St. Vincent and the Grenadines: Detailed Assessment Report on Anti-Money Laundering and Combating the Financing of Terrorism; IMF Country Report 10/311; June 2010

IMF Country Report No. 10/311

St. Vincent and the Grenadines: Detailed Assessment Report on Anti-Money

Laundering and Combating the Financing of Terrorism

This Detailed Assessment Report on Anti-Money Laundering and Combating the Financing of

Terrorism for St. Vincent and the Grenadines was prepared by a staff team of the International

Monetary Fund using the assessment methodology adopted by the Financial Action Task Force

in February 2004 and endorsed by the Executive Board of the IMF in March 2004. The views

expressed in this document are those of the staff team and do not necessarily reflect the views of

the Government of St. Vincent and the Grenadines or the Executive Board of the IMF.

Copies of this report are available to the public from

International Monetary Fund ● Publication Services

700 19th Street, N.W. ● Washington, D.C. 20431

Telephone: (202) 623 7430 ● Telefax: (202) 623 7201

E-mail: [email protected]

● Internet: http://www.imf.org

International Monetary Fund

Washington, D.C.

SAINT VINCENT AND

THE GRENADINES

DETAILED ASSESSMENT

REPORT ON ANTI-MONEY

LAUNDERING AND

COMBATING THE FINANCING

TERRORISM

JUNE 2010

INTERNATIONAL MONETARY FUND

LEGAL DEPARTMENT

Contents Page

Acronyms ...................................................................................................................................6

Preface…………. .......................................................................................................................8

Executive Summary ...................................................................................................................9

1. GENERAL ...................................................................................................................17

1.1. General Information on SVG ...........................................................................17

1.2. General Situation of Money Laundering and Financing of Terrorism ............19

1.3. Overview of the Financial Sector .....................................................................22

1.4. Overview of the DNFBP Sector .......................................................................26

1.5. Overview of commercial laws and mechanisms governing legal persons and

arrangements, and Non-Profit Organizations (NPOs) .....................................30

1.6. Overview of strategy to prevent money laundering and terrorist financing ....33

2. LEGAL SYSTEM AND RELATED INSTITUTIONAL MEASURES .....................39

2.1. Criminalization of Money Laundering (R.1 & 2) ............................................39

2.1.1. Description and Analysis .....................................................................39

2.1.2. Recommendations and Comments .......................................................43

2.1.3. Compliance with Recommendations 1 & 2 .........................................43

2.2. Criminalization of Terrorist Financing (SR.II) ................................................44

2.2.1. Description and Analysis .....................................................................44

2.2.2. Comments ............................................................................................45

2.2.3. Compliance with Special Recommendation II ....................................46

2.3. Confiscation, freezing and seizing of proceeds of crime (R.3) ........................46

2.3.1. Description and Analysis .....................................................................46

2.3.2. Recommendations and Comments .......................................................51

2.3.3. Compliance with Recommendation 3 ..................................................52

2.4. Freezing of funds used for terrorist financing (SR.III) ....................................52

2.4.1. Description and Analysis .....................................................................52

2.4.2. Recommendations and Comments .......................................................55

2.4.3. Compliance with Special Recommendation III ...................................55

2.5. The FIU and its Functions (R.26) ....................................................................55

2.5.1. Description and Analysis .....................................................................55

2.5.2. Recommendations and Comments .......................................................61

2.5.3. Compliance with Recommendation 26 ................................................62

2.6. Law enforcement, prosecution and other competent authorities—the

framework for the investigation and prosecution of offenses, and for

confiscation and freezing (R.27, & 28) ............................................................62



2.6.1. Description and Analysis .....................................................................62

2.6.2. Recommendations and Comments .......................................................66

2.6.3. Compliance with Recommendations 27 & 28 .....................................66

2.7. Cross Border Declaration or Disclosure (SR.IX) .............................................67

2.7.1. Description and Analysis .....................................................................67

2.7.2. Recommendations and Comments .......................................................72

2.7.3. Compliance with Special Recommendation IX ...................................73

3. PREVENTIVE MEASURES —FINANCIAL INSTITUTIONS ................................74

3.1. Risk of money laundering or terrorist financing ..............................................74

3.2. Customer due diligence, including enhanced or reduced measures (R.5 to 8) 75

3.2.1. Description and Analysis .....................................................................75

3.2.2. Recommendations and Comments .......................................................98

3.2.3. Compliance with Recommendations 5 to 8 .......................................100

3.3. Third Parties And Introduced Business (R.9) ................................................102

3.3.1. Description and Analysis ...................................................................102

3.3.2. Recommendations and Comments .....................................................105

3.3.3. Compliance with Recommendation 9 ................................................105

3.4. Financial Institution Secrecy or Confidentiality (R.4) ...................................106

3.4.1. Description and Analysis ...................................................................106

3.4.2. Recommendations and Comments .....................................................108

3.4.3. Compliance with Recommendation 4 ................................................109

3.5. Record keeping and wire transfer rules (R.10 & SR.VII) ..............................109

3.5.1. Description and Analysis ...................................................................109

3.5.2. Recommendations and Comments .....................................................115

3.5.3. Compliance with Recommendation 10 and Special Recommendation

VII ......................................................................................................116

3.6. Monitoring of Transactions and Relationships (R.11 & 21) ..........................116

3.6.1. Description and Analysis ...................................................................116

3.6.2. Recommendations and Comments .....................................................119

3.6.3. Compliance with Recommendations 11 & 21 ...................................120

3.7. STRs and Other Reporting (R.13-14, 19, 25 & SR.IV) .................................120

3.7.1. Description and Analysis ...................................................................120

3.7.2. Recommendations and Comments .....................................................126

3.7.3. Compliance with Recommendations 13, 14, 19 and 25 (criteria 25.2),

and Special Recommendation IV ......................................................127



3.8. Internal Controls, Compliance, Audit and Foreign Branches (R.15 & 22) ...127

3.8.1. Description and Analysis ...................................................................127

3.8.2. Recommendations and Comments .....................................................133

3.8.3. Compliance with Recommendations 15 & 22 ...................................133

3.9. Shell Banks (R.18) .........................................................................................134

3.9.1. Description and Analysis ...................................................................134

3.9.2. Recommendations and Comments .....................................................137

3.9.3. Compliance with Recommendation 18 ..............................................137

3.10. The Supervisory and Oversight System—Competent Authorities and SROs.

Role, Functions, Duties, and Powers (Including Sanctions) (R. 23, 29, 17 &

25) ..................................................................................................................138

3.10.1.Description and Analysis ...................................................................138

3.10.2.Recommendations and Comments .....................................................169

3.10.3.Compliance with Recommendations 17, 23, 25 & 29 .......................171

3.11. Money or Value Transfer Services (SR.VI) ...................................................173

3.11.1.Description and Analysis (summary) .................................................173

3.11.2.Recommendations and Comments .....................................................177

3.11.3.Compliance with Special Recommendation VI .................................177

4. PREVENTIVE MEASURES—DESIGNATED NON-FINANCIAL

BUSINESSES AND PROFESSIONS .......................................................................177



4.1. Customer Due Diligence and Record-keeping (R.12) ...................................177

4.1.1. Description and Analysis ...................................................................177

4.1.2. Recommendations and Comments .....................................................186

4.1.3. Compliance with Recommendation 12 ..............................................186

4.2. Suspicious Transaction Reporting (R.16) ......................................................186

4.2.1. Description and Analysis ...................................................................186

4.2.2. Recommendations and Comments .....................................................191

4.2.3. Compliance with Recommendation 16 ..............................................191

4.3. Regulation, Supervision, and Monitoring (R.24-25) .....................................191

4.3.1. Description and Analysis ...................................................................191

4.3.2. Recommendations and Comments .....................................................199

4.3.3. Compliance with Recommendations 24 & 25 (criteria 25.1, DNFBP)200

4.4. Other Non-Financial Businesses and Professions—Modern-Secure

Transaction Techniques (R.20) ......................................................................201

4.4.1. Description and Analysis ...................................................................201

4.4.2. Recommendations and Comments .....................................................201

4.4.3. Compliance with Recommendation 20 ..............................................202

5. LEGAL PERSONS AND ARRANGEMENTS & NON-PROFIT

ORGANIZATIONS ...................................................................................................202

5.1. Legal Persons—Access to Beneficial Ownership and Control Information

(R.33) .............................................................................................................202

5.1.1. Description and Analysis ...................................................................202

5.1.2. Recommendations and Comments .....................................................206

5.1.3. Compliance with Recommendation 33 ..............................................207

5.2. Legal Arrangements—Access to Beneficial Ownership and Control

Information (R.34) .........................................................................................208

5.2.1. Description and Analysis ...................................................................208

5.2.2. Recommendations and Comments .....................................................209

5.2.3. Compliance with Recommendation 34 ..............................................210

5.3. Non-Profit Organizations (SR.VIII) ..............................................................211

5.3.1. Description and Analysis ...................................................................211

5.3.2. Recommendations and Comments .....................................................214

5.3.3. Compliance with Special Recommendation VIII ..............................214

6. NATIONAL AND INTERNATIONAL CO-OPERATION .....................................215

6.1. National Co-Operation and Coordination (R.31 & R.32) ..............................215

6.1.1. Description and Analysis ...................................................................215

6.1.2. Recommendations and Comments .....................................................217

6.1.3. Compliance with Recommendation 31 & 32 (criterion 32.1 only) ...217

6.2. The Conventions and UN Special Resolutions (R.35 & SR.I) ......................218

6.2.1. Description and Analysis ...................................................................218

6.2.2. Recommendations and Comments .....................................................219

6.2.3. Compliance with Recommendation 35 and Special Recommendation I220

6.3. MLA (R.36-38, SR.V) ...................................................................................220

6.3.1. Description and Analysis ...................................................................220

6.3.2. Recommendations and Comments .....................................................225

6.3.3. Compliance with Recommendations 36 to 38 and Special

Recommendation V ...........................................................................225

6.4. Extradition (R.37, 39, SR.V) ..........................................................................225

6.4.1. Description and Analysis ...................................................................225

6.4.2. Recommendations and Comments .....................................................227

6.4.3. Compliance with Recommendations 37 & 39, and Special

Recommendation V ...........................................................................227

6.5. Other Forms of International Co-Operation (R.40 & SR.V) .........................227

6.5.1. Description and Analysis ...................................................................227

6.5.2. Recommendations and Comments .....................................................231

6.5.3. Compliance with Recommendation 40 and Special Recommendation

V .........................................................................................................231

7. OTHER ISSUES ........................................................................................................231

7.1. Resources and Statistics .................................................................................231

7.1.1. Recommendations ..............................................................................238

7.1.2. Compliance with Recommendation 30 & 32 .....................................239

7.2. Other relevant AML/CFT Measures or Issues ...............................................241

7.3. General Framework for AML/CFT System (see also Section 1.1) ................241

Tables

1. Ratings of Compliance with FATF Recommendations ................................................242

2. Recommended Action Plan to Improve the AML/CFT System ..................................256

Annexes

Annex 1. Authorities’ Response to the Assessment...........................................................273

Annex 2. Details of All Bodies Met During the On-Site Visit ..........................................275

Annex 3. List of All Laws, Regulations, and Other Material Received ..........................277

Annex 4. Copies of Key Laws, Regulations, and Other Measures ..................................279

- 6 -

ACRONYMS

AML/CFT Anti-Money Laundering/Combating the Financing of Terrorism

AG Attorney General

BL Banking Law

BCP Basel Core Principles

CC Criminal Code

CDD Customer Due Diligence

CFATF Caribbean Financial Action Task Force

CFT Combating the Financing of Terrorism

CPC Criminal Procedure Code

CSP Company Service Provider

CTR Currency Transaction Report

DNFBP Designated Non-Financial Businesses and Professions

DTOA Drug Trafficking Offenses Act

DPP Director of Public Prosecutions

ECCB Eastern Caribbean Central Bank

ECCU Eastern Caribbean Currency Union

FATF Financial Action Task Force

FIs Financial Institutions

FIU Financial Intelligence Unit

FSAP Financial Sector Assessment Program

FSRB FATF-style Regional Body

FT Financing of Terrorism

IAIS International Association of Insurance Supervisors

IBC International Business Company

IFSA International Financial Services Authority

ITR International Trust

KYC Know Your Customer/client

LEG Legal Department of the IMF

MEF Ministry of Economy and Finance

MFA Ministry of Foreign Affairs

MOU Memorandum of Understanding

ML Money Laundering

MLA Mutual Legal assistance

NAMLC National Anti-Money Laundering Committee

NPO Nonprofit Organization

PEP Politically-Exposed Person

POCA Proceeds of Crime and Money Laundering (Prevention) Act

RA Registered Agent

ROSC Report on Observance of Standards and Codes

RSVGPF Royal Saint Vincent and the Grenadines Police Force

SAR Suspicious Activity Report

SFT Suppression of the Financing of Terrorism

SRD Supervisory and Regulatory Division

SRO Self-regulatory Organization

STR Suspicious Transaction Report

SVG Saint Vincent and the Grenadines

UN United Nations

UNATMA United Nations (Anti-Terrorism Measures) Act

UNSCR United Nations Security Council Resolution

PREFACE

This assessment of the anti-money laundering (AML) and combating the financing of terrorism

(CFT) regime of Saint Vincent and the Grenadines (SVG) is based on the Forty

Recommendations 2003 and the Nine Special Recommendations on Terrorist Financing 2001 of

the Financial Action Task Force (FATF), and was prepared using the AML/CFT assessment

Methodology 2004, as updated in 2008. The assessment team considered all the materials

supplied by the authorities, information obtained onsite during their mission from February 23

through March 10, 2009, and other verifiable information subsequently provided by the

authorities. During the mission, the assessment team met with officials and representatives of all

relevant government agencies and the private sector. A list of the bodies met is set out in Annex

II to the detailed assessment report.

