Anti-Money Laundering and Anti-Terrorism

The Proceeds of Crime Act covers all serious offences. The Act creates the specific offence of Money Laundering and defines money laundering as conduct where a person engages directly or indirectly, in a transaction that involves money or other property that is the proceeds of crime or the person knowingly receives, possesses conceals, disposes of or brings into or transfers from St. Kitts and Nevis any money or property that is the proceeds of crime.

The Guidance Notes on the Prevention of Money Laundering apply to all Regulated Businesses in St. Kitts and Nevis.

The Financial Intelligence Unit (FIU) is the authority responsible to receive, collect, analyze and act upon reports of suspicious transactions from regulated business in St. Kitts and Nevis. The FIU perfoms investigations and establishes a data base for detecting money laundering. They also disseminate information on suspicious transactions to competent authorities and liaise with other anti-money laundering intelligence agencies.

All regulated business are required to report suspicious transactions to the competent authority (i.e FIU). Failure to report suspicion of money laundering is an offence under the Proceeds of Crime Act 2000.

Yes, the Anti-Money Laundering Regulations 2011 and the Financial Services (Implementation of Industry Standards) Regulations, 2011.

Fiduciary Services

A registered agent is a corporation having paid-in capital of at least $500,000, Attorney or Law Firm of Attorneys licensed by the Nevis Island Administration to provide fiduciary services. A registered agent can also act as an Authorised Person to submit applications to the Citizenship by Investment Unit and act as a local representative person for foreign ships registered on the St. Kitts and Nevis International Ship Registry. Fiduciary services are defined in paragraph 171 of the Financial Services (Implementation of Industry Standards) Regulations, 2011 and comprise of any of the following activities carried on as a business, either singly or in combination:

  • formation and/or execution of trusts;
  • management or administration of trusts;
  • acting as a trustee or protector for trusts;
  • maintaining the office for service of trusts;
  • incorporation and/or registration of companies;
  • establishing partnerships or foundations;
  • providing nominee shareholders, directors, chief executives or managers for companies or partnerships;
  • maintaining the registered office or the office for service, for companies or partnerships or foundations;
  • management or administration of limited partnerships;
  • acting as a registered agent.

Applicants can apply to become a Registered Agent either as a management company, Attorney or law firm of Attorneys. They should complete an application – Form C and send it along with supporting documents and a business plan to the Nevis Financial Services (Regulation and Supervision) Department. The Business plan should contain a description of the company or the Attorney or law firm of Attorneys law practice; the types of services and products to be offered; information on the beneficial owners, directors and senior management, barrister or solicitor, as the case may be; their qualifications and experience; organizational chart showing reporting lines for senior positions and key responsibilities; details of any material outsourcing arrangements that may be anticipated; the market that the company intends to target and its sales and marketing strategy; the number of local persons to be employed; “Know Your Customer” policies and procedures; a three-year financial projection and intended financial year end; source of initial paid-in and future capital, etc.

Companies can request a five-year tax exemption on corporate profits and can request exemption of customs duties on office equipment. In respect of a company, the address of its registered office must be physically situated in Nevis and the company must demonstrate that the ‘mind and management’ of the company will be in Nevis. This is the same requirement for individuals that apply as an Attorney or law firm of Attorneys. The Department then conducts due diligence investigations and fit and proper assessments on each of the principals, directors and the manager of the company, Attorney or law firm of Attorneys and submits the findings along with the application to the Ministry of Finance. The Minister of Finance approves or disapproves the application. The information required for due diligence is as follows: the names, present address, date and place of birth of shareholders, directors and manager(s); social security number(s); passport information including number, date of issuance, where issued; driver’s licence information.

NB: Where the management company has not been incorporated, applicants may submit all relevant documentation (business proposal, due diligence information along with applicable fees) for approval prior to incorporation. Companies are required to be incorporated as local companies under the Companies Ordinance, Cap 7.06, Nevis.

Submission of the application should be accompanied by the following fees. All cheques should be made payable to the Nevis Island Administration:

  1. Administrative fees of EC $1,500 (US$560).
  2. A payment for due diligence fees of USD5,000 per non-CARICOM national shareholder, director or Manager of the company, Attorney or law firm of Attorneys. If any of the individuals are CARICOM nationals, the due diligence fees are USD2,500. Due diligence investigations will also be conducted on nationals who have resided outside of the Federation of St. Kitts and Nevis for an extended period of time.

