Recent Developments in the Eastern Caribbean Region

1
Recent Developments in the Eastern Caribbean
Region

• Presented by
• Agatha Jeffers-Gooden, Ph.D
• Director, Nevis Financial Services Department
• at
• The Offshore Institute Caribbean Regional
• Conference Exhibition
• British Colonial Hilton Hotel
• Nassau, Bahamas
• 5-7th June 2000

2
Development of International Financial Services
in the Caribbean.

• Developed over the past two decades.
• Driven by active government support.
• Favorable fiscal incentives.
• Better macro-economic environment.
• Improved technology.
• Propitious time zone location.
• Excellent telecommunication links.

3
International Financial Services in the Caribbean.

• Is described as an area of economic activity
  that is helping Caribbean island nations stand on
  their own feet.

4
Reason for Development of the International the
Financial Services Sector.

• Economies vulnerable to threats of natural
  disasters and other economic shocks.
• Sugar, banana other agriculture cease to be
  viable economic industries.
• Removal of preferential treatments and decrease
  in concessionary aid flows.
• Compelled to diversify into service areas.

5
Reason for Development of the International the
Financial Services Sector.

• The respective government had the good foresight
  to develop into international financial services.
• Expended considerable resources to develop
  expertise in the sector.
• Compatible with tourism.
• Offers opportunity for economic diversification
  growth.
• Has potential to generate foreign exchange
  earnings.
• Contribute to government revenues overall GDP.

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Importance of The Financial Services Sector.

• Generates employment.
• Employs high technology and has favorable
  spin-off effect to other sectors of the economy.

7
Importance of The Financial Services Sector
(cont)

• Contributes to the economic development of the
  countries.
• Enhance the quality of life of the citizens.

8
Importance of The Financial Services Sector
(cont)

• Sector now accounts for substantial proportion of
  the economies of these island states.
• Direct revenues from registration other govt
  fees.
• Local spending.

• Rental of office space accommodation. Increased
  activity in the construction sector.
• Well-paid, high-end employment.

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Unique characteristics of the Eastern Caribbean
islands.

• Composed of 8 nations but 9 offshore
  jurisdictions (Federation of St. Kitts and Nevis
  have 2 separate governments and 2 offshore
  jurisdictions).
• Six of the eight island nation states have full
  political independence while 2 (Anguilla
  Montserrat) are British Overseas Territories.

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Anguilla

• June 1999 - officially launched ACORN system.
• System available to licensed practitioners and
  their overseas agents.
• System funded by U.K.
• In recognition of e-commerce, seen marked
  increase in activity.

12
Anguilla 2000

• On 3rd March, 2000, new Parliament elected. Plans
  to
• Enact Proceeds of Crime Bill.
• Amend IBC, Limited Partnership Ordinances, revise
  Offshore Banking Trust Ordinance.
• Enact Financial Services Act.
• Review all licensing legislation practices as
  part of U.K. requirement.

13
Antigua Barbuda

• 1999, overhaul banking supervision board.
• IFSA now renamed IFRSA under Foreign Affairs.
• 9 Sept. Money Laundering (Prevention) Amendment
  Act 1999 enacted. Increased fees for offences,
  changed reporting req.
• Amended IBC Legislation.
• Will establish separate body for Public Relations.

14
Antigua Barbudas 2000

• Strictly enforce new regulatory requirements and
  monitor the industry.
• Enhance international image and perception.
• Attract legitimate business activities.
• Plans to change from no tax to low tax - 2

15
Dominica

• Offshore banking legislation passed in 1996
• Sector administered by the IBU.
• In 1999
• Launched its electronic registry system for IBCs
  - companies can register via modem.
• evaluated existing legislation.
• December, amended Offshore Banking Act that
  placed supervision of Offshore Banks with ECCB.
• Placed hold on economic citizenship program.
• Introduced quarterly magazine.

16
Dominicas2000

• Broaden due diligence evaluations.
• Internet gaming.
• Consider mutual funds legislation.
• Enact Free Zone Act.

17
Grenada

• Centre launched in 1996 with enactment of
• Offshore Banking Act,
• The Companies Act,
• International Insurance Act, and
• International Trusts Act.

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Grenada (cont)

• 29 October, 1999 - introduced the Grenada
  International Financial Service Authority in the
  house. This action places intl financial
  services in the hands of a Crown Corporation. No
  longer under Ministry of Finance but now a
  semi-autonomous body.

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Grenada2000

• Establish on-line registration system.
• introduce new money laundering bill -contents of
  which are consistent with the provisions of the
  CFATF.
• draft mutual funds legislation.
• enact ship registration legislation.
• refine economic citizenship program.

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Montserrat

• Soufriere Hills Volcano erupted in 1996.
• Despite setback, offshore Legislation passed at
  end of 1998.
• Offshore banks declined by 2 to 15.
• Only a handful of IBCs registered.

