Saint Kitts and Nevis: Developments in the Nevis Financial Services Sector

For the past twenty years, the island of Nevis has been a popular jurisdiction for investors looking to fulfill their offshore needs in the areas of international business and limited liability company formation as well as the establishment of trusts and other structures. These services are provided through the 1984 Nevis Business Corporation Ordinance, the 1994 Nevis International Exempt Trust Ordinance, the 1995 Nevis Limited Liability Company Ordinance and the 1996 Nevis Offshore Banking Ordinance. Investors have found that by using the Nevis legislation, powerful asset protection and other vehicles can be created while at the same time providing a comfortable degree of safety and security.

Under the Nevis Business Corporation Ordinance, a company may be incorporated to conduct any lawful business, and it is not necessary to enumerate the particular objective for which the company is incorporated. Additionally, the registration process is quite simple and easily accomplished.

The Nevis International Exempt Trust Ordinance provides not only for the creation of charitable, spendthrift and protective trusts, but also includes special provisions that make Nevis arguably one of the preferred jurisdictions for the establishment of asset protection trusts (APTs).

The Nevis Limited Liability Company (LLC) is a business entity that provides an alternative to those who might consider using partnerships or corporations. While most U.S. LLC statutes, as does the Nevis LLC Ordinance, protect the company’s assets from the creditors of its members through the limitation of creditors to a charging order, the Nevis LLC Ordinance goes further to specify that this is the exclusive remedy available to the creditor. Also, the Ordinance gives the company the power to redeem the interest of creditors.

The Nevis offshore banking legislation is comprehensive and ensures that a bank licensed under the legislation can be properly monitored to safeguard depositor’s funds and to ensure that the bank maintains acceptable accounting standards and satisfies capital requirements.

• In addition, Nevis offers numerous competitive advantages. Of notable mention are the following:
• A jurisdiction that has been given a stamp of approval by being removed from the OECD & FATF lists.
• A stable Government based upon the Westminster model of Government and continuity of national policy.
• A stable and secure economy with a strong currency.
• A favourable time zone location.
• Easy accessibility to Europe and North America.
• Temperate climate.
• World-class accommodation facilities.
• A solid reputation with the commitment to having a proper regulatory regime.
• World-class cutting-edge legislation.
• Over 60 highly qualified trust and asset management companies, registered agents and other service providers with expertise in law, accounting, banking, taxation & finance.
• A wide range of developed support services, such as state-of-the-art telecommunications facilities, professional and competent attorneys and accountants and a range of local, regional and international banking institutions.
• A newly renovated airport including a longer runway, a modern tower and a new terminal building.
• A population with a 98% literacy level.
• An adaptable and trainable workforce.
• Easy registration of companies and large availability of names.
• No personal income taxes.
• Exemption of offshore companies from income, social security, capital gains, with-holding, gift, estate and succession taxes.
• The granting of tax holidays, concessions and exemptions to qualified companies under the Fiscal Incentives Act.
• Reasonable incorporation and annual renewal fees.
• A jurisdiction whose watchwords are quality, innovation and integrity.

The financial services industry has been undergoing changes primarily in response to the global economic climate and the international coordinated efforts to combat money laundering, terrorism, other international crimes and the collection of taxes by high taxing jurisdictions. These challenges have required that all international financial services centers respond by undertaking a variety of initiatives. Notwithstanding these externalities, Nevis is convinced that the ones who adapt effectively to the environment will be the ones that survive. To this end, the Nevis Island Government has been developing strategies to empower the country and its citizens to respond to the global environment and to ensure the continued feasibility, viability, vitality and vibrancy of the Nevis Financial Services Sector. To this end, several initiatives were undertaken in 2003.

One event was the hosting in August 2003 of a major international financial services industry conference by the Government of Nevis in conjunction with the Offshore Institute at Nevis’ prestigious Four Seasons Resort. The comprehensive event, held under the theme: Strategies to Ensure the Future of the International Financial Services Industry was facilitated by internationally renowned speakers and was attended by over 120 delegates from throughout the Eastern Caribbean and was hailed as an outstanding and historic experience.

A second event was the launching of the Nevis Chapter of the Offshore Institute also in August 2003. By undertaking this initiative, Nevis has distinguished itself as being a leader in the international financial services sector and has sent a clear message to the world that it is committed to the education of the operators involved in the financial services sector, as well as reaffirmed its commitment to maintaining the highest standard of integrity with respect to a proper regulatory regime, ethical codes, and in collaborating with other relevant bodies and organizations in the international arena. Furthermore, by joining the Offshore Institute, the inductees have also demonstrated their commitment to improving themselves and to ensuring that Nevis remains a reputable jurisdiction from which to conduct legitimate international financial business activity.