If approval is granted, the applicable licence(s) will be issued from the Nevis Island Administration after the payment of all the prescribed fees including fees for the licence(s).The fee for each licence (Trusts, IBCs, LLCs, Foundations) is EC$500 each. In practice, management companies, Attorney or law firm of Attorneys generally request approval for all services and upon payment of the fees are issued licences authorizing the company to register Trusts, IBCs, LLCs and Foundations, to act as their registered agent and provide all services that are ancillary to a management company or to be registered as an Authorised Person by the Citizenship by Investment Unit.

All Registered Agents are required to submit annual audited financial statements to the Nevis Financial Services (Regulation and Supervision) Department within three months of the end of their financial year in accordance with sections 35-37 of the Financial Services Regulatory Commission Act, Cap 21.10 (FSRC Act). They are also subject to AML/CFT compliance audits as mandated under the FSRC Act, the Anti-Money Laundering Regulations, 2011 and the Financial Services (Implementation of Industry Standards) Regulations, 2011. The Compliance audits are undertaken pursuant to our Risk Based Supervisory Framework to evaluate the adequacy and completeness of the measures that are in place for AML/CFT with special attention on the internal controls procedures for client acceptance, monitoring risks, suspicious activity reporting to authorities and record keeping including a review of citizenship by investment files, if applicable.

Under the Alien Land Holding Act Cap. 102, foreign beneficial owners and directors of a local company must have an Alien Land Holding licence to hold shares in the company and act as directors. These applications are made through the Ministry of Agriculture. Work permits are also required for the staff that are non-nationals of the Federation of St. Kitts and Nevis.

The information required for due diligence checks are as follows: the name of the directors; social security number(s); passport numbers(s); passport date of issuance, passport place of issue; drivers licence number(s), current addresses of directors; dates and place of birth of directors.

A registered office is the office of registered agent that maintains requisite records and accepts service of process, legal communications and notices. The registered office also performs the traditional corporate functions such as dealing with correspondence, paying of fees and filing.

Please check the “Regulated Entities” link of this website for the complete list of registered agents/ service providers.

General

Doing Business in Nevis is Easy! Nevis is an economically and politically stable jurisdiction with over 21 years of experience as an international financial centre. Nevis has state of the art infrastructure and no exchange controls, user-friendly and flexible legislation and a qualified pool of professionals with expertise in asset management and protection, finance, taxation, banking, law and accountancy. Nevis has a reputation as a welcoming, innovative and progressive jurisdiction. In Nevis, the government fees are competitive, the incorporation process is efficient and there is no compromise on the quality of service or the carrying out of international best practices.

The International Financial Services Sector is the second highest foreign revenue earner and contributor to the economy of Nevis.

Great! For 2005, there has been significant growth in the number of companies, in particular International Business Companies (IBC’s), being registered in Nevis. In addition, there is new and great interest in the jurisdiction as an International Insurance, Mutual Funds and Foundations Industry.

The Federation of St. Kitts & Nevis has signed Tax Information Exchange Agreements (TIEAs) with twenty Four (24) countries, namely Aruba, Australia, Belgium, Canada, Curacao, Denmark, Faroe Islands, Finland, France, Germany, Greenland, Guernsey, Iceland, India, Ireland, Liechtenstein, Netherlands, New Zealand, Norway, Portugal, South Africa, St. Maarten, Sweden and United Kingdom. The Federation has also signed thirteen (13) Double Taxation Conventions (DTCs) with the following countries: Antigua and Barbuda, Barbados, Belize, Dominica, Grenada, Guyana, Jamaica, Monaco, San Marino, Switzerland,- , St. Lucia, St. Vincent and The Grenadines and Trinidad and Tobago. Additionally, to facilitate automatic exchange of information with the United States of America, the Federation signed a Model 1B FATCA Inter-governmental Agreement (IGA).

International Insurance

The different classes of International Insurance Business offered in Nevis are: Long-term Insurance, General Insurance, Reinsurance, Captive Insurance, Allied Annuity Insurance and Allied Reinsurance.