The assessment was conducted by a team of assessors composed of two staff of the International

Monetary Fund (IMF) and two expert acting under the supervision of the IMF: Manuel G.

Vasquez (LEG staff, team leader and financial sector assessor); Moni Sengupta (LEG staff and

law enforcement/FIU assessor); Ross Delston (legal expert under LEG supervision) and John

Abbott (DNFBP

expert under LEG supervision). The assessors reviewed the institutional

framework, the relevant AML/CFT laws, regulations, guidelines and other requirements, and the

regulatory and other systems in place to deter and punish money laundering (ML) and the

financing of terrorism (FT) through financial institutions (FIs) and DNFBPs. The assessors also

examined the capacity, implementation, and effectiveness of all these systems.

This report provides a summary of the AML/CFT measures in place in SVG at the time of the

mission or shortly thereafter. It describes and analyzes those measures, sets out SVG levels of

compliance with the FATF 40+9 Recommendations (see Table 1) and provides

recommendations on how certain aspects of the system could be strengthened (see Table 2). The

report will be presented to and endorsed by the CFATF for purposes of their mutual evaluation

program at its plenary meeting in May 2010.

The assessors would like to express their gratitude to the SVG authorities for cooperation,

assistance and hospitality throughout the assessment mission.

DNFBP.

The report was originally scheduled for presentation at the CFATF’s plenary and ministerial meeting in

October 2009, but the SVG authorities were unable to properly comment on the revised report within the

allowable time for circulation of the report.

EXECUTIVE SUMMARY

Key Findings

1. Saint Vincent and the Grenadines (SVG), as is the case with other countries in the

Caribbean, is exposed to money laundering (ML) and financing of terrorism (FT) risk related to

drug trafficking and international criminal groups. It is also exposed to international ML/FT risk

associated with its relatively small international (offshore) financial sectors. SVG is aware of

these risks and has expressed strong commitment to identifying and prosecuting drug trafficking

offenses and money laundering. It is not aware of any FT activities being conducted in SVG.

There have been four convictions for ML (with two pending cases) and five prosecutions in the

last five years (2004–2008). The number and level of prosecutions as well as property

confiscations and forfeitures appear to be relatively low.

2. To help address these risks, SVG has enacted legislation that includes, inter alia, the

DTOA, the Proceeds of Crime and Money Laundering (Prevention) Act (POCA) and its

Regulations, the Financial Intelligence Unit Act (FIU Act), and the United Nations (Anti-

Terrorism Measures) Act (UNATMA). However, SVG could benefit from a formal and broad-

based national policy and strategy to combat ML and FT across all sectors, including

international financial services. A country review of the main ML/FT threats and vulnerabilities

would support the formulation of such strategy, action plan, and the effective use of resources.

3. Local legislation conforms to most but not all of the provisions of the Vienna and

Palermo Conventions. In addition, the ML laws do not cover some of the categories of predicate

offenses called for by the international standard, and the provisions with respect to the definition

of “property” and self-laundering should be strengthened. The definition of ‘terrorist act’ in the

UNATMA does not cover acts required by two of the applicable UN Conventions. Finally, there

is significant scope for enhancing implementation of the AML/CFT legislation in order to

increase the number of ML prosecutions, convictions and confiscations.

4. Interagency cooperation and coordination arrangements are informal but generally

effective. There is a National Anti-Money Laundering Committee (NAMLC) which provides a

forum for the exchange of information and coordination. Its members are key stakeholders in

national AML/CFT efforts including the financial sector regulators, the financial intelligence unit

(FIU) and the various law enforcement agencies. Interagency cooperation could be better

supported by more formal arrangements e.g. between the DPP and the FIU with respect to

investigations and prosecutions.

5. The preventive measures regime covers most of the financial and DNFBP sectors as

required under the FATF Recommendations. However, the POCA and its Regulations have not

kept pace with revisions in the FATF standard and should be updated. There are no other

enforceable means (OEM) for ensuring compliance with these requirements and the authorities

should consider making the non-mandatory Guidance Notes or parts thereof enforceable. A key

challenge will be to more fully implement the legislation across all sectors, particularly in the

domestic non-banking sectors (e.g. the building societies, credit unions, insurance companies and

intermediaries, and money remittance), and in the international financial services sectors. This

may entail strengthening the staffing and resource capacity of the International Financial

Services Authority (IFSA) and the Supervisory and Regulatory Division (SRD) of the Ministry

of Finance. Compliance with the AML/CFT legal requirements has not been vigorously enforced

by the financial sector supervisors and their supervisory programs could benefit from the

application of more risk-based AML/CFT supervisory procedures.

6. The SVG authorities have cooperated with their international counterparts in the area of

ML and are willing and able to cooperate in matters relating to both ML and FT.

Legal Systems and Related Institutional Measures

7. ML has been criminalized and the legislation is largely in conformity with the

Vienna and Palermo Conventions. However, certain offenses and the definition of ‘property’

in POCA are not consistent with the relevant articles of these conventions. Self-laundering by

way of simple possession of proceeds is not criminalized. Racketeering, human trafficking and

migrant smuggling are not predicate offenses for ML. Moreover, implementation appears to be

weak as suggested by the low number of criminal prosecutions and convictions for ML and

related predicate crimes.

8. The financing of terrorism has also been criminalized and is largely in conformity

with the Suppression of the Financing of Terrorism (SFT) Convention. However, the

Convention on the Physical Protection of Nuclear Material (1980) and the International

Convention for the Suppression of Terrorist Bombings (1997) are not included in the list of

conventions under the UNATMA for purposes of the definition of ‘terrorist act.’ In addition,

certain offenses in the UNATMA apply only to terrorist groups and not to individual terrorists.

There is no legislation to implement the relevant United Nations Security Council resolutions

(UNSCRs), including but not limited to UNSCRs 1267, 1373 and 1455, that require member

states to freeze, seize and confiscate the assets of designated terrorists and terrorist organizations.

9. While it is not possible to reach a definitive conclusion, the overall numbers of

prosecutions, convictions, confiscations and forfeitures of property in the last five years

appear to be low given the extent of drug trafficking believed to be taking place in or

through SVG. In addition, the available statistics do not reflect the potential for ML and FT

associated with the international financial (offshore) services sectors.

10. The FIU is well established and operational, with sufficient legal authority and a

highly motivated and professional staff. It is the primary AML/CFT institution in SVG, and is

constituted as a hybrid administrative/law enforcement FIU reporting to the Minister of Finance.

In addition to its core functions of receiving, analyzing and disseminating STRs, the FIU also has

taken on additional tasks, in particular, engaging in financial intelligence, investigation and

prosecutorial activities. (The prosecutorial activities are carried out in coordination with the

DPP.) The FIU Act provides it with sufficient legal authority for most financial intelligence

functions but does not specify the requisite authority to access relevant information from other

governmental bodies for intelligence purposes. Police and customs officers assigned to the FIU,

however, retain their individual authority to access information under their respective police and

customs legislation. The FIU consistently analyzes all suspicious activity reports (SARs)

received but its effectiveness in terms of generating financial intelligence for further domestic

investigation and prosecution for ML offenses is could be improved. Its composition as a multi-

disciplinary FIU allows for efficient case management and information flow but this may be at

the expense of its core financial intelligence function due to limited human resources. Nearly all

of the ML investigations conducted and related production orders issued to-date have been based

on pro-active investigations by the FIU and not prompted by SARs.

11. Designated law enforcement authorities are available to support the FIU’s

AML/CFT investigations and prosecutions. As a hybrid administrative/law enforcement FIU,

it has specialized staff that carry out the ML/FT investigative, law enforcement and prosecutorial

functions. Its staff includes lawyers, seconded police, and customs officers, and other support

staff. FIU staff are adequately trained and versed in their areas of expertise. No significant

weakness was observed in this arrangement.

12. There is good cooperation between the FIU, law enforcement authorities and the

Attorney General (AG). The FIU staff conducts joint operations and investigations with the

police and customs authorities, and regularly applies to the court for production orders in

coordination with the DPP. This has helped to develop prosecutions of ML cases. Cooperation

arrangements could nonetheless be enhanced through a more formal framework between the FIU

and domestic law enforcement authorities. The AML/CFT expertise within the police and

customs force could also be enhanced, and all agencies involved in AML/CFT could benefit

from more advanced training especially for complex ML and FT cases. Both the DPP and the

AG’s office are under-resourced to conduct complex ML prosecutions especially those with

international dimensions. This may partly explain why some ML investigations are diverted to

other jurisdictions.

13. The legal and institutional framework regarding the cross-border transportation of

cash and bearer instruments is largely in place. However, the Customs Department has an

administrative procedure in place for dealing with cash couriers that could limit enforcement

action against such couriers. This procedure is not being used and its potential drawbacks are

mitigated by informal cooperation arrangements with the FIU. There is also insufficient

coordination with the DPP on such matters. In addition, administrative and criminal fines in the

customs laws are not sufficiently proportionate and dissuasive.

Preventive Measures—Financial Institutions

14. SVG has implemented an AML/CFT legal and regulatory framework for FIs,

supplemented by non-mandatory Guidance Notes that partly meet with the FATF

requirements. The POCA (2001) was amended in 2002 and in 2005, but the POCA Regulations

(Regulations) have remained practically unchanged since they were issued in 2002. They have

not been updated to more fully comply with the revised FATF standard. In addition, key

provisions of the Guidance Notes, which could help meet the FATF requirements, are not

mandatory or enforceable. Making them enforceable or including some of their provisions in the

POCA Regulations may achieve this goal.

15. The regulatory framework does not explicitly cover CFT issues and does not extend

the customer due diligence (CDD) requirements beyond customer identification and

verification. The CDD provisions in the Guidance Notes are generally broad but, as noted

above, they are not enforceable. The AML/CFT requirements could be strengthened with the

addition of key provisions for, inter alia, the establishment of formal AML/CFT policies, CDD

for beneficial owners and controllers of legal entities and arrangements, and record keeping. In

addition, the POCA (Schedule 1) and Regulations do not explicitly cover mutual fund and life

insurance sector intermediaries and should, for the avoidance of doubt, list all FIs specifically

covered by SVG financial legislation. More strict enforcement of compliance by supervisors is

required to ensure more effective implementation of the existing CDD requirements. The

regulations should include enhanced requirements for ML/FT risk management and controls

especially with respect to higher risk customers or relationships e.g. companies that issue bearer

shares, politically exposed persons (PEPs), non-residents, and correspondent banking

relationships.

16. Recordkeeping in the domestic financial sector appears to be generally adequate but

the regulatory requirements and practice do not facilitate effective ongoing supervision of

FIs operating in the international financial services sectors. These FIs are generally allowed

to keep records outside of SVG although the IFSA (IFSA–the primary supervisor for such

entities) has the legal authority to request and access information or copies of records. In cases

where FIs are allowed to rely on third parties for carrying out CDD, the Regulations do not

require FIs to immediately obtain the relevant CDD information from such third parties. This

limits the ability of the supervisory authorities, auditors, and compliance officers to more

efficiently and effectively monitor compliance with the CDD and other AML/CFT requirements,

particularly where the underlying customer records are kept outside of the jurisdiction. It may

also limit the ability of the FIU and law enforcement agencies to efficiently access such

information.

17. Arrangements for the reporting of suspicious transactions are generally well

developed and the FIU has been receiving reports from FIs. There is a need to upgrade the

regulatory requirements to monitor and document, complex, large and unusual transactions to

provide a stronger basis for identifying and reporting suspicious transactions. Implementation of

the suspicious transaction reporting regime varies significantly across sectors, with apparent

under-reporting by offshore FIs sectors and the domestic non-banking sectors. The vast majority

of SARs filed relate to cash transactions.

18. AML/CFT compliance supervision is still evolving and more effective

implementation is required particularly with respect to the non-banking sectors. IFSA is

the supervisor for international services businesses, including some DNFBPs, while the ECCB

and the SRD of the Ministry of Finance are responsible for domestic banks and non-banking FIs,

respectively. The scope and frequency of onsite inspections for all FIs could be strengthened

including through the adoption of a more risk-based approach. Compliance supervision of

domestic banks has been sporadic, and the framework and procedures for AML/CFT supervision

of insurance companies and intermediaries, credit unions, and money remitters are still being

developed. Implementation of AML/CFT supervision, particularly onsite inspections, has only

recently commenced for the domestic non-banking sectors, and the legal and supervisory

framework for a systemically important building society is still being developed. There are a

couple of lending entities that appear to fall under the POCA and its Regulations but which are

not subject to authorization and supervision. After the mission, they were reviewed by the

authorities for significance and “fit and proper” purposes. At the time of the mission, staff

resources of IFSA and the newly established SRD were very limited given the number of entities

under their jurisdiction but post mission the authorities informed that steps were being taken to

strengthen staff at the IFSA.

