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 1,350,000 East Caribbean dollars ($500,000), while for 'restricted' licenses the level is only 135,000 East Caribbean dollars ($50,000). 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.

In 2002, the assets of commercial banks increased by $181.5 million or 10.2% to total just under 2 billion at year end. The National Bank, which is the largest commercial bank in the Eastern Caribbean Currency Union has assets in excess of a billion dollars. By mid-2005 the assets of commercial banks had reached $3 bn.

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. Insurance

Non-domestic insurance and assurance businesses must be licensed under the Insurance Act. The Federation's 1997 Financial Services (Regulations) Order set the following minimum net assets for applicants wishing to engage in insurance business: long-term and general insurance business, 810,000 East Caribbean dollars ($300,000), reduced to 540,000 East Caribbean dollars ($200,000) for long-term but not general insurance, and further lowered to 270,000 East Caribbean dollars ($100,000) for general but not long-term insurance.

In July, 2004, the Nevis Ministry of Finance and Development in Nevis announced the passage of the Nevis International Insurance Ordinance. The Ordinance is divided into six sections, and provides for the licensing and regulation of general insurance, captive insurance and reinsurance companies. It is compulsory for insurance companies to have a physical presence in Nevis, whether via a resident manager or a fully trained registered agent, with adequate knowledge and experience of the insurance industry. Trusts

Trust management has become an important business for St Kitts and Nevis.

Like all offshore finance businesses in the Federation, trust management companies need authorisation under the Financial Services (Regulations) Order, 1997. Under the Order, applicants wishing to establish a trust business handling both unrestricted and restricted business must have net assets of 540,000 east Caribbean dollars ($200,000) or its equivalent in other currencies, reduced to 54,000 east Caribbean dollars ($20,000) for restricted business.

Nevis trusts are formed under the Nevis International Exempt Trust Ordinance of 1994, as amended to September 2000. The Trust Ordinance includes special provisions to enhance the use of Nevis as a preferred jurisdiction for the establishment of Asset Protection Trusts.

The St Kitts and Nevis Trusts Act 1996 was a replacement for the 1961 Trustee Ordinance modeled after the 1925 English Trusts Act, and also contains modern asset protection provisions.