The Minimum Paid up Share Capital for:

  • Long-term Insurance – US$185,000
  • General Insurance – US$185,000
  • Reinsurance – US$75,000
  • Captive Insurance:
    i. Single Owner Captive – US$10,000
    ii. Less Than 5 Owners Captive – US$20,000
    iii. 5 or more Owners captive – US$50,000
  • Allied Insurance – US$10,000

The amount by which an insurer’s assets must exceed its liabilities is prescribed as follows:

  1. If the Insurer is carrying on Long Term Insurance Business- The margin of solvency is the minimum paid up share capital;
  2. If the Insurer is carrying on Insurance Business Other than Long-term Insurance Business – The margin of solvency should be at least the minimum amount of paid up capital. If the net retained premium of the insurer does not exceed US$5,000,000, the prescribed amount is 20% of the net retained premium. If the net retained premium exceeds US$5,000,000, the prescribed amount is US$1,000,000 plus 10% of the amount by which the net retained premium exceeds US$5,000,000.

A registered insurer must submit audited annual accounts to the Registrar of International Insurance within 21 days after a meeting to approve such accounts or in any event within six months of the financial year. Additionally, every three years at the end of its financial year the Registered Insurer of Long-Term Insurance Business must file an actuarial valuation of its assets and liabilities, certified by an approved actuary.

Every Registered Insurer must have an Insurance Manager or local Registered Agent.

The Insurance manager may reside outside of Nevis but this is subject to the approval of the Registrar of International Insurance. In this case the Insurance Manager must also appoint a resident agent.

It takes approximately four (4) weeks for one to receive a decision on an application to license insurance business.

Multiform Foundations

The concept “Multiform” means the form of the foundation as provided for in its constitution and stated in its certificate of establishment. The constitution of the Foundations can state how the Nevis Foundation should be treated, whether as a trust, a company, a partnership or an ordinary foundation.

The Nevis Multiform Foundation Ordinance anticipates that the Nevis Multiform Foundation will be used for estate planning, charity, financing and special investment holding arrangements.

There is no other Foundation product like the Nevis Multiform Foundation. The Nevis Multiform Foundation is a legal entity shell into which a subscriber can self-design the form of the Foundation, subject to given rules that define it. Each Nevis Foundation will have a stated “multiform”, which means that the constitution of the foundation will state how it is to be treated whether as a trust, a company, a partnership or an ordinary foundation. Through the “multiform” concept the stated identity of the Foundation can be changed during its lifetime, thus allowing for there to be greater flexibility in its use and application.

The Nevis Multiform Foundation Ordinance provides for entities to be converted or transformed, continued or consolidated or merged into a Nevis Multiform Foundations. Therefore, an entity incorporated outside of Nevis can be transformed into a Nevis Foundation; an existing Nevis entity can be converted into a Nevis Foundation; and any two or more entities from outside or within Nevis can merge into a Nevis Multiform Foundation. These features definitely make the Nevis Multiform Foundations Ordinance, an attractive asset protection vehicle. However, there are many other notable features of the Nevis Multiform Foundations Ordinance, which make it very attractive. For example the Nevis Multiform Foundation Ordinance provides for a balance between privacy and transparency and also provides for healthy corporate governance.

Nevis Companies

In Nevis, there are 2 types of international companies: International Business Corporations (IBCs) which are incorporated under or continued under the Nevis Business Corporation Ordinance 2017, and Limited Liability Companies (LLCs) which are organised under or continued under the Nevis Limited Liability Company Ordinance 2017.

Registration of Nevis IBCs and LLCs is easy. First of all, you must utilize the services of a registered agent/service provider. You would normally submit the name of the desired IBC or LLC to the registered agent. The registered agent could instantaneously reserve the name of the IBC or LLC using the Nevis Online Registration Module or by making a call to the registry. Once the name has been reserved, the Nevis IBC can be incorporated by filing Articles of Incorporation with the Registrar of Corporations and the LLC can be formed by filing Articles of Organization with the Registrar of Companies. If the incorporation or formation documents comply with the law, an endorsement certificate and/or a certificate of incorporation/formation will be issued.

It takes approximately 24 hours to form a Nevis LLC or to incorporate a Nevis IBC.

Yes, a foreign entity can easily be re-domiciled as a Nevis LLC or IBC.

Entities are NOT required to file annual returns. However, pursuant to AML/CFT Regulations, Registered Agents acting on behalf of entities are required to obtain and maintain KYC/CDD information on all principals, to include, for example, beneficial owners, settlors, controlling shareholdings, directors, major beneficiaries, etc.

Yes, Bearer Shares are allowed, but they are immobilized. Generally however they are discouraged. Where bearer shares are issued, they must be held in the custody of an approved custodian (usually the registered agent).