19. Effective ongoing supervision is hindered by minimal physical presence/mind and

management of some FIs operating in the international financial services sector. While all

offshore banks have local offices, the mission found that a small number have only nominal

mind and management in SVG. Supervision of FIs that conduct and manage the core of their

business operations from overseas is not complemented by e.g. the use of independent auditors

and/or consultants acting on behalf of the supervisor. Monitoring of the fit and proper

requirements for owners and controllers of offshore FIs does not appear to be a routine

supervisory activity and should be strengthened including the transparency of ownership

structures. Enforcement of AML/CFT compliance is relatively weak and there should be

additional enforcement powers in the AML/CFT and/or financial laws to apply a range of

administrative sanctions.

20. There are no regulatory requirements for including full originator information for

wire transfers in accordance with FATF Special Recommendations SR.VII. Nevertheless, as

a matter of normal business practice some FIs appear to comply with most of the originator

information requirements of FATF Special Recommendations SR.VII because of international

standardized procedures for cross-border wire transfers.

21. Money service businesses are required to be licensed and are subject to the

preventive measures obligations of the POCA and Regulations. Supervision for compliance

of stand-alone money service businesses is the responsibility of the SRD-Ministry of Finance,

including for AML/CFT. Licensing procedures, including regulatory requirements for AML/CFT

controls, are in place but at the time of the assessment, the Ministry was only beginning to

develop AML/CFT compliance monitoring procedures. Four firms have been licensed as money

transmitters and are involved primarily in servicing inward flows of worker remittances. Money

transmitters process a large volume of one-off cash transactions and have implemented systems

for identifying and reporting suspicious activities. They have filed the highest number of STRs to

the FIU.

Preventive Measures—Designated Non-Financial Businesses and Professions

22. SVG has extended the preventive measures obligations of the POCA and

Regulations to DNFBPs. The covered sectors are: casinos, lawyers, notaries, accountants,

company and trust services providers (RAs and trustees), real estate agents, and jewelers. The

obligations also apply to lottery agents and car dealers. For the DNFBPs, the main ML/FT risk

exposure appears to be related to cross-border transactions conducted through the international

financial services sector, or connected with real estate transactions in the tourism sector. SVG

has an active trust and company services sector focused primarily on formation and management

of international business corporations (IBCs), and trust administration. They are required to be

licensed by the IFSA. Tourism-related real estate transactions are also significant. Cash

transactions in high value goods (jewelry, cars) are relatively small scale and domestically

oriented. The casino sector is small (two facilities) but poorly regulated.

23. The preventive measures requirements for DNFBPs are broadly similar to those for

FIs but supervision of compliance with their AML/CFT obligations is uneven and

underdeveloped. RAs and trustees are supervised by IFSA as part of its oversight of the

international financial services sector. Supervision of RAs has focused primarily on licensing

requirements but more recently IFSA has enhanced its on-site and off-site monitoring of

compliance with the AML/CFT requirements.

24. No agency has been assigned supervisory responsibility for monitoring of and

enforcing compliance by the other DNFBPs. Nonetheless, the FIU plays an active role in

promoting AML/CFT compliance by DNFBPs, as it does for other FIs. The FIU has statutory

responsibility for raising awareness of AML/CFT issues across the regulated sectors and under

this authority it engages in a regular program of outreach and training for DNFBPs, especially

for those that are not subject to formal regulation. Despite the absence of formal supervision,

these DNFBPs generally appeared to be familiar with their obligations. Formal AML/CFT

oversight is needed to ensure that all DNFBPs are effectively implementing, on a risk-sensitive

basis, the measures required by POCA and the Regulations, as well as the applicable FATF

Recommendations. While the casino sector is very small, its vulnerability to ML has not been

evaluated and its regulatory framework is not well established.

Legal Persons and Arrangements & Non-Profit Organizations

25. With respect to international business companies (IBCs), SVG’s legal framework

requires RAs to obtain information about beneficial ownership of legal persons, to make

that information available to IFSA, and to immobilize bearer shares. In addition, IFSA has

begun the process of implementing these requirements through onsite inspections and is

developing procedures. However, in practice, there are a number of significant concerns that

diminish IFSA’s ability to ensure transparency of legal persons. In particular, bearer shares are

not properly immobilized and onsite inspection procedures of IFSA have not been sufficient to

ensure that adequate, accurate and complete information about beneficial owners is being

collected and maintained by RAs. For local companies, the Companies Registrar does not have

legal authority to ensure that adequate, accurate and complete information about beneficial

owners is available to them or to law enforcement authorities. There is also no restriction or

control on the use of nominee shareholders and directors in the Companies Act nor is it possible

for the Companies Registrar to determine if nominees are being used. For both IBCs and local

companies, relevant laws do not provide competent authorities with adequate powers to ensure

that requisite information on beneficial owners is being maintained and disclosed.

26. With respect to legal arrangements, the legal and institutional framework is

minimal for ITRs, and there is no legal or institutional framework in place for domestic

trusts. With respect to ITRs, there are no laws, regulations or other enforceable means that

require registered trustees to identify the beneficial owners/beneficiaries of trusts.

27. Charities are subject to the preventive measures obligations of the POCA and the

associated regulations but are not subject to oversight for compliance. To be eligible for tax

preferences, non-profit organizations (NPOs) are required to be incorporated under the

Companies Act, including satisfying basic governance and reporting requirements. The Act does

not have a specific FT orientation. Drawing on companies’ registration information, the FIU has

undertaken responsibility for evaluating the structure and activities of NPOs to monitor the

vulnerability of the sector to ML and FT risks, and to promote AML/CFT awareness and

compliance. The bulk of NPOs in SVG are believed to be small, involving raising and disbursing

of local funds for social, cultural, religious, or charitable purposes. However, a few NPOs

receive significant funding from overseas to support various forms of education, training, and

welfare assistance. These larger NPOs have been the primary focus of the FIU’s attention. No

specific ML or FT concerns have been identified.

National and International Co-operation

28. SVG has significantly enhanced its framework for national cooperation since the

last assessment. The repeal of the Exchange of Information Act 2002 eliminated the previous,

prohibitive provisions on financial information. The principal legal provisions for national

cooperation and coordination are contained in the Exchange of Information Act 2008 (EIA) and

in the FIU Act. National cooperation has been further enhanced by the signing of MOUs among

the FIU, Police and Customs authorities. A similar MOU with Inland Revenue is also needed.

Nonetheless, the FIU does not have specific legal authority to obtain law enforcement and other

governmental information needed for purposes of its intelligence and analysis functions. In

addition, the NAMLC does not have a statutory role for policy coordination. Finally, domestic

regulatory authorities do not have a uniform basis for interagency cooperation including with the

FIU and law enforcement authorities. While the NAMLC plays a vital communication role

among the various agencies, it does not have a specific mandate or arrangement for information

sharing or cooperation in specific cases.

29. The framework for international cooperation is generally well designed and based

on clear legal authority. The authorities consider international cooperation a priority in their

AML/CFT framework, and have participated in a number of cooperation cases to-date. The legal

framework for cooperation could nonetheless be enhanced by specific provisions that allow for

investigations and related prosecutorial measures relating to FT on behalf of foreign law

enforcement authorities. The framework for MLA and extradition is generally in place, and has

been fully implemented within the SVG AML/CFT legal system.

1. GENERAL

1.1. General Information on SVG

History, System of Government, Laws and Institutions

30. SVG is a multi-island State situated in the Eastern Caribbean. It is part of the Windward

Islands in island chain called the Lesser Antilles, and is located approximately 1600 miles

southeast of Miami and 100 miles from Barbados. SVG comprises mainland St. Vincent, which

is the largest geographically, and 31other islands and cays, seven of which are inhabited, namely

Bequia, Mustique, Union Island, Canouan, Petit St. Vincent, Palm Island and Mayreau. SVG has

a combined land mass of 389 sq km.

31. The population of SVG is estimated at 118,432 (July 2008 est. Source: The CIA World

Factbook) with the majority of people living and working in St. Vincent, which is the hub of

most of SVG’s economic and business activity. The official language is English.

32. SVG gained its full independence from the United Kingdom in 1979. It is a common law

jurisdiction operating under a democratic system of Government with a unicameral legislature

(House of Assembly). General elections are held every five years. SVG has a written

Constitution, which provides for the separation of powers among the Governor General, the

Parliament/legislature, Executive, Judiciary, and the public service. The tenure and powers of the

DPP are enshrined in the Constitution.

33. The Chief of State is Queen Elizabeth II who appoints and is represented by the Governor

General. The Head of Government is the Prime Minister who is also the Minister of Finance,

Minister of Legal Affairs and Minister of National Security. Cabinet is appointed by the

Governor General on the advice of the Prime Minister. SVG is a member of the British

Commonwealth, the UN, the Organization of American States, the International Labor

Organization, the Caribbean Community (CARICOM) and the Organization of Eastern

Caribbean States (OECS). SVG is also a member country of the CFATF.

34. SVG is a member of the regional Eastern Caribbean Supreme Court which is based on

Saint Lucia. It is also a member of the ECCU sharing a common currency (EC Dollar: US$1 =

EC$2.70) and central bank (St. Kitts-based ECCB) with five other independent countries and

two United Kingdom Overseas Territories.

Legal and Judicial System

35. As mentioned above, SVG’s legal system is based on English common law with the

English Privy Council being the final court of appeal. The legal system has a three-tiered

structure set out in hierarchal order as follows: (i) the Eastern Caribbean Court of Appeal; (ii) the

Supreme Court of Judicature or the High Court; and (iii) the Magistrates’ Courts or the lower

courts. The judiciary is within the Saint Lucia-based Eastern Caribbean Supreme Court of which

two judges, not citizens of SVG, reside in SVG. One of the judges has jurisdiction over criminal

matters and the other presides over civil matters.

36. SVG also has four Magistrates and one visiting Master of the Court. Two Magistrates’

Courts are based in the capital Kingstown and the other two Magistrates’ Courts are rotated in

the outlying districts of SVG, including in the Grenadines. A Serious Offenses Court forms one

of the two courts in Kingstown, presided over by the Chief Magistrate. This court was

established to ensure that there is consistency in the adjudication and sentencing of serious

crimes at the magisterial level. The Master of the Court deals with civil matters before the High

Court, so as to curtail the amount of time which the High Court Judge spends dealing with

applications which are incidental to the main issues before the Court.

37. Both the Court of Appeal and the Court of Criminal Assizes sit three times per year while

the High Court in its civil jurisdiction and the lower courts sit throughout the year. The average

session of each sitting of the Court of Criminal Assizes is three months whereby 35 cases on

average are adjudicated at each sitting. According to the authorities, access to justice is

unimpeded as systems exist for the laying of charges and the filing of civil suits by any member

of the public.

38. Law enforcement is carried out by the DPP and the Royal St. Vincent and the Grenadines

Police Force (RSVGPF) supported by the Coast Guard. The FIU was established in May 2002

and is the national centralized agency for receiving, analyzing, investigating and disseminating

suspicious activity information to relevant authorities in and out of SVG. As such it has

investigative powers with respect to ML and relevant offenses under POCA. The FIU is a mixed

or ‘hybrid’ FIU that carries out administrative, investigative and prosecutorial functions. The

latter functions are carried out under the authorization of the DPP.

39. The authorities claim that they strive to maintain high ethical and professional standards

for police officers, prosecutors, judges and other persons involved in the justice system.

Disciplinary proceedings are available for police officers and prosecutors as a result of

legislation and practice ((the Police Act, CAP 280 and the Eastern Caribbean Supreme Court (St

Vincent and the Grenadines) Act, CAP 18 respectively)). A Police Service Commission also

exists which has responsibility for disciplinary proceedings against police officers. The Bar

Association can recommend disciplinary proceedings and/or disbarment of lawyers to the High

Court. The transparency and efficacy of disciplinary procedures available in SVG pertaining to

lawyers is illustrated by the disbarment in 2007, of a local Queen’s Counsel and former OECS

judge, for unethical and dishonest practices. The said Queen’s Counsel’s appeal against his

disbarment was recently declined by the Court of Appeal. No disciplinary and similar action has

been taken by the authorities or industry groups/SROs against accountants and RAs.

Economy

40. The production of bananas and other agricultural products remain the staple of SVG’s

economy. However, the country has sought to diversify its economic base away from agriculture

by increasing investment in other sectors such as tourism, agro-processing, information

communications technology and light manufacturing. Economic growth strengthened in recent

years, with GDP growth averaging about 6.0 percent per annum during the period 2004-2007.

Domestic demand has been one of the key drivers of this growth reflecting robust private

consumption and investment spending. Preliminary government data indicate that economic

activity increased by 7.0 percent in 2007, following a 7.6 percent growth in 2006.