Another significant event was the creation and development of a 232-page publication entitled "The Nevis Golden Book 2003/2004". The publication launched in November 2003 was spearheaded by the Nevis Financial Services Development & Marketing Department and was a collaborative effort between the various departments within the Nevis Island Administration as well as between the public and private sectors. The informative and enlightening publication will serve as a comprehensive reference manual that highlights activities in Nevis and will be instrumental in the promotion and marketing of Nevis in the current areas of upscale tourism, provision of financial services to the discerning investor, agriculture as well as attract other viable investment opportunities. The Nevis Golden Book will be of enormous value to lawyers, accountants, trust professionals, tourists, investors, potential investors and others in the many jurisdictions concerned with Nevis.

Another initiative is the on-going operations of the Financial Services Commission (FSC) and the Financial Intelligence Unit (FIU). The mission of the Financial Services Commission (FSC) is to ensure that there is sustained development of the financial services sector through the effective supervision and enforcement of regulations and to interact with the international community. The FIU was created to be the national centralized agency for the collection, analysis and dissemination of suspicious transaction reports. The FSC functions in concert with the FIU which addresses matters of a criminal nature as they pertain to the sector. This partnership helps to safeguard and strengthen the reputation and integrity of the financial services sectors.

Furthermore, of importance to Nevis is the strengthening of the island’s regulatory framework. Over the years, Nevis has expended considerable resources aimed at enhancing its position as a reputable jurisdiction from which to conduct legitimate financial business activity. To this end, the entire regulatory and supervisory structure has been reviewed with respect to staffing requirements, ongoing training and other matters to ensure that the country’s financial system is seen as a sound and healthy system, which is conducive to legitimate business. As a result, the Regulation & Supervision Department, in conjunction with local, regional and international organizations and bodies have conducted a number of mini-conferences, workshops and training seminars geared at improving the competency of the various stakeholders.

These initiatives as well as others that have been undertaken by Nevis in the past year have resulted in Nevis continuing to be recognized as a predominant jurisdiction with many competitive advantages.

Plans are in place to continue efforts to upgrade Nevis’ regulatory infrastructure. Although the Federation has been removed from the FATF and OECD lists, Nevis is mindful that it must not relax its guard. To this end, Nevis is committed to monitoring its legislative and regulatory institutions to ensure that it complies with international best practices and to ensure that only persons with the highest degree of integrity are permitted to conduct business activity on the island. With this in mind, the Nevis Government intends to continue its work with other regional and international organizations to develop international standards on a level playing field basis.

In addition, the year 2004 will commemorate 20 years since the launch of the Nevis Financial Services sector. To this end, plans are in place to celebrate this event with a financial services awareness week that will include a variety of activities and will culminate in the 2^nd two-day international financial services industry conference in August 2003 held in collaboration with the Nevis Island Government and the Nevis Chapter of the Offshore Institute.

The Nevis Financial Services Development & Marketing Department also looks forward to additional collaboration with the Nevis Chapter of the Offshore Institute aimed at providing education and ethics in the area of financial services; sharing current developments and other information; providing a global network of offshore professionals; facilitating the development and growth of the financial services sector; raising an awareness of the financial services sector here on the island.

Plans are in place to continue the Nevis Financial Services Advisory Committee and the Nevis Financial Services Strategic Committees that were formed at the end of 2002 to form liaison between the Government and the private sector and determine the best way forward for the Nevis financial services sector.

Continued operation of the special joint St. Kitts/Nevis Task Force that was formed in 2000 is also anticipated. This body, composed of local experts was established to develop legislation and other policies that were necessary to strengthen financial services regulation and international cooperation while at the same time ensuring that the countries remain practical jurisdictions from which to conduct legitimate international financial activity.

A further goal is Nevis’ participation along with St. Kitts in the Special Working Group of the OECD Global Forum to play a role in the development of standards that are applicable to all in the global arena and the achievement of a level playing field based upon the accepted principles of equity and shared responsibility.

Finally, work is at the advanced stage to enact legislation for new financial services products and new markets that will enhance the attractiveness of Nevis.

CONCLUSION

The Nevis Island Government plans to enact various initiatives aimed at guarding Nevis’ impeccable reputation and has continuously demonstrated its commitment to the development of a solid international financial services sector. Notwithstanding the challenges of the past year, the Nevis financial services sector continues to fortify itself in order to meet the needs of its clients and the industry that it represents.