The Nevis LLC recognizes a single member LLC. There are NO limitations on the number of members. A Nevis LLC can also be managed by a single manager.

The minimum number of shareholders required is one and the minimum number of directors required is also one. Shareholders, Directors and other officers of the Nevis IBC can reside anywhere and be of any nationality.

Yes, an IBC or LLC incorporated in Nevis must maintain at all times a registered agent and a registered office in Nevis.

International Banking

In Nevis, international banking is the receiving of foreign funds through foreign deposits, sale or placement of foreign bonds, certificates, notes or other debt obligations or securities; or either in whole or in part using of foreign funds so acquired for loans, advances and investment whether in Nevis or elsewhere. It also includes any other activity deemed and declared by the Minister as similar or related to International banking activity.

Nevis has one (1) international Bank, which is The Bank of Nevis International Ltd, a wholly owned subsidiary of the Bank of Nevis Ltd.

Yes, section 32 of the Nevis International Banking Ordinance, 2014 provides that no statement, return or information shall be required by the Regulator or the Minister with the respect of the affairs of any customer of an international bank.

Except as is specifically provided for by this Ordinance and for the purposes specified, no statement returns or information furnished or submitted by a Licensee in respect of its business shall be communicated or disclosed. Additionally, the Confidential Relationships Act, Cap. 21.02 provides that unauthorized disclosure of information to any third party body or organization is strictly prohibited.

The Nevis Financial Services (Regulation and Supervision) Department is the regulatory authority for international banks in Nevis.

Part III of the Nevis International Banking Ordinance, 2014 sets out the licensing requirements for applicants. In particular, section 6 provides that no person shall carry on international banking business or hold himself out as carrying on international banking business in Nevis without a license granted by the Minister of Finance. An applicant must be a company.

An eligible company must be incorporated under the Companies Ordinance, Cap7.06 as a company limited by shares and have the word “bank” included as part of its name.

In accordance with section 9 of the Nevis International Banking Ordinance, 2014, to be eligible to do international banking the company must be incorporated; have its objects restricted to international banking from within Nevis; have articles of incorporation and bylaws; have at least one director who is a citizen and resident of Nevis; have an authorized capital of at least two million US dollars pursuant to section 11 of the Ordinance; provide the name, address and particulars of identification of every director, senior management personnel and shareholder having more than 5% of the shares; submit the name and registered office of its appointed auditor and compliance officer; provide such other information of a financial or other nature as the Regulator may require in any particular case; tender with the application form and supporting documents a non-refundable application fee and submit the requisite fees to conduct due diligence checks.

Trusts

There are three main types of International trusts offered in Nevis: Spendthrift or Protective Trust, Charitable Trust and Non-Charitable Trust also known as Purpose Trust.

The Trustee for a Nevis trust is usually a licensed Nevis Trust Company.

The maximum duration period for a spendthrift trust is 100 years from the date of creation. An international trust established for charitable and non-charitable purposes may have a duration exceeding 100 years. The rule against perpetuities does not apply to trust registered in Nevis. The trust may authorize the accumulation of income for a period not exceeding the maximum duration of the trust.

Yes. The Nevis International Exempt trust cannot be declared void, voidable or defective by reason of any forced heirship rules of the Settlor’s domicile.

There are many salient features of the Nevis International Exempt Trust:

  1. A creditor seeking to set aside a transfer to a Nevis Trust has a very high burden to discharge. The creditor is required to establish beyond reasonable doubt that the transfer constituted a fraudulent disposition and he must prove intent to defraud with “clear and convincing evidence”.
  2. A creditor must first lodge a security bond of US$25,000 with Ministry of Finance before he can bring an action against a Nevis Trust. No claim or action will be entertained by the Court of St. Kitts and Nevis after the expiration of one year, after the creation of the trust.
  3. Foreign Judgments are not enforceable against a Nevis trust. Any civil action to recover assets must be brought anew in the Court of the Federation of St. Kitts and Nevis.
  4. The Statute of Queen Elizabeth has no application.
  5. The legislation provides for there to be a protector of the trust. The protector is responsible for overseeing or monitoring the operations of the trust and actions of the trustee.
  6. The same person can act as Settlor, Beneficiary and protector of the Trust. This allows the Settlor to maintain greater control over the trust assets, if desired.