41. The construction sector remained the major driver of economic activity in 2007 with the

sector’s share of real GDP rising to 11.0 percent from 10.3 percent in 2006, and fuelled by both

public and private sector projects. Public sector projects centered on infrastructure, including a

new international airport that is expected to be completed in 2011. Private sector development

activity focused on residential housing, hotels and resorts. Tourist arrivals in 2007 totaled more

than 200,000 tourists mostly to the Grenadines. The increase in residential housing activity was

evidenced by an expansion of 18.6 percent in commercial bank credit for home construction and

renovation, well above the 3.2 percent rate of increase recorded in 2006.

42. The banking and insurance sector grew by 5.4 percent. Saint Vincent also has an offshore

sector mainly comprising banking, insurance, mutual funds, trusts and company services.

1.2. General Situation of Money Laundering and Financing of Terrorism

Money Laundering

43. The principal predicate offenses which have generated illegal proceeds that are laundered

include drug offenses, burglary, theft, and unlawful possession. A portion of the drug offenses

relate to activities involving other jurisdictions. There are no estimates for the proceeds of crime

or of the amount laundered in or from within SVG annually. The authorities maintain that ML

methods used in SVG have remained relatively consistent over the years. This includes

smuggling of monies into the country through the official ports of entry, and by sea through its

many islands and cays. Other methods include use of money remittance business, nominees or

third parties to hold assets. Cash intensive front business such a boutiques and car rental

companies are also used for reinvestment and distribution of illicit drugs. (Source: mutual

evaluation questionnaire (MEQ)). No concrete information was provided with respect to the use

or potential use of domestic or international (offshore) FIs for ML and FT purposes, namely

banks mutual funds, insurance companies, trusts/trustees, international business companies, or

through other professional services providers such lawyers and accountants.

44. The authorities state that the majority of the predicate offenses do not constitute a serious

ML problem citing drug offenses that often involve possession of relatively small quantities of

marijuana. They also claim that a similar situation exists with respect to burglary and theft which

are often committed by petty criminals. There has been moderate decline over the last four years

in the number of predicate offenses committed, except for drug trafficking.

45. The following table provides summary statistics on the predicate offenses:

Table 1: Crimes committed during 2004-2008

Offence 2004 2005 2006 2007 2008

Against Lawful Authority 6 10 9 3 3

Against Person 2868 2516 2135 2161 27

Against Property 5487 5075 4760 4471 2615

Against Penal Code 240 233 192 234 985

Total 8601 7834 7096 6869 3630

Table 2: Selected crimes against property for years 2004-2008

Offence 2004 2005 2006 2007 2008

Drugs 390 314 252 447 531

Burglary 1563 1492 1301 1192 1107

Theft 2017 1933 1849 1664 1729

Unlawful Possession 26 33 37 23 24

Total 3996 3772 3439 3326 3391

46. During the last four years the FIU, in conjunction with other law enforcement authorities,

investigated 41 domestic ML cases. Of the 41 money laundering cases, the predicate offenses are

38 drug trafficking, 2 thefts, 1 fraud. The amounted forfeited was ECD$124,591.60. Thus far the

investigations have resulted in three successful money laundering convictions involving two

individuals. In one instance, the defendant challenged his conviction and sentence in the Court of

Appeal and both the conviction but these were upheld. The FIU’s legal team undertook the

prosecution and subsequent confiscation hearings of these ML cases in conjunction with and on

behalf of the Office of the DPP. These three matters resulted in forfeiture of cash in one instance

and confiscation in the others. See chart at c. 2.5, below.

47. Other ML cases dealt with over this time period are as follows:

 1 confiscation hearing was successfully completed against a subject convicted of theft.

 1 ongoing confiscation hearing against a person convicted of drug possession, who is an

associate of a person of major interest.

 2 pending money laundering cases before the court, both relating to drug trafficking.

 1 prosecution of a person operating a car dealership business for failing to implement an

effective compliance system. It involved 2 counts were for failing to keep proper records

of transactions and failing to comply with a production order for relevant information.

 18 successful cash forfeiture applications by the FIU on behalf of the DPP in the civil

jurisdiction of the Magistrate’s Court.

 51 cases of seizures and detention of cash by the FIU in conjunction with other law

enforcement agencies under the POCA.

48. According to the authorities, while both banks and money remitters may be used to

launder money, it is becoming increasingly difficult for money launderers to use domestic banks

due to compliance requirements and supervision of such entities. Money remitters have filed the

highest number of SARs to the FIU, but a number of these appear to be either defensive or de

facto threshold cash transaction reports. A money remitter has cooperated with the FIU in the

investigation of a possible ML offence.

49. The authorities state that enhanced AML efforts by the NAMLC, the FIU, law

enforcement and other authorities may prompt money launderers to search for more vulnerable

areas in the financial system to manage their illegal proceeds. These could be the less tightly

regulated domestic and offshore FIs, and DNFBPs. The authorities do not perceive or anticipate

changes in the threat of ML.

50. Assessors acknowledge that while the scale of predicate crimes committed and

originating in SVG may not pose a growing ML threat if the size of international financial sector

remains the same, decreases or if there is little interaction between the international and domestic

sectors. (See discussion above with respect to the filing of SARs by money remittance

businesses. Also note that money remittance and some international services providers use the

domestic banking sector which can create a contagion risk for the banks.) There is, nonetheless, a

threat of ML in the international financial sectors arising from crimes committed abroad. Except

for the number of offshore banks which has declined in recent years, the other international

sectors have grown moderately in the past few years including e.g. mutual funds, trusts and

company services, and the insurance sectors. There is also a potential for ML in the growing

tourism sector e.g. through real estate transactions and other related businesses such as hotels,

restaurants, jewelers, and other support services. By extension, the FIs that deal with such

businesses could also be exposed to ML risk.

51. The information provided by the authorities, particularly in the MEQ, focuses mainly on

predicate offenses committed locally, and the potential for ML connected with such offenses. At

the time of the mission, there was no information available on ML/FT related to crimes

committed in other countries. Increased focus on ML connected with crimes committed abroad

would enhance the scope of attention to such threats and form a more comprehensive basis for

developing a national AML/CFT strategy. Post mission the authorities provided examples of

specific cases where they became aware or were involved in cross-border cooperation and

investigations.

52. The authorities are of the view that the mere fact that SVG has an international financial

services industry does not make it vulnerable to ML or FT. They maintain that the international

financial services sector is small and well-regulated, and that the ML/FT the risks have been

mitigated by strong legislative and administrative measures. There has been a sharp decrease in

the number of offshore banks from about 41 in 2000 to six at present, influenced in partly by the

need to be removed from the FATF Non-Cooperative Countries and Territories (NCCT) list (de-

listed in 2003). (Soon after the mission, the number of offshore banks reduced to four. One bank

was closed because of suspected of involvement in fraudulent activities while another went into

liquidation for prudential reasons.) During this period, legislation was updated, off-site and on-

site monitoring of offshore entities was undertaken by the regulatory authority, and training was

provided by the FIU. The authorities state that a thorough due diligence review of the principals

of regulated entities, save unlicensed international business companies, was undertaken which

helped foster a culture of compliance with the AML/CFT laws and regulations. Nonetheless, the

IFSA (the offshore regulator) has limited supervisory staff capacity (four at the time of the

mission) and about 120 licensees subject to its supervision, excluding the IBC and trust

registration and related functions.

Financing of Terrorism

53. The authorities have not identified FT through financial institutions, and do not anticipate

a change in this situation. They consider banks and money remittance services to be the most

likely vehicles for FT using techniques that closely resemble ML activity, requiring close

scrutiny of suspicious activity reported to the authorities. The FIU states that it has undertaken

training and awareness raising programs to assist the regulated sectors learn more about FT in an

effort to contain this risk.

1.3. Overview of the Financial Sector

54. The domestic financial sectors comprises of: 6 banks; 1 building society; 9 credit unions;

23 insurance companies; 101 insurance intermediaries (brokers, agents and sales

representatives); and 4 money transfer service providers.

There are some (two known) lending

businesses that are technically covered by the AML/CFT legislation but which are not subject to

a compliance oversight regime. The same applies to the building society which is registered with

the Registrar of the High Court but not subject to ongoing supervision at the time of the mission.

Post mission, the authorities indicated that a Building Society Amendment Act 1 of 2009 was

There are indications of one money remittance business that has started operations but which has not

been authorized under the Money Services Business Act.

passed to allow the Ministry of Finance to regulate and supervise these entities. The authorities

also indicated supervision of this entity has commenced.

55. The international financial services sector comprises: 6 offshore banks (post mission

reduced to 4); thirteen (13) international insurance companies; 3 insurance managers/brokers; 45

mutual funds; 30 mutual fund and managers/administrators. Post mission the authorities

informed that there are no known mutual fund underwriters subject to the mutual funds law

operating in or from within SVG. In addition, there are 28 licensed RAs/Trustees; 123 registered

trusts; and 9,584 international business companies.

56. The ECCB regulates all domestic banks while the IFSA is the regulatory body for the

international financial services sector. The domestic insurance sector and money remitters are

supervised by the SRD of the Ministry of Finance while credit unions are supervised by the

Registrar of Co-operatives. Later in 2009, the SRD will assume supervision of credit unions and

building societies. At the time of the mission, the SRD had only 2 supervisors/examiners on its

staff.

57. The following table shows the composition of the domestic and international financial

sectors in SVG:

Table 3: Financial Institutions

Domestic financial

institutions

No. Assets

US$mn

Branches or

Subs.

Abroad

Branches/Sub

. of Foreign

Bank

Regulator

Banks (includes

securities broking by

banks)

6 776.2 0 3 ECCB

Insurance companies (9

life)

23 NA

0 Ministry of

Finance

Brokers for insurance

company

6 NA 0 Ministry of

Finance

Agents for insurance 10 NA 0 Ministry of

The three foreign bank branches are for banks with head offices in Canada, Barbados and Trinidad and

Tobago.

The ECCB is responsible for the supervision of domestic banks in the eight countries comprising the

ECCU (Antigua and Barbuda, Dominica, Grenada, St. Kitts and Nevis, St. Lucia, St. Vincent and the

Grenadines, Anguilla and Montserrat). There are 39 domestic banks operating in the ECCU.

No recent statistics except for long-term premium which totaled about EC$82.5 million for 2007.

Insurance companies only report statistics six months after calendar yearend. Pensions and annuities for

2007 was about EC$68.7 million, which is included in long-term business.

The Ministry of Finance may designate the Supervisor or is the Authority responsible for supervising the

various entities, as provided in the respective financial laws.

Finance

Sales representatives for

insurance

85 NA 0 Ministry of

Finance

Pension fund plan for

insurance company

14 NA 0 Ministry of

Finance

Money transfer

services

4 NA 0 Ministry of

Finance

Credit unions (active) 9 NA 0 Registrar Credit

Unions

Building Society 1 94.3 0 Registrar of

High Court

(registration

only)

Total Domestic 158

0 3

International

(Offshore) Financial

Entities

No. Assets

US$mn

Branches or

Subs.

Abroad

Branches of

Foreign Bank

Regulator

Offshore banks

6 100 0 0 IFSA

International insurance

companies

9 NA 0 IFSA

International insurance

managers/brokers

3 NA 0 IFSA

Mutual funds/1 45 NA 0 IFSA

Mutual fund

managers/administrators

30 NA 0 IFSA

Sub-total offshore 93

NA 0

Other non-financial

offshore

RAs/trustees 28 NA IFSA

Trusts 123 NA IFSA (registration

only)

International business

companies -IBC’s

9,584 NA IFSA

(registration only)

Total Offshore 9828

1/ Mutual funds: 38 public, 5 private, 2 accredited. Mutual fund services providers: 4

managers/administrators, 22 managers, 4 administrators.

Does not include off-balance sheet assets under administration or held in a fiduciary capacity. Two of

these banks were intervened by the financial regulator soon after the mission reducing the number to four

banks when they are finally closed.

Table 4: Types of FIs authorized to carry out financial activities listed in the

glossary of the FATF 40 recommendations

Types of financial activity Types of financial institution that is

authorized to perform this activity

Acceptance of deposit and other repayable

funds from the public (including private

banking)

Credit Unions, Domestic Banks,

International banks

Lending (including consumer credit:

mortgage credit; factoring, with or without

recourse; and finance of commercial

transactions (including forfeiting)

Domestic Banks, Non Bank FIs

Financial leasing (other than financial

leasing arrangements in relation to

consumer products

Not Applicable

The transfer of money or value (including

financial activity in both the formal or

informal sector (e.g. alternative remittance

activity) , but not including any natural or

legal person that provides FIs solely with

message or other support systems for

transmitting funds

Domestic Banks, International

Banks, International Insurance, Credit

Unions, Money Transfer Businesses, Gaming

Companies

Issuing and managing means of payments

(e.g. credit and debit cards, cheques,

traveler’s cheques, money orders and

banker’s drafts, electronic money)

Domestic Banks, International Banks, Credit

Unions, Gaming Companies

Financial guarantees and commitments Domestic Banks, International Banks

Trading in:

a) money market instruments

(cheques, bills, CD’s,

derivatives etc)

b) foreign exchange

c) exchange, interest rate and index

instruments

d) transferable securities

e) commodity futures trading

Domestic Banks, International Banks

Participation in securities issues and the

provision of financial services related to

such issues

Domestic Banks, International Banks

Individual and collective portfolio

management

International Banks

Safekeeping and administration of cash or

liquid securities on behalf of other persons

Domestic Banks

Otherwise investing, administering or

managing funds or money on behalf of

other persons

International Banks

Underwriting and placement of life

insurance and other investment related

insurance (including insurance undertakings

and to insurance intermediaries (agents and

brokers)

Insurance ( Domestic and International)

Money and currency changing Domestic Banks

1.4. Overview of the DNFBP Sector

58. DNFBPs subject to preventive measures in SVG are casinos, lottery agents, lawyers,

notaries, accountants, RAs and trustees, real estate agents, and jewelers. Car dealers, while not

DNFBPs under FATF definitions, are included subject to the same AML/CFT requirements as

jewelers and are included in the discussion of DNFBPs.

