Union had assets in excess of two billion dollars.

The Nevis Offshore Banking Ordinance 1996 defines offshore banking as follows:

• Receiving of foreign funds through the acceptance of foreign money, deposits payable upon receipt demand or after a fixed period or after notice;
• The sale or placement of foreign bonds certifcates, notes or other debt obligations or other securities, or
• Any other similar activities involving foreign money or foreign securities, and
• Either in whole or in part using foreign funds so acquired for loans, advances and investments whether in Nevis or elsewhere.

Licences under the Banking Ordinance are issued to eligible companies or qualified foreign banks. An eligible company must be a wholly owned subsidiary of a local bank regulated by the Eastern Caribbean Central Bank that is licensed under the Banking Act to do business in Nevis. A qualified foreign bank is a foreign bank that is licensed under the Banking Act, or is foreign bank with minimum capitalization and assets, as prescribed by the Minister, that is not licensed under the Banking Act but is licensed to do domestic banking in its jurisdiction of incorporation.

An eligible company must be incorporated under the Companies Act as a company limited by shares, and must have objects or business activity restricted to offshore banking from within Nevis. It must have at least one director who is a citizen of St. Kitts and Nevis with a residence in Nevis. The minimum Authorised Capital must be at least ECD2 Million, of which not less than ECD1 Million has been Subscribed and Paid Up in cash, such cash being deposited in an account maintained by the Permanent Secretary at the Eastern Caribbean Central Bank.

Not later than four months after the close of its financial year, a licensee must forward to the Permanent Secretary copies of its balance sheet and profit and loss account and the full and correct names of the directors of the licensee. The balance sheet and the profit and loss account must bear on its face the certificate of an auditor.

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