Insurance

Captive Insurance Business

Insurance business where the insured is a parent or affiliated company of the registered insurer or is a person in respect of whom the registered insurer is authorised by the Registrar to provide insurance.

Reinsurance

Insurance business where the risk insured by a person is a risk that person has accepted from an insurer.

Long Term Insurance Business

Insurance business of any of the following kinds, namely:

  • affecting and carrying out contracts of insurance on human life or contracts to pay annuities on human life;
  • effecting and carrying out contracts of insurance against risks of the persons insured sustaining injury as the result of an accident, or of an accident of a specified class, or dying as the result of an accident or of an accident of a specified class, becoming incapacitated in consequence of disease, or disease of a specified class, being contracts that are expressed to be in effect for a period of not less than five years or without limit of time and either not expressed to be terminable by the insurer before the expiration of five years from the taking effect thereof or are expressed to be so terminable before the expiration of that period only in special circumstances therein mentioned;
  • effecting and carrying out contracts of insurance, whether effected by the issue of policies, bonds or endowment certificates or otherwise, whereby in return for one or more premiums paid to the insurer a sum or a series of sums is to become payable to the persons insured in the future, not being contracts such as to fall within either paragraph (a) or (b); and(d) any kind of insurance business declared by regulation to be long-term business.

General Insurance Business

Insurance business that is not long term business, reinsurance business or captive business and without limiting the generality of this term includes marine insurance, engineering insurance aviation insurance, transportation insurance, motor insurance, property liability insurance, pecuniary loss insurance, credit and guarantor insurance and miscellaneous personal insurance.

Allied Reinsurance

A company carrying on insurance business where the registered reinsurer is allied to a primary insurer who typically initiates insurance contracts as part of its normal course of business, and the allied reinsurer will only assumes risks and accepts premiums from this primary insurer.

Allied Annuity

A company carrying on insurance business where the registered insurer’s business entails only the issuance of annuity contracts, and/or single premium life contracts, and where premiums are acceptable only from its parent(s), or other person(s) of substantial relationship, whether personal or business, and the number of annuitants does not exceed ten (10) persons.

Insurance is a highly regulated industry, and the operation of a captive — just like any other insurer– requires staying in compliance with multiple regulatory authorities. The task of forming and operating a captive is a challenge that calls for expertise in many areas and ongoing attention. Implicit in accomplishing this are the crucial roles played by risk managers, insurance regulatory lawyers, accountants, outside auditors, investment professionals, resident insurance managers, tax lawyers, finance and corporate lawyers, reinsurance specialists, underwriters, and often actuaries, among others. Coordinating the activities of these many persons calls for a effective overall manager.

  1. Greater availability of insurance coverage at a reasonable cost or any cost
  2. Use of a captive may have significant tax advantages
  3. Greater control of insurance needs
  4. Better service for insurance exposure. A captive can tailor its insurance program to meet its own specific situation. This can involve better loss control, better underwriting and more control over the handling and settlement of claims
  5. Ability to obtain broader coverage
  6. The ability to have greater stability in the cost of insurance
  7. Potential for improved cash flow. The premium collected by the captive earns investment income which accrues for the benefit of the captive owner(s)
  8. Direct access to the reinsurance market
  9. More immediate reward for controlling the cost of claims

The minimum capital requirements are based on the specific class of insurance.

  1. Captive Insurance
    – 1 owner – US$10,000.
    – More than 1 but less than 5 – US$20,000.
    – More than 5 – US$50,000.
  2. Reinsurance – US$75,000.
  3. Long Term Insurance – US$185,000.
  4. General Insurance – US$185,000.
  5. Allied Reinsurance – US$10,000.
  6. Allied Annuity – US$10,000.

Click here for “How to Apply” section under Insurance.