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Montserrat (cont)

• Continued volcanic activity had profound negative
  effect on the economic activity of the island.
• Offshore financial services sector remained slow
  as rebuilding efforts continued.

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Montserrat2000

• Package of legislation due to come into force
  when accompanying regulations finalized.
• New insurance law and limited partnership
  legislation in the pipeline.

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NEVIS

• One of the first jurisdictions in the EC to
  realize the benefits of economic diverisfication
  vis a vis Intl Fin Svcs.
• One year after gaining independence, launched the
  sector with enactment of NBCO, 1984.
• Now has 4 pieces of legislation.
• Has over 50 service providers with expertise in
  law, banking, taxation and finance.

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NEVIS (cont)

• Recognized as a predominant, reputable IBC,
  Trust, LLC formation jurisdiction.
• Well served by philosophy of doing it right
  rather than doing it fast.
• Government incorp and registration fees from
  sector contributes over 11 to current government
  revenue other direct and indirect contributions.

25
NEVIS (cont)

• 1999 - Enacted 2 amendments Req. IBCs and LLCs
  who wish Admin or mgmt offices to first obtain
  license from Min of Finance.
• Drafted Service Providers Supervision Ordinance -
  to be enacted in near future.
• Launched an aggressive marketing campaign aimed
  at increasing market share.
• Increased public awareness via seminars,
  articles, radio talk shows, etc.
• Worked with Service providers to discuss concerns
  of Government and private sector.

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NEVIS2000

• Enact Service Providers Supervision Ordinance.
• Investigate new products and markets.
• Ensure continued high level of confidence between
  government and private sector (via NIBA).
• Increase market share of the sector.
• Enhance training and development in government
  private sector in the changing face of
  international financial services.

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Saint Christopher (St. Kitts)

• 1997 - Launched St. Kitts as an international
  financial centre with the enactment of new
  legislation.
• 1998 - Established first trust company and
  launched Websitewww.fsd.gov.kn

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Saint Christopher (St. Kitts)2000

• Review existing legislation with the intention of
  adding to its current package.
• Increase regulatory oversight.
• Aggressively promote the jurisdiction as a
  reputable international financial services centre.

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ST. LUCIA

• Dec 1999 - Enacted 4 of the 6 financial services
  bills.
• Jan 2000 - Enacted other 2 legislation along with
  some of the supporting legislation.
• Officially launched the financial services
  centre.
• As of May 2000 - Licensed first 6 service
  providers.
• Old Director replaced with new Director.
• Launched Pinnacle St. Lucia as worlds only
  public online IBC registry.

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ST. LUCIA2000

• Will continue to aggressively market centre.
• Will continue training and developing the
  infrastructure.
• Plans to enact more supporting legislation.
• Anticipate that through its strong tourism
  industry, it will attract lucrative business
  opportunities.

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St. Vincent The Grenadines

• Sept. 1998 - Enacted two new amendments to
  insurance and mutual funds legislation -
  International Insurance (Amendments Insurance
  Act) and The Mutual funds (Amendments) Act 1998.
• March 1999 - first funds and insurance companies
  formed.
• Offshore banks increased by 10, up to 22.
• Has over 26 Trust companies and over 24 RAs.

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St. Vincent and the Grenadines2000

• Continue vigorous promotion as a major
  international financial centre.
• Increase activity in mutual funds and captive
  insurance.
• Drafting a new economic citizenship program.

33
Threats to the Caribbean Nations.

• Threats from larger territories.
• OECD Report Harmful Tax Competititon An
  Emerging Global Issue. - April 1998.
• Classified certain low or no tax countries as tax
  havens with harmful tax regimes.
• Report threatens legitimate business that is
  allowing small island states to stand on their
  own feet.

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Threats to the Caribbean Nations.

• Bahamas Government stated OECD Report perceived
  as a heavy handed approach to dealing with
  legitimate, properly-regulated international
  financial centres.

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Threats (cont)

• Other Reports
• UN Offshore Initiative.
• More reasonable.
• Made distinction between money laundering and tax
  evasion.
• However, initiative desires to eliminate
  confidentiality, which is one of the cornerstones
  of international financial centres.

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Main Threats

• Ability of major countries to cripple smaller
  countries.
• Prospects for concerted punitive action against
  non-cooperating centres.
• Exchange controls.
• Loss of reputation for confidentiality.
• Loss of competitiveness.
• BIAC stated that Report could make smaller
  countries economically dependent on other
  nations.

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Conclusion.

• The jurisdictions of the Caribbean
• have demonstrated their capability to
  successfully compete in the global environment.
• are committed to facilitating legitimate
  financial activity.
• despite threats will prosper.

Thank You.