Casinos

59. Two casinos operate in SVG, one being a small, local club in Saint Vincent with a limited

number of regular patrons, the other being a relatively new operation in a large upscale resort on

Canouan Island. The casino in St. Vincent consists of three card tables, two roulette wheels, and

about eight electronic slot machines. Players would number around 30 on a busy weekend, and

between 10 and 12 on a week day. Stakes are relatively low, with chip purchases of EC$3,000

being exceptional, occurring approximately once every two months. Credit may be extended to

known customers during play with settlement in cash, or on approval, by check, at check-out.

Some credits carry over for later settlement. Credit cards are not accepted. There are no wire

facilities. A succession of operators has managed the club, with the current manager in place for

about four years.

60. Little information was available in SVG about the casino at the resort on Canouan Island.

Resort facilities are very high end and the island is an international port of entry, with scheduled

flights to Barbados and Puerto Rico, as well as charter and private jet services. By reputation, the

casino caters to international junkets.

61. While the casino sector is nominally subject to licensing and to AML/CFT requirements,

little or no regulation is applied, and scant information was readily available in the authorities’

files. Money laundering risk at the casino in St. Vincent appeared to be low while the situation at

Canouan was undetermined.

RAs and Licensed Trustees

62. SVG has a small international financial sector, offering international business companies,

ITRs, international mutual funds, and allowing for establishment of international banks and

international insurance. Licensing is required in order to offer company formation and

management services or to act as a trustee. There are 28 firms licensed as registered agents

(RAs), all of which are also licensed as trustees. Most RAs are small firms headed by a lawyer or

an accountant. The principle office is required to be in SVG but a couple of firms have overseas

offices, and in the case of one of the largest RAs, most of its business originates and is organized

and managed by its European office.

63. Company formation is the most active line of business for RAs, with a total of 9,466

companies registered as of the end of 2008. At the same time there were 1,059 registered trusts

(statistics updated as of June 2009). No information is available on total amount assets under

trust administration. RAs tend to rely on established overseas business relationships for referral

of new business, although a small amount of business may be attracted as a result of advertising.

The active ship registry business in SVG is another channel generating demand for IBCs.

Traditionally, RAs have generated most of their business from European clientele although

recently business from Asia has increased and is being actively pursued. Organizing and

managing mutual funds is an increasing activity of this sector, as is international insurance. The

international banking sector has contracted significantly in recent years.

64. SVG RAs offer the full range of services expected of trust and CSPs, including company

formation, acting as director or secretary, providing a registered office and business address,

acting as a nominee shareholder or trustee, or arranging for others to do so. It appears that, in

most cases, day-to-day administration and management are left to others. Although bearer share

companies are allowed, since 2002 procedures have been in place for immobilization of bearer

shares. RAs are to be the custodians for immobilized bearer shares or arrange for other approved

persons to be the custodians. Amendments to the Companies Act in 2007 tightened requirements

for approving custodians of bearer shares.

Lawyers

65. The legal profession in SVG consists of barristers and solicitors who have been called to

the bar by the Judiciary and admitted to practice. Although there is a Bar Association, there is no

legal practices law in SVG and membership in the Bar is not required to be admitted to practice.

At the time of the assessment mission there were approximately 94 lawyers admitted to practice

in SVG. The Bar Association does not have legal standing or an enforceable code of practice, nor

powers to discipline members. Solicitors represent and act for their clients in a wide range of

commercial activities. All real estate transaction involves the participation of lawyers in drawing

the agreement, arranging for funds transfers, and processing settlement and registration.

66. Notaries are experienced lawyers whose function involves authentication of the contents,

completeness and accuracy of documents, as well as authentication of CDD documentation.

Accountants

67. The accounting profession in SVG consists of both accountants and auditors. No

legislation in SVG regulates their activities but most accountants are members of chartered

accountants association in another jurisdiction, primarily Canada, the UK or another

Commonwealth jurisdiction. As of the time of the mission there were approximately 24 qualified

accountants practicing in SVG. Two of the international Big Four accounting firms are

represented in SVG and they handle most of the audit work for the SVG offices of international

firms. A second tier of well-staffed firms is also active in audit and advisory work with SVG

clients. A third tier, consisting mainly of one-two person practices, provides accountancy and tax

services to local clients. Three RAs are headed by accountants.

Real Estate Agents

68. The real estate agent business is not specifically regulated and there is no association of

real estate agents. As of the time of the mission, the authorities estimated that there were 41

firms offering real estate agency services in SVG. This number includes individuals conducting

occasional transactions as well as firms with multiple offices in SVG.

69. Identification generally is applied to the vendor but not the buyer. Buyer identification

generally is treated as the responsibility of the lawyer who draws up the contract and attends to

the settlement. For sales to non-residents, extensive due diligence on the buyer is carried out by

the authorities under the provisions of the Alien Land Registration Act. FIU involvement in

CDD compliance is too limited to test the effectiveness of implementation of FATF

Recommendation (R) 5 requirements by Real Estate Agents.

Table 5: Designated Non Financial Businesses and Professions (DNFBPs)

Types of financial activity Non-FIs that is authorized to perform

this activity

Provide and collect legal fees Lawyers, Notary Publics

Gaming activities Casinos

Sales of Jewels, repair of Jewels Jewelers

Vehicle sales & rentals, suppliers of

automobile parts, auto body repairs

Car Dealers

Property sales, property valuations &

appraisers, Property management & rentals

Real Estate Agents

Auditing, accounting services, taxation

services, insolvency services, management &

business advisory services

Accountants

Charitable activities, membership fees, fund

raising activities

Non- profit organizations (NPO)

Financial Fiduciary, collecting prescribe fees

for offshore business activities

RAs-Service Providers

Table 6: Number of DNFBPs

Types of institutions No.

Lawyers 94

Notaries 20

Casinos 2

Jewelers 8

Car Dealers 16

Real Estate 41

Accountants 24

Non- profit organizations (NPO) 120

RAs-Service Providers 28

Licensed Trustees 28

Table 7: Authority responsible for registration and supervisory of AML/CFT

Types of domestic

financial institutions

Authority responsible for

registration

AML/CFT supervision

Banks Commerce and Intellectual

Property office

IFSA

ECCB

IFSA

Insurance Supervisory & Regulatory

Division –Ministry of Finance

IFSA

Supervisory & Regulatory

Division –Ministry of

Finance

IFSA

Credit Unions Cooperative Department –

Ministry of National

Mobilization

Cooperative Department

–Ministry of National

Mobilization

Money transfer services Supervisory & Regulatory

Division –Ministry of Finance

Supervisory & Regulatory

Division –Ministry of

Finance

Brokers for insurance

company

Supervisory & Regulatory

Division –Ministry of Finance

Supervisory & Regulatory

Division –Ministry of

Finance

Agents for Insurance

company

Supervisory & Regulatory

Division –Ministry of Finance

Supervisory & Regulatory

Division –Ministry of

Finance

Pension fund plan-

insurance company

Supervisory & Regulatory

Division –Ministry of Finance

Supervisory & Regulatory

Division –Ministry of

Finance

Table 8: Registrant Authority/Supervisory Authority for DNFBPs & NPOs

Types of institutions Registrant Authority/Supervisory

Authority

Lawyers & Notaries High Court Registry, Bar Association

Casinos Gaming Commission and the FIU

Jewelers FIU

Car Dealers FIU

Real Estate FIU

Accountants FIU

RAs/Service Providers IFSA

NPO Commerce and Intellectual Property Office

1.5. Overview of commercial laws and mechanisms governing legal persons and

arrangements, and Non-Profit Organizations (NPOs)

70. A ‘person’ includes any company or association or body of persons incorporate or

unincorporate. The main types of legal persons and arrangements used in SVG to own property,

hold bank accounts, own shares or conduct financial transactions are:

 Local Companies

 International Business Companies (IBC’s)

 Trusts

Local Companies

71. The Companies Act provides the legal mandate in relation to the incorporation of

companies and contains provisions that deal with corporate capacity and powers, ownership,

management, administration, winding up and dissolution. Different types of companies exist

such as “for profit” companies and non-profit companies. A ”for profit” company is incorporated

by filing the following documents:

 Articles of Incorporation

 Statutory Declaration

 Notice of Directors

 Notice of Address

 Request for Name Search and Reservation

72. A non-profit company is incorporated by filing the above documents however the

approval of AG is also required for incorporation. In order to qualify for the approval of the AG,

a non-profit company must restrict its business to a patriotic, religious, philanthropic, charitable,

educational, scientific, literary, historical, artistic, social, professional, fraternal, sporting or

athletic nature, or to the promotion of some other useful object.

73. All companies are required to disclose their registered office address. Information

concerning local companies is a matter of public record and is available for inspection by any

member of the general public. Pursuant to Sections 123 and 124 of the Companies Act a local

company is required to prepare a list of its shareholders which may be examined by any of its

members.

74. According to the authorities, companies are the main vehicle in SVG used to conduct

commercial activities, although partnerships governed by the Partnership Act, CAP 109, are also

used.

International Business Companies (IBCs)

75. IBCs are established under the International Business Companies (Amendment and

Consolidation) Act, 2007 and its Regulations, SRO No. 6 of 2008, which set out the

requirements for incorporation. The Act makes specific provision for several types of companies

namely: companies limited by shares, companies limited by guarantee (whether or not authorized

to issue shares), and unlimited companies. Specific provision is made for limited duration

companies and segregated cell companies (SCC). This latter type of company is attractive to the

mutual fund and captive insurance sectors of the international financial services industry.

76. The Act establishes rules on corporate governance, financial reporting, fundamental

changes and amendments, civil remedies, offenses and penalties, winding up and dissolution

provisions. The Registrar of International Business Companies (administratively under IFSA) is

responsible for the administration of this Act and maintains a register of IBCs which is open to

public inspection.

77. IBCs may only be incorporated through the services of a SVG-licensed RA. Disclosure of

information concerning ownership and control (shareholders and directors) is not mandatory and

the company can elect to register its directors.

78. IBCs cannot conduct or engage in business locally and must have an international

element. Corporate documents are kept at the office of the RA and records of minutes of

meetings and resolutions of members are maintained by the company. They are used in the

international financial services sector and are useful for carrying out specific investment

activities and attract tax advantages under the Act. IBCs are the most popular form of carrying

out commercial activities in SVG’s international financial services sector.

Trusts

79. Trusts can be either local or international. A local trust is governed by the Public Trustees

Act, CAP 382 and the Trustees Act, CAP 383 of the Laws of St. Vincent Revised Edition 1990,

respectively. ITRs must be registered by the Registrar of ITRs who is currently also the

Executive Director of IFSA. The Registrar has the power to obtain information and reports, and

to require the production of documents by notice in writing served on the registered trustee. ITRs

are governed by the ITR Act 1996 and its Regulations, SRO No. 34 of 1996. IBCs can engage in

ITR business and are also governed by the International Business Companies (Amendment and

Consolidation) Act.

80. The Trustees Act governs the duties, powers, liabilities of the trustee and powers of the

Court relating to the administration of trusts in terms of the trust instrument. There must be an

instrument creating the trust. ITRs are created by written instrument which satisfies the formal

requirements for a deed or settlement under the proper law of the trust, and which is signed by

the settlor and Trustee who must be a licensed RA in SVG. Property is vested in the Trustee

upon trust for named beneficiary beneficiaries. The law makes provision for the appointment of a

protector and retention of control by the settlor. The trustee can either be a person or a legal

entity.

81. Property of any sort can be held in trust and the uses of trusts are varied. Trusts can be

created during a person’s life (usually by a trust instrument referred to above) or after death in a

will. Types of trusts which are available include spendthrift or protective trusts, charitable trusts,

and purpose trusts which are irrevocable with a limited duration of 120 years. The ITRs Act

states the conditions which may constitute the termination, failure or cancellation of a trust,

liability for breaches, the proper law and effect of foreign law and powers of the court.

82. The ITR Register is not open to public inspection except by the protector, trustee or a

person authorized in writ

ing by the protector. An ITR must have a registered office, which is the

office of the Registered Trustee/RA.