Insurance Manager Documents

  • Completed Application Form – 1- Insurance Manager, Registered Agent.
  • Completed Personal Questionnaire Form (Form 2) (all directors and shareholders, managers and officers) At least 2 directors is required – Section 28 of the Ordinance.
  • Application fee: US$250 – Insurance Manager, Registered Agent.
  • Due diligence documentation must be submitted with the application for each control person (directors/ shareholders/managers/officers) who have completed a Form 2, this includes:
  1. Notarized passport declaration pages or government issued photo ID.
  2. Utility bill confirming address (dated within 6 months of application date).
  3. Two (2) references: 1 professional reference (from accountant, lawyer, or administrator etc), 1 bank reference (on company stationery) attesting to good standing of individual.
  4. Police record (preferred) and/ or notarized criminal history declaration form or affidavit.
  5. Curriculum vitae for each control person (directors, manager, officers). For each director it is preferred that skill and expertise along with professional qualifications be highlighted.
  6. Annual accounts for 2 years preceding year of application, of each shareholder which is a body corporate holding more than 10% of the applicant’s issued share capital or total voting rights, together with similar accounts for the parent body, if any, of each such body corporate.
  • A list of all insurers whom the applicant is, or will be engaged to act as manager or consultant.
  • A business plan must be submitted with application.
  • Financial projections (3-5 yrs minimum) including Pro Forma Income Statement, Balance Sheet and Cash Flow Statement.
  • Documents by which the body corporate is to be constituted such as Articles of Incorporation, Memorandum of Association, Articles of Association, By-laws etc. If not yet incorporated attach the proposed documentation.
  • External Due Diligence Fee of US$1200 per non-national control person.
  • If approved, Registration fee: US$1000 is required to be paid before the applicant receives the license.

Auditors

  • Due diligence documentation including:
  1. Notarized passport declaration pages or government issued photo ID.
  2. Utility bill confirming address (dated within 6 months of application date).
  3. Two (2) references: 1 professional reference (from accountant, lawyer, or administrator etc), 1 bank reference (on company stationery) attesting to good standing of individual.
  4. Police record (preferred) and/ or notarized criminal history declaration form or affidavit.
  5. Curriculum vitae for each control person along with professional qualifications.
  • Current and valid Auditors license for the firm; and
  • Any additional information to support the company’s credentials.

Directors

  • Completed Personal Questionnaire Form (Form 2) (to be completed by all directors and shareholders) (please see attached form).
  • Due diligence documentation including:
  1. Notarized passport declaration pages or government issued photo ID.
  2. Utility bill confirming address (dated within 6 months of application date).
  3. Two (2) references: 1 professional reference (from accountant, lawyer, or administrator etc), 1 bank reference (on company stationery) attesting to good standing of individual.
  4. Police record (preferred) and/ or notarized criminal history declaration form or affidavit.
  5. Curriculum vitae for each control person along with professional qualifications.
  6. Annual accounts for 2 years preceding year of application, of each shareholder which is a body corporate holding more than 10% of the applicant’s issued share capital or total voting rights, together with similar accounts for the parent body, if any, of each such body corporate.

It is important to note, that the above documents must be submitted through the intended insurance company’s registered agent.

Registered insurers holding a General Insurance, Long-Term Insurance or Reinsurance license must submit annual audited accounts. Registered insurers holding a Captive Insurance, Allied Reinsurance or Allied Annuity Insurance license must submit financial statements and tax returns, as filed and accepted by the relevant authority in the country of origin (or where filed); however the Registrar at his discretion may request audited financial statements for further analysis of the insurance company’s financial stability.

Annually, 21 days after they have been approved by the Board of Directors and no later than 6 months after the end of the financial year.

A waiver request or audit extension can be made to the Registrar of International Insurance in order to obtain authorization to submit financial statements after the original deadline date.

A domicile is the jurisdiction in which an insurer is incorporated and regulated. There are many domicile options worldwide. Many of the factors involved in the selection of the best domicile are included as part of a feasibility study that is coordinated by a qualified insurance professional who can marshal input from other professionals as needed.

Some of the questions that bear on the selection of where to incorporate the insurance company include: What is the domicile’s image in the insurance industry, and how politically stable is it? Is the domicile respected by reinsurers and fronting companies, and what is the local tax structure? More detailed analysis involves addressing issues such as: capitalization and solvency requirements, initial and ongoing fees and expenses, and specific regulatory requirements regarding approval of coverage forms and types of coverage permitted, policy pricing, loss reserves, minimum premiums, and admissibility of various classes of investment assets.

There are many things to consider when choosing a domicile, some international domiciles are better suited for smaller captives. Offshore domiciles are monitored by the Organization for Economic Cooperation and Development (“OCED”), the International Monetary Fund (“IMF”), and other international monitoring organizations in order to ensure that the domicile meets international standards, ensuring compliance with financial controls to prevent money laundering, tax fraud, etc. In less regulated jurisdictions, the absence of strict compliance with these international standards can be a concern. In general, only a bona fide regulatory jurisdiction should be considered.

Any Foreign Corporation may, subject to and upon compliance with the further provisions of the Ordinance Part XII, transfer its domicile into Nevis, and may perform the acts described in the provisions of Part XII, so long as the law of the Foreign Domicile does not expressly prohibit such a transfer.

Any Foreign Corporation may transfer its domicile to Nevis by filing with the Registrar of Companies an Application to Transfer Domicile which shall be executed in accordance with section 107 of Part XII and filed and recorded in accordance with section 4 and Part 1 of the Ordinance.

To transfer domicile an application must be submitted to the Department along with all the necessary documents.

Application includes:

  • Date and jurisdiction where corporation was formed and incorporated.
  • Name of the corporation
  • The foreign jurisdiction that constituted the domicile
  • Declaration that transfer of domicile has been approve
  • Declaration that transfer of domicile is made in good faith
  • Name and Address of the corporation’s Registered Agent in Nevis
  • Any other pertinent information required by the Ordinance

Additional documents required:

  • Certificate of Good Standing by authorized officer of foreign domicile
  • Certified copy of the Articles of Incorporation

FATCA

ActivityDue Date
Opening of IRS Portal for registration of FFIs19 August 2013
Date of final registration on IRS Portal to ensure inclusion on 2014
IRS FFI list
25 April 2014
Circulation of list of compliant FFIs2 June 2014
Commencement of collection of information by FFIs1 July 2014
Commencement of reporting for FFIs in non-IGA jurisdictions and
FFIs in Model 2 IGA jurisdictions
31 March 2015
Commencement of reporting for FFIs in Model 1 IGA jurisdictions30 September 2015

The Foreign Account Tax Compliance Act was enacted by the United States of America (U.S.) on March 18, 2010 as part of the U.S. Hiring Incentives to Restore Employment (HIRE) Act. Its purpose is to reduce tax evasion by U.S. taxpayers holding assets in non-U.S. financial accounts. It requires FFIs to report to the U.S. Internal Revenue Service (IRS) information on assets held by US taxpayers, or by foreign entities in which U.S. taxpayers hold substantial (greater than 10%) ownership interest.

Non-U.S. financial institutions that accept deposits, hold financial assets for others, invest in securities or trades in securities such as:

  • custodial institutions
  • depository institutions
  • investment entities
  • specified insurance companies

Such entities include banks, funds, insurance companies, trusts, private equity companies, and special purpose entities.

Foreign Financial Institutions (FFIs) are institutions that:

  • Accept deposits in the ordinary course of a banking or similar business;
  • Hold financial assets for the account of others as a substantial portion of its business;
  • Are engaged (or holding itself out as being engaged) primarily in the business of investing;
  • Are involved in reinvesting, or trading in securities, partnership interests, commodities or any interest in such securities, partnership interests or commodities.
  • Exempt Beneficial Owners other than Funds
    • Government entities
    • International Organizations
    • Central banks (No commercial banking activities)
  • Retirement/ Pension Funds
  • Small or Limited Scope Financial Institutions
    • Financial Institution with a Local Client Base (institution must not solicit customers or Account Holders outside FATCA Partner country)
    • Local Bank (bank or credit union operating without profit and that does not have assets of more than US$175 million)
    • Financial Institution with only Low-Value Accounts (no financial account has a value in excess of US$50,000.00 and does not have assets of more than US$50 million)
    • Qualified Credit Card Issuer
  • Investment Entities that qualify as Deemed-Compliant FFIs
    • Trustee Documented Trust
    • Sponsored Investment Entity and Controlled Foreign Corporation
    • Sponsored Closely Held Investment Vehicle
    • Investment Advisors and Investment Managers
    • Collective Investment Vehicle

For further details, please see the Model 1 IGA Annex II.

  • U.S. citizen (including dual citizen)
  • U.S. resident (e.g. Green card holder)
  • Meets requirements as a “tax resident”
  • U.S. corporation, U.S. partnership, U.S. estate or U.S. trust
  • U.S. indicia
    • U.S. place of birth
    • U.S. resident or mailing address (including a U.S. post office box)
    • Standing instructions to transfer funds to a U.S. account
    • Power of attorney or signatory authority with a U.S. address
    • U.S. in-care-of address or hold mail address that is the sole address the FFI has identified for the account holder
    • U.S. telephone number (and no non-U.S. telephone number on file)

U.S. source income is income that arises from sources within the U.S.