Non-Profit Organizations (NPO)

83. NPOs are required to register under the Companies Act. The primary purpose of

registration is to verify that the organization is eligible for exemption from taxation because it is

a not-for-profit organization operating with a charitable or public purpose. Although the

registration formalities are streamlined, each NPO must be approved by the AG before being

accepted for registration. Once registered, oversight is generally limited to following up if annual

financial statements are not filed or in response to complaints. There has been no systematic

review of the FT vulnerability of the NPO sector in SVG.

Table 9: Numbers of NPOs

Years No. of registrations

1993-2003 57

2004 8

2005 16

2006 10

2007 13

2008 16

Total 120

1.6. Overview of strategy to prevent money laundering and terrorist financing

AML/CFT Strategies and Priorities

84. According to the authorities, the Government of SVG has been and is committed to

establishing the necessary infrastructure, both legislative and administrative in order to ensure it

has a strong AML/CFT regime. In the last seven years, the Government passed legislation to

combat money laundering and the FT, including:

 POCA 2001 and amendments thereto;

 POCA Regulations 2002 and amendment thereto;

 FIU Act 2001 and amendments thereto;

 Exchange of Information Act 2002 (repealed the Confidentiality (Preservation of

Relationships ) Act, recently replaced by the Exchange of Information Act 2008;

 International Banks Act 2004;

 International Business Companies (Consolidation and Amendment) Act 2007;

 UN Anti Terrorism Measures Act 2002 and amendment thereto.

85. Money Laundering Prevention Guidance Notes to the regulated sector were first issued in

2003 and amended thereafter in 2004 and 2006.

86. The authorities have not as yet issued a formal AML/CFT policy and strategy to help

prioritize its AML/CFT efforts and resources. In practice, the NAMLC provides a forum for

coordinating AML/CFT activities among its representative agencies, and is the de facto policy

making body. According to the authorities, it regularly meets with the key AML/CFT

stakeholders of SVG and has focused on implementing the applicable legislation. The main

agencies are described below in the context of the institutional arrangements for AML/CFT.

The Institutional Framework for Combating Money Laundering and Terrorist Financing

87. The NAMLC provides the main AML/CFT forum for national cooperation and

coordination in SVG. It is a national body created pursuant to the provisions of POCA,

consisting of the following members:

 the AG;

 the DPP;

 the Director General, Ministry of Finance and Planning;

 Director of the FIU;

 Comptroller of Customs;

 Representative of the ECCB;

 Commissioner of Police;

 Chairman and Executive Director, IFSA.

88. The SRD of the Ministry of Finance is not a statutory member but has been invited to

attend meetings by the Director General of the Ministry of Finance who is the Chairman of the

NAMLC.

89. As mentioned above, the NAMLC is the umbrella body which coordinates governmental

action in relation to AML/CFT. It makes recommendations to the Minister of Finance and AG

for the strengthening of the AML/CFT regime including recommendations pertaining to

legislative and administrative changes. Meetings of the NAMLC are held every quarter and

convened more regularly if required.

90. SVG’s Minister of Finance has certain responsibilities under various pieces of AML/CFT

legislation. He is, for example, the Minister:

 to whom the NAMLC reports under POCA;

 to whom the FIU reports; and

 that gives final approval for the licensing of a banks and mutual funds.

91. The Minister of Finance’s role is the AML/CFT regime is also important from the point

of view of resource allocation based on his responsibility for the country’s budget. The Minister

of Finance in SVG is also the Minister of Legal Affairs, the Minister of National Security and the

Prime Minister.

92. The AG plays an important role in SVG’s AML/CFT regime in two respects:

(i) responsibility for proposing legislation to Parliament; and

(ii) as the central authority for international cooperation. The AG has played a leading

role in enacting AML/CFT legislation since 2001. Together with the Office of the

DPP, who is the competent authority under the MLA in Criminal Matter Act

1993, the AG receives requests under this Act and other international requests by

letters rogatory or through diplomatic channels. Requests made through

diplomatic channels are received by the MFA and forwarded to the AG. The main

role of the MFA is therefore receiving international requests for cooperation and

forwarding them for processing by the relevant authorities in SVG. The AG has

authorized the FIU to process all international requests which the office receives

either directly, or through the MFA. The execution of these requests by the FIU

has proven to be the most efficient way of processing international requests for

assistance. The AG is also the competent authority under the US Treaty for MLA

in Criminal Matters between SVG and the USA.

93. The FIU also plays a key role in the AML/CFT regime. In addition to its core FIU

functions, it has also engaged in awareness raising and training activities for the regulated sectors

with respect to their obligations under POCA. It has also established relationships locally and

internationally in order to carry out its duties more effectively and to be able to foster greater

information sharing. The FIU has entered into nine MOUs with counterparts in other

jurisdictions and has provided assistance regularly to such counterparts.

94. The DPP is responsible for the prosecution of all criminal matters in SVG. It works

closely with FIU whereby certain applications under POCA, as well as prosecutions, are

undertaken by the FIU under the authority of the DPP. The FIU prosecutes ML cases and its

functions include obtaining production orders, search warrants, restraint orders, confiscation

applications, and cash detention orders. Although under the Constitution the power to prosecute

lies solely with the DPP, prosecutions may be delegated to others, including the FIU or

independent counsel. The DPP’s staff is not involved in day-to-day ML prosecutions, and the

institutional knowledge is largely within the FIU legal staff. To the extent that more prosecutions

are being developed, the balance of work between the FIU and DPP should be revisited, and

appropriate staffing enhancements should be considered. While the FIU and DPP have informed

the mission that the case-by-case delegation by the DPP has been effective, a formal, open-ended

delegation would facilitate the FIU’s work in this regard.

95. In SVG, the law enforcement agencies are composed of different departments or

branches within the RSVGPF. The latter specializes in certain crime fighting areas and has

formed specialized units such as the White Collar Crimes Unit, a Criminal Investigation

Department, a Rapid Response Unit, a Narcotics Unit, and a Major Crimes Unit.

96. The main financial sector bodies in SVG with responsibility for authorizing and

supervising FIs are the ECCB, IFSA, the Ministry of Finance and its SRD, the Registrar of

Cooperatives Department and the Commerce and Intellectual Property Office (CIPO). As the

regulator of domestic banks, the ECCB has been involved in the examination of domestic banks

but onsite examinations have not been conducted regularly for some banks and do not seem to

adhere to its stated risk-based approach with respect to AML/CFT. Prior AML/CFT reviews

appear to be more compliance-based focusing on the existence and adequacy of internal policies,

procedures and controls.

97. IFSA is a single regulator for the international (offshore) financial services sector

responsible for the supervision all of the international financial services providers authorized in

SVG including:

 International Banks;

 International Mutual Funds;

 International Insurance;

 RAs and Trustees;

 Registration of International Business Companies; and

 Registration of ITRs.

98. Supervision by IFSA consists of offsite monitoring and onsite examinations. It has

limited supervisory capacity (4 examiners including the Executive Director). Onsite

examinations for AML/CFT have only recently been conducted for most sectors, and are still

evolving in dept and scope. Special attention has been give to the international banks by virtue of

their inherent risks. To complement its staff resources, IFSA has in the past utilized the services

of an outside consultant for onsite inspections, financed through the Caribbean Regional

Technical Assistance Center (CARTAC).

99. Domestic insurance and money remitters are subject to the supervision of the Ministry of

Finance–SRD, while credit unions are supervised by the Registrar of Co-operatives. At the time

of the mission, an amendment to the Building Societies Act was being made to grant regulatory

responsibility for building societies, which have not been supervised, to the Ministry of Finance.

There were also plans to transfer responsibility for credit unions from the Registrar to the

Ministry of Finance. The establishment of the SRD in SVG is part of an ECCU wide initiative to

set up a Single Regulatory Unit in each member State to supervise those FIs not subject to the

supervision of the ECCB and IFSA. A MOU for the Single Regulatory Units in the region is

being developed to facilitate regional cooperation among the various units.

100. The Commerce and Intellectual Property Office (CIPO) has responsibility for the

incorporation of companies and maintaining a register of companies. Non-profit organizations

are also registered by CIPO.

101. Casinos are licensed by the Gaming Commission and subject to the joint supervision of

the Commission and the FIU. There are only two licensed casinos.

102. The Bar Association does not have self-regulatory authority. As a result, there is no legal

framework for supervising lawyers for AML/CFT compliance.

103. Except for the trust and CSPs that are supervised by IFSA, all other DNFBPs fall under

the legal jurisdiction of the FIU for AML/CFT legal compliance supervision.

Approach Concerning Risk

104. There is no formal policy or procedures for applying a risk-based approach to compliance

and supervision, and no assessment has been conducted of ML and FT threats and vulnerabilities

in the system to inform policy making and implementation of countermeasures. The authorities

nonetheless maintain that risk is assessed at the national level by the NAMLC, with important

input from the FIU, and that priority is placed on commercial and international banks, money

remitters and cash businesses. Priority is given to these entities due to the high volume of

transactions, the trend of suspicious activity reporting, intelligence results, and the fact that

worldwide these institutions are recognized as being more susceptible to ML and FT. However,

this “assessment” has not translated into the formulation of a national policy, strategy, and the

application of supervisory resources, especially with respect to the international sectors.

105. The list of regulated entities covered under the POCA No. 39 of 2001 is relatively broad

containing most activities required under the FATF Recommendations. It does not appear to be

risk-based and includes some activities that are not currently in operation in SVG. Some existing

activities, however, should be explicitly listed such as insurance agents and brokers, mutual fund

administrators/managers and underwriters, etc.

106. It is also noted that the POCA Regulations and Guidance Notes provide certain

exemptions for the verification of client identity e.g. with respect to introduced business and

other non-face to face activities. Both types of business are more common in the international

(offshore) sectors and are inherently more vulnerable to ML/FT risks arising from cross-border

activities. This would not be consistent with a risk-based approach.

107. While the authorities maintain that a risk-based approach has been implemented to

supervision for compliance with the AML/CFT requirements, the practice suggests that this has

not been fully developed. For instance, supervision of money remitters (a high risk sector as e.g.

reflected by SAR reporting), investment-linked insurance activities, and the international

financial and trust and company services sectors, have not attracted the level of supervision and

resources that would be commensurate with their inherent risks. The casinos and other DNFBPs

have also not been subject to an effective AML/CFT oversight regime.

108. The authorities maintain that both the domestic and international financial sectors of SVG

are relatively modest and that it would be somewhat impracticable to develop an elaborate risk-

rating system. They note that while there are differences in the quality of banks, there is no

pressing need to develop or adopt an elaborate risk-based methodology that would allow for

variations in approach.

Progress since the Last Mutual Evaluation

109. The last evaluation of SVG’s AML/CFT regime was undertaken by the CFATF in

October 2003. SVG responded to the large majority of the recommendations made by embarking

upon both legislative and administrative changes. The two prominent criticisms of SVG’s

AML/CFT regime in the CFATF mutual evaluation report were weaknesses of its Customs and

Excise Department and the restrictive effect of Section 5 of the Exchange of Information Act

2002, with respect to international regulatory co-operation and exchange of information. Both

deficiencies have been addressed by changes in the Customs and Excise Department and by

repeal and replacement of the Exchange of Information Act. Some concerns remain with

restrictive information exchange language in sectoral laws.

110. While progress has been made since the 2003 CFATF mutual evaluation, the regime has

some key legal and institutional weaknesses left to address. Specifically, there are limitations in

the legal framework for FT investigations and prosecutions. The recommendations of the

CFATF and the status of these recommendations, whether implemented or not, are outlined in

the following table.

Table 10: Action Since Last Assessment

Criminal Justice Measures

and International

Cooperation

Recommended Action Actions Taken by St. Vincent and the

Grenadines

I—Criminalization of ML

and FT

1) Ratify and implement the

Palermo Convention

expeditiously.

2) Implement the Inter-

American Convention Against

Corruption in a timely manner.

3) For the avoidance of doubt

as to whether FT offenses are

ML predicate offenses, the

POCMLPA could be amended

to list the FT offenses created

by the UNATMA in the

Second Schedule to the

POCMLPA as relevant

offenses.

4) Amend Schedule 2

POCMLPA to set out a list of

offenses rather than a list of

Acts.

5) Consideration should be

given to amending the

1) The Palermo Convention was signed by

SVG on November 20, 2002. Legislation

enacted in the jurisdiction addresses several

articles of the Convention. For e.g., the

Criminal Code, Chapter 124, Chapter 5,

creates offenses against the administration of

lawful authority including official corruption,

in keeping with the provisions of Article 8 of

the Palermo Convention.

Additional steps will be taken with regard to

the ratification of the Palermo Convention.

2) Steps are currently being taken with regard

to the implementation of the Inter-American

Convention Against Corruption by St.

Vincent and the Grenadines.

CARICOM is currently drafting a harmonized

bill to give effect to the Convention however

this has not as yet been distributed to member

territories for passage through Parliament.

3) POCA was amended in 2005 by Act No. 8

of 2005 and now lists the FT offenses in the

Second Schedule thereby establishing them as

relevant offenses and by extension ML

predicate offenses.

4) Schedule 2 of POCA has been repealed and

replaced by Act No. 8 of 2005 and now refers

to a list of offenses created under various Acts

rather than a list of Acts.

5) Sections 41- 43 of POCA have been

amended by Act No. 8 of 2005 and now

POCMLPA to explicitly

provide for inferring the

intentional element of ML

offenses from objective factual

circumstances. Possible

wording such as: “Knowledge,

intent, purpose, belief or

suspicion may be inferred from

objective, factual

circumstances” might be

considered.

6) The Customs Department

needs to be adequately funded,

resourced, trained and its

practices reviewed so that it

can become an effective

element in the implementation

of the ML and FT laws.

adequately provide for the inferring of the

mental element of ML offenses from

objective factual circumstances.

6) A new Comptroller of Customs has since

been appointed to head the Department. He is

well-versed in AML/CFT laws and practices

and the Department has improved its

implementation of same since his

appointment.

Further, onsite training was conducted with

the Customs Department by the Caribbean

Anti-Money Laundering Programme (CALP),

in 2004.

The Customs Department has established and

intelligence unit and conducts internal

AML/CFT training with new recruits as well

as intermediate and senior staff.

2. LEGAL SYSTEM AND RELATED INSTITUTIONAL MEASURES

2.1. Criminalization of Money Laundering (R.1 & 2)

2.1.1. Description and Analysis

111. Legal Framework: The POCA, No. 39 of 2001, as amended by Act No. 25 of 2002 and

Act No. 8 of 2005 (collectively, POCA) is the main piece of AML legislation in SVG.

Criminalization of Money Laundering (c. 1.1—Physical and Material Elements of the

Offence):

112. ML is criminalized in Sections 41 – 43 of POCA which criminalize a broad range of

offenses generally consistent with the Vienna and Palermo Conventions, including concealing or

disguising proceeds of criminal conduct (Section 41(a)), converting or transferring such property

(Section 41(b)), retention or control of such property by or on behalf of another person (Section

42(1)), and acquiring, using or possessing such property (Section 43(1)). However, the offenses

set forth in Section 41 are not consistent with Article 3(1)(b)(i) and (ii) of the Vienna

Convention, nor with Article 6(1)(a) of the Palermo Convention, which state that the criminal

conduct must be “for the purpose of concealing or disguising the illicit origin of the property or

of assisting any person who is involved in the commission of such an offence or offences to

evade the legal consequences of his actions.” (emphasis added). The POCA offenses in Section

41 simply contain one leg of the required purposes, as follows: “for the purpose of avoiding

prosecution for a drug trafficking or relevant offence or the making or enforcement in his case of

a confiscation order.”

The Laundered Property (c. 1.2):

113. Under the definition of ‘property’ in Section 2(1) of POCA, all types of property are

covered in a manner consistent with the Vienna and Palermo Conventions, including “real or

personal property, whether inside or outside St. Vincent and the Grenadines and includes money

and all other property, moveable or immovable . . . .” However, the definition does not include

“legal documents or instruments evidencing title to, or interest in, such assets” as required by

Article 1(q) of the Vienna Convention and Article 2(d) of the Palermo Convention.

Proving Property is the Proceeds of Crime (c. 1.2.1):

114. Under POCA, when proving that property is the proceeds of crime, there is no

requirement that the accused be convicted of a predicate offense. According to the authorities,

courts in SVG have required a linkage of the proceeds to a criminal offense, but not proof of or

conviction for the predicate offense. See LGQM [2004] EWCA Crim 1579. The Scope of the

Predicate Offenses (c. 1.3): SVG uses an “all crimes” approach to predicate crimes. Under

Sections 41–43 of POCA, the money laundering offenses are based on proceeds of criminal

conduct. The definition of criminal conduct under Section 2(1) means any “drug trafficking or

any relevant offense.” The term “any relevant offense” is defined as: any indictable or summary

offence; any offence triable both summarily or on indictment in SVG from which a person has

benefited, other than a drug trafficking offence; an offence under the Acts listed in Schedule 2;

and any act or omission which, had it occurred in St. Vincent and the Grenadines, would have

constituted any of the aforementioned offenses. The offenses listed in Schedule 2 include non-

criminal or administrative violations of regulatory or other laws. However, with respect to

designated categories of offenses, the offenses of racketeering, human trafficking and migrant

smuggling are not covered as predicate offenses since they are not found in domestic legislation.

Threshold Approach for Predicate Offenses (c. 1.4):

115. N/A

Extraterritorially Committed Predicate Offenses (c. 1.5):

116. Predicate offenses extend to offenses committed extraterritorially, based on the definition

of ‘relevant offence’ as set out in Section 2(1) of the POCA which includes “any act or omission

which, had it occurred in St. Vincent and the Grenadines, would have constituted an offence [in

SVG] . . . .”

Laundering One’s Own Illicit Funds (c. 1.6):

117. Pursuant to Section 41(1) of POCA, a person commits an offence if he conceals or

disguises any property which represents his proceeds of criminal conduct or converts or transfers

that property, brings it into or removes it from SVG. Possession of the criminal’s own proceeds

is not currently covered; according to the authorities, a proposed amendment to POCA will be

considered.

Ancillary Offenses (c. 1.7):

118. Section 42 of POCA provides that the arrangement with another to retain the proceeds of

criminal conduct is an offence. While there are no statutory provisions in POCA, the CC

provides for conspiracy, attempt, aiding and abetting, facilitating and counseling the commission

of any crime, including money laundering. CC, CAP 124 (1990), Section 20(b) aiding, (c) aids or

abets, (d) counsels; Section 315, attempt; and Section 310, conspiracy.

Additional Element—If an overseas act which does not constitute an offence overseas, but

would be a predicate offence if occurred domestically, lead to an offence of ML (c. 1.8):

119. Yes, based on the definition of ‘relevant offence’ in Section 2(1) of the POCA which

includes “any act or omission which, had it occurred in St. Vincent and the Grenadines, would

have constituted an offence [in SVG] . . . .”

Liability of Natural Persons (c. 2.1):

120. The ML offence extends to natural persons who knowingly engage in money laundering

activity as set forth in Sections 41–43 of POCA.

The Mental Element of the ML Offence (c. 2.2):

121. Under Sections 42–44 of POCA (as amended by the 2005 Amendments),

a person must

“know, suspect or have reasonable grounds to suspect . . . ” and therefore the intentional element

of the offense may be inferred from objective factual circumstances. The authorities have also

cited relevant English case law such as Regina v. Montila, [2004] 1 WLR 3141, at 10, para. 43,

which states that “. . . the evidence which goes to prove knowledge or reasonable grounds to

suspect . . . will often be sufficient to justify the inference that the origin of the property was

coincident with that state of mind.”

Liability of Legal Persons (c. 2.3 ):

122. Criminal liability extends to legal persons under Section 57 of POCA, which states;

“Where a body corporate commits an offence under this Act and the offence is proved to have

been committed with the consent or connivance of any director, manager, secretary or other

similar officer of the body corporate or any person who was purporting to act in any such

capacity, he, as well as the body corporate, commits that offence and is liable to be proceeded

against and punished accordingly.” In addition, under Section 3(1) of the Interpretation and

General Provisions Act, CAP. 10, the definition of ‘person’ includes any company, association,

or body, corporate or unincorporated.

Liability of Legal Persons should not preclude possible parallel criminal, civil or

administrative proceedings (c. 2.4):

123. According to the authorities, parallel proceedings are implicitly provided for in POCA

and therefore two or more civil, criminal or administrative procedures may be brought against a

corporation at the same time although this has never occurred in SVG. According to the

authorities, parallel proceedings may be brought against a corporation or natural person, where

simultaneously a criminal, administrative and civil proceeding may proceed from the same facts

or incident. To date, this has not occurred in SVG.

Sanctions for ML (c. 2.5):

124. Section 47 of POCA sets out the penalties for the money laundering offenses set out in

Sections 41–43 of the Act. A person committing an offence under any of these Sections faces

imprisonment for 5 years or a fine of up to EC$500,000 on summary conviction, and

imprisonment for 20 years or an unlimited fine or both.

Table 11: ML Prosecutions and Convictions, 2005 – 2008

Year Prosecutions Convictions Sentence Predicate

offense

2005 0 0 N/A N/A

2006 3 3 Three

convictions:3½

years, 9

months

imprisonment

and

EC$10,000

(fine)

Drug

Trafficking

2007 1 1 4½ years

imprisonment

Drug

Trafficking

2008 2 Pending Pending Drug

Trafficking

Effectiveness of Implementation

125. While the SVG legal framework is generally compliant with relevant Conventions and

FATF Recommendations 1 and 2, the low number of prosecutions and convictions in the last

four years, six and four, respectively, raise questions about the effective implementation of the

criminalization provisions. While it is not possible to reach any definitive conclusions about the

pattern of prosecutions and convictions in the last four years, the overall numbers appear to be

low given the extent of drug trafficking believed to be taking place in or through SVG (e.g. the

authorities acknowledged that the identities of the largest traffickers were known to them) and

the inherent ML and FT risks in the cross-border international (offshore) business sectors.

2.1.2. Recommendations and Comments

126. Relevant laws should be strengthened to provide that:

 The references to the purpose of the offenses set forth in Section 41 are consistent with

the Vienna and Palermo Conventions.

 The definition of property in POCA includes a reference to legal documents or

instruments evidencing title in a manner consistent with the Vienna and Palermo

Conventions.

 Self-laundering by way of simple possession of proceeds is criminalized.

 Racketeering, human trafficking and migrant smuggling are enacted into law as criminal

offenses and covered by POCA as predicate offenses.

 In addition, efforts should be made by competent authorities to increase the number of

convictions for ML and related predicate crimes.

2.1.3. Compliance with Recommendations 1 & 2

Rating Summary of factors underlying rating

R.1 PC

 Certain offenses in Section 41 of POCA as well as the definition of

‘property’ in POCA are not consistent with the relevant articles of the

Vienna and Palermo Conventions.

 Self-laundering by way of simple possession of proceeds is not

criminalized.

 Racketeering, human trafficking and migrant smuggling are not

predicate offenses.

 Effective implementation is weak in light of low number of criminal

prosecutions and convictions for ML and related predicate crimes.

R.2 C

The mission has been informed that the authorities have taken steps to draft legislation to remedy this

deficiency.

2.2. Criminalization of Terrorist Financing (SR.II)

2.2.1. Description and Analysis

Legal Framework:

127. The United Nations (Anti-Terrorism Measures) Act, No. 34 of 2002, as amended in 2006

by Act No. 13 of 2006 (UNATMA) was enacted to implement the International Convention for

the Suppression of the FT, 1999 and to provide measures to combat terrorism. The

criminalization of FT under UNATMA is generally compliant with the SFT Convention except

as noted below.

Criminalization of FT (c. II.1):

128. FT is criminalized by Sections 3–6 of UNATMA, which covers terrorist acts, terrorist

groups, and, in most instances, individual terrorists and is generally consistent with the relevant

offenses set forth in the SFT Convention. However, Schedule II to UNATMA, which lists the

relevant terrorism conventions, omits two conventions that are listed in the annex to the SFT

Convention, as follows: The Convention on the Physical Protection of Nuclear Material (1980)

and the International Convention for the Suppression of Terrorist Bombings (1997). One of the

conventions listed in UNATMA, on the safety of maritime navigation, has not been signed and

ratified. In addition, one convention not listed in UNATMA, the convention on terrorist

bombings, has been acceded to but not ratified, and one not listed, on nuclear materials, has not

been signed or ratified. Conduct covered by the listed conventions is criminalised by UNATMA.

Finally, under UNATMA, terrorist financing offenses extend to any funds as defined in the SFT

Convention.

Predicate Offence for Money Laundering (c. II.2):

129. Offenses under UNATMA are captured by the definition of ‘relevant offence’ in Section

(2)(1) of POCA in two ways: First, under Section 7 of UNATMA, offenses are both summary

and indictable, therefore covered under the first part of the definition, and second, under an

amendment to UNATMA, Act No. 8 of 2005, Schedule 2, amending Schedule 2 of POCA,

offenses under UNATMA are listed, thereby establishing such offenses as predicate offenses for

money laundering.

Jurisdiction for Terrorist Financing Offence (c. II.3):

130. Under Section 9 of UNATMA, terrorist acts committed outside SVG by citizens of SVG

and “stateless persons” resident in SVG (e.g. resident aliens) constitute offenses under

UNATMA.

The Mental Element of the TF Offence (applying c. 2.2 in R.2 for c. II.4):

131. See discussion at c. 2.2.

Liability of Legal Persons (applying c. 2.3 & c. 2.4 in R.2 for c. II.4):

132. Under Section 3(1) of the Interpretation and General Provisions Act, CAP. 10, the

definition of ‘person’ includes any company, association, or body, corporate or unincorporated.

The possibility of parallel criminal or civil liability is not prohibited.