FATCA provisions apply to withholdable payments. These are defined as:

  • Any payment of interest (including any portfolio interest and original issue discount), dividends, rents, royalties, salaries, wages, annuities, licensing fees and other fixed, determinable or periodical (FDAP) income, gains, and profits, if such payment is from sources within the United States.
  • Any gross proceeds from the sale or disposition of U.S. property of a type that can produce interest or dividends
    • Interest paid by foreign branches of U.S. banks

Certain “passthru” payments will also be subject to FATCA – a passthru payment generally includes any portion of a payment that is not withholdable multiplied by the entity’s so called “passthru payment percentage.”

FATCA requires withholding of 30% on the proceeds of the sale of U.S. securities by foreign persons – regardless of the amount of gain, or even whether there is a gain or loss on the sale – unless the appropriate disclosures are made. Custodians and brokers will need the ability to distinguish between U.S. and non-U.S. securities and withhold tax when necessary. Transfer agents who also act as custodians will need to prepare to withhold on proceeds as well. In addition, an FFI must withhold 30% on any passthru payment it makes to a recalcitrant account holder, as well as to payments it makes to another FFI unless that FFI meets certain requirements.

This refers to account holders who fail to comply with any request by an FFI to provide documentation and/or information required to determine the status of their accounts (i.e. U.S. or non-U.S. accounts). As a consequence of this classification, FFIs are required to report the customers as recalcitrant. Customers who allow their accounts to become recalcitrant may also see their financial institutions giving serious consideration as to the future of the business relationship.

An individual, corporation, partnership, trust, association, or any other entity, including any foreign intermediary, foreign partnership, or U.S. branch of certain foreign banks and insurance companies that has control, receipt, custody, disposal, or payment of any withholdable payment.

  • Additional Due Diligence (customers with U.S. indicia) including:
    • Tax Identification Number (TIN)
    • Declaration of Place of Birth, Nationality, Permanent Residency
  • Tax Forms
    • W-8 – U.S businesses, citizens and Green Card Holders
    • W-9 – non U.S. citizens and non U.S businesses
  • Authorization for the FFI to report customers’ information to U.S. Tax Authorities

Foreign Financial Institutions (FFIs) must report account numbers, balances, names, addresses, and U.S. identification numbers. For U.S.-owned foreign entities, they must report the name, address, and U.S. TIN of each substantial U.S. owner.

  • A determination of which accounts are United States accounts;
  • Compliance with verification and due diligence procedures and annual reporting on U.S. accounts to the U.S. Treasury;
  • Compliance with additional IRS reporting requests;
  • Calculating passthru payments;
  • Withholding tax of 30% on payments of certain U.S. source income (e.g. dividends, interest, insurance premium).
  • Identify who within your organization is going to take responsibility for FATCA
  • Put together a steering committee that includes all of the impacted businesses and functions.
  • Undertake an assessment to help identify the relative impact of the legislation on the organization and budget needed to address steps necessary to comply.

No. The mere transfer of money from someone in the U.S. to someone in a foreign country will not trigger FATCA withholding. However, money transferred into, and income earned in, a U.S. account may be subject to the FATCA reporting requirements.

The latter. FFIs are required to report world-wide income and proceeds received by specified U.S. persons.

No. Generally, any account holder whose account is at least US$50,000 that does not comply with reasonable requests for information necessary to determine whether its account is a United States account will be a “recalcitrant account holder” and will be subject to 30% withholding on withholdable payments and gross proceeds from the sale or disposition of U.S. assets which can produce interest or dividends.

There is no FATCA requirement to report on non-U.S. accounts. However, a participating FFI still needs to report the number and aggregate value of financial accounts held by recalcitrant account holders (which may include non-U.S. account holders) and the number and aggregate value of financial accounts held by related or unrelated nonparticipating FFIs.

A joint account which has one U.S. owner is treated as a U.S. account and the entire account is subject to reporting as a U.S. person.

When an account is jointly held, each of the joint holders is considered an account holder for the purposes of the Agreement. The balance or value in the account is to be attributed in full to each holder of the account. This value is to be reported on the Form 8938. This will apply for both aggregation and reporting purposes.

For example; When a joint account has a balance or value of US$100,000 and both account holders are specified U.S. persons, each is attributed the US$100,000 and reports are made for both. For reporting purposes, one slip with the full account balance, should be prepared for each joint holder that is a U.S. person.