Sanctions for FT (applying c. 2.5 in R.2 for c. II.4):

133. Sanctions, as set forth under Section 7 of UNATMA, provide that: “A person guilty of an

offence under sections 3, 4, 5 or 6 of [UNATMA] shall be liable- (a) on conviction on

indictment, to imprisonment for a term not exceeding twenty years, to an unlimited fine or both;

or (b) on summary conviction, to imprisonment for a term not exceeding five years, to a fine not

exceeding EC$500,000 or both.”

Effectiveness of Implementation

134. There are no known instances of FT in SVG, no SARs for FT have been filed nor have

there been any investigations, prosecutions or convictions under UNATMA since its

implementation. Hence effectiveness is difficult to gauge. However, the authorities maintain that

SVG is a jurisdiction which is low risk for FT and has had no instances of FT being identified in

or passing through the jurisdiction and that this is borne out by the fact that there are no domestic

or international matters which involve FT which have been brought to light by foreign or

international authorities.

2.2.2. Comments

The laws of SVG should be strengthened as follows:

 Schedule II to UNATMA, which lists the relevant terrorism conventions, omits two

conventions that are listed in the annex to the SFT Convention, as follows: The

Convention on the Physical Protection of Nuclear Material (1980) and the International

Convention for the Suppression of Terrorist Bombings (1997);

 Section 3(4) of UNATMA should be amended to apply to individual terrorists, and not

just terrorist acts and terrorist groups; and

 The POCA Regulations should be amended to cover FT offenses.

2.2.3. Compliance with Special Recommendation II

Rating Summary of factors underlying rating

SR.II LC

 The Convention on the Physical Protection of Nuclear Material (1980)

and the International Convention for the Suppression of Terrorist

Bombings (1997) are not included in the list of Conventions that define

one aspect of the definition of terrorist act in UNATMA;

 Under Section 3(4) of UNATMA, the offenses under Sections 3(1) and

3(3) of UNATMA do not apply to individual terrorists; and

 POCA Regulations do not cover FT offenses.

2.3. Confiscation, freezing and seizing of proceeds of crime (R.3)

2.3.1. Description and Analysis

Legal Framework

135. Part II, Sections 6–22 of POCA relate to confiscation orders which may be made during

the sentencing of the defendant if the Court is satisfied that a defendant has benefited from either

drug trafficking or relevant offenses and is based on the Court’s assessment of the value of the

defendant’s proceeds of criminal conduct under Section 13 of POCA. Section 26 of POCA

provides for the making of restraint orders which prohibit any person from dealing with any

realizable property. Further, Sections 49 and 50 of POCA provide for the seizing, detaining and

forfeiture of cash which is reasonably suspected of directly or indirectly representing any

person’s proceeds of criminal conduct or of being intended by any person for use in criminal

conduct.

Confiscation of Property related to ML, FT or other predicate offenses including property

of corresponding value (c. 3.1):

136. Sections 6-8 of POCA provide for the confiscation of the proceeds from the commission

of any crime, including drug trafficking, money laundering, terrorist financing and other

predicate offenses, as well as property of corresponding value if the proceeds themselves are not

available. The confiscation order can be applied for at the time of conviction but before

sentencing once the Court is satisfied that the defendant has benefited from the offence and has

or may have ‘realisable property’ as defined by POCA. The value of such proceeds is determined

by the Court and is not limited to the actual amount of proceeds seized from or relating to the

defendant.

137. Under Section 51A of POCA, instrumentalities used or intended to be used to commit

any offence may also be forfeited, including property under the defendant’s possession or control

which has been used for the purpose of committing or facilitating the criminal conduct, or was

intended to be used to commit the criminal conduct. In addition, the Drugs (Prevention of

Misuse) Act, CAP 219, Section 28, includes all conveyances for drugs and drug trafficking,

subjecting those to forfeiture as well.

138. Questions of fact to be decided by a Court in proceedings under POCA including seizures

or forfeitures are subject to a civil standard of proof, i.e. “the balance of probabilities,” under

Section 63 of POCA.

Confiscation of Property Derived from Proceeds of Crime (c. 3.1.1 applying c. 3.1):

139. (a) Indirect proceeds of crime: Although there is no explicit provision that applies to

indirect proceeds of crime, including income, profits or other benefits, the authorities are of the

view that the confiscation provisions of POCA would apply to such indirect proceeds, since,

under Section 7(3)(a) “a person benefits from an offence if he obtains property as a result of or in

connection with its commission and his benefit is the value of any property so obtained; and (b)

if he derives a pecuniary advantage as a result of or in connection with the commission of an

offence, he is to be treated as if he obtained instead a sum of money equal to the value of his

pecuniary advantage.” Further, they cite the English Court of Appeal case of Regina v. Causey

(18 October 1999, at 6, which stated that “if one penny or one penny’s worth of the property

dealt with is the proceeds of criminal conduct” then the property is obtained partly in connection

with the commission of an offence. This interpretation appears to be a reasonable one in light of

the statutory reference to the defendant having derived a “pecuniary advantage.”

c.3.1.1 Property held by third parties:

140. With respect to confiscation of property held by a third party, subject to Section 14 of

POCA, which provides for protection of the property rights of third parties (see c. 3.5 below), the

definition in Section 2 of ‘realisable property’ applies to “any property held by the defendant”

and “any property held by a person to whom the defendant has, directly or indirectly, made a gift

caught by this Act.” Under Section 3(4)(a), which covers gifts caught under POCA, “the

circumstances in which the defendant is to be treated as making a gift include those where he

transfers property to another person, directly or indirectly, for a consideration the value of which

is significantly less than the value of the consideration provided by the defendant.” Such

property is subject to confiscation only if the consideration for the gift is “significantly less” than

the value of the property. Finally, POCA applies to all property, whether in the hands of the

defendant or of a third party, and including proceeds of criminal conduct as well as

instrumentalities. See also c. 3.1(b) above.

Provisional Measures to Prevent Dealing in Property subject to Confiscation (c. 3.2):

Two provisions of POCA relate to provisional measures:

141. Section 26 authorizes the court to make restraint orders to prohibit persons from dealing

with, transferring or disposing of any realizable property that is or may become subject to

confiscation. According to the authorities, this typically occurs during the investigation of a ML

case as well as prior to or during the prosecution but prior to the completion of the case. The

evidentiary standard is the same civil standard as applies generally under POCA. In addition,

Section 49 permits the seizure of cash and monetary instruments anywhere in the country “if the

[police or customs] officer has reasonable grounds for suspecting that it directly or indirectly

represents any person's proceeds of criminal conduct or is intended by any person for use in any

criminal conduct.”

Ex Parte Application for Provisional Measures (c. 3.3):

142. Under Section 26(4)(b) of POCA, a restraint order may be made on an ex parte

application to a Judge in chambers. Prior notice is therefore not necessary According to the

authorities, once an ex parte application has been granted by the court, notice is subsequently

provided to the affected parties within a reasonable time. This is usually from immediately up to

seven days. Notice is given to all affected parties; affected parties are usually listed in the Order

and may include FIs, corporate bodies or individuals.

Identification and Tracing of Property subject to Confiscation (c. 3.4):

143. The laws of SVG provide for a number of legal powers to identify and trace property that

is or may become subject to confiscation or is suspected of being the proceeds of crime,

including the following:

 Under Section 4(2)(b) of the FIU Act, the Director of the FIU “. . . may require the

production of such information (excluding information subject to legal professional

privilege) from FIs or a person engaged in a relevant business activity that the FIU

considers necessary for the purpose of investigating the relevant offence” where it

appears to the Director that there are reasonable grounds to suspect that a relevant offence

has been committed;

 Under Section 35(1) of POCA, the DPP as well as a police officer may apply to the Court

for a production order for the purpose of an investigation in or outside SVG into (i) any

offence, (ii) ascertaining whether any person has benefited from criminal conduct or (iii)

ascertaining the whereabouts of any proceeds of criminal conduct, if there are reasonable

grounds for suspecting that a specified person has carried on drug trafficking or has

benefited from criminal conduct (Section 35(4)). According to the authorities, the term

"specified person" is wide enough to include any person who has possession or control of

such proceeds;

 Under Section 37 of POCA, a police officer may apply for a search warrant for the

purpose of an investigation into any offence if the Court is satisfied, inter alia, that a

production order has not been complied with and that there are reasonable grounds for

suspecting that material pertaining to a specified person who is suspected to have

benefited from criminal conduct is located on the premises;



Section 38 of POCA also provides for the making of an order to compel disclosure of

information held by Government Departments;

 Section 39 of POCA provides for the making of monitoring orders directing a financial

institution to give to a police officer information obtained by the institution about

transactions conducted by a particular person with that institution.

Protection of Bona Fide Third Parties (c. 3.5):

144. Section 14 of POCA provides for the protection of bona fide third party rights in a

manner consistent with the Palermo Convention. This section provides that a person asserting

interest in property subject to confiscation the opportunity to apply to the court and prove that he

was not in any way involved in the defendant’s criminal conduct, that he acquired the interest in

the property for sufficient consideration, without knowing of the criminal conduct and in

circumstances that he would not have formed a reasonable suspicion, that the property was, at

the time he acquired it, property that was involved in or was the proceeds of criminal conduct.

Power to Void Actions (c. 3.6):

145. There is no explicit power in the laws of SVG to void contracts, and no legal basis for

doing so otherwise. The authorities have cited three cases that contracts against public policy

will not be enforced, as follows:

“Contractual freedom must be fostered but any contract that tends to prejudice the social

or economic interest of the community must be forbidden. The contract is not unlawful in

the sense that it is criminal or would give any cause of action to a third person injured by

its operation, but it is unlawful in the sense that the law will not enforce it. North-Western

Salt Co v. Electrolytic Alkali Co (1912) 107 LT 439. A contract is illegal and void if its

object , direct or indirect, is the commission of a crime or tort, is an agreement made with

the object of defrauding or deceiving a third party, or one which amounts to a criminal

conspiracy. No person is allowed to benefit from his own crime, Cleaver v. Mutual

Reserve Fund Life Association [1892] 1 QB 147. The rule that the court will not assist a

person to recover the fruits of his crime applies equally to his representatives, Beresford

v. Royal Insurance Co Ltd [1937] 2 KB 197.”

Additional Elements (Rec. 3)—Provision for:

(a) Confiscation of assets from organizations principally criminal in nature:

146. While there is no explicit provision for confiscation of assets from criminal

organizations, under Section 57 of POCA, corporate bodies are subject to prosecution and hence

their assets are subject to confiscation.

(b) Civil forfeiture:

147. Cash and negotiable instruments only may be seized, detained and confiscated without

criminal conviction under Sections 49 and 50 of POCA.

148. While there is no provision of law providing for civil forfeiture of property prior to

conviction other than cash and negotiable instruments, Section 11 of POCA provides that the

Court may require the defendant to indicate the extent to which he accepts any allegation

provided by the DPP to the Court in relation to his benefit and assessing the value of his

proceeds of drug trafficking or benefit from any relevant offenses. As a result, the defendant is

provided with the opportunity to demonstrate the lawful origin of his property by negating any

such allegations put forward by the DPP. Sections 8 and 10 of POCA do not apply to seizures or

forfeitures of cash under Sections 49 and 50 of POCA but do allow for post-conviction

confiscations or forfeitures of non-cash property. According to the authorities, orders made under

Sections 8 and 10 for non-cash property may take into consideration all benefits derived from the

underlying criminal activity for the period over which such activity was undertaken, normally

limited to six years from the date of the charge for the relevant offence.

Effectiveness of Implementation

149. While it is not possible to reach any definitive conclusions about the pattern of

confiscations and forfeitures in the last four years, the overall numbers appear to be low given

the extent of drug trafficking believed to be taking place in or through SVG (e.g. the authorities

acknowledged that the identities of the largest traffickers were known to them) and the inherent

ML and FT risks in the cross-border international (offshore) business sectors.

Table 12: Cash Forfeitures under POCA, 2004 – 2008

Year Amount Seized Equivalent (EC$) Equivalent (US$)

2004

EC$8,104.64 8,104.64 2,990.64

EC$12,953.32 12,953.32 4,779.82

Total 21,057.96 7,770.46

2006

EC$18,700.00 & US$3,000 26,710.00 9,856.08

BD$ 8,100.00 & US$300 11,574.00 4,270.84

EC$1,520.00 & US$20 1,573.40 580.59

£3,020.00 10,570.00 3,900.37

EC$1,452.15 & US$1.00 1,454.82 536.83

BD$6,600.00 & US$667.00 10,690.89 3,944.98

EC$3,200.00 3,200.00 1,180.81

€3,280.00 11,480.00 4,236.16

Total 77,253.11 28,506.66

2007

BD$49,845.00 67,290.75 24,830.54

According to the authorities, virtually all of the seizures noted on this chart resulted in forfeitures of the

assets in question.

EC$31,895.00 31,895.00 11,769.37

EC$6,750.00, US$210 &

BD$14,300

26,615.70 9,821.29

BD$ 9,900.00 13,365.00 4,931.73

BD$72,600.00 98,010.00 36,166.05

EC$9,170.00 9,170.00 3,383.76

BD$10,542.00 14,231.70 5,251.54

€6,890 & US$249 22,457.13 8,286.76

BD$7,392 & US$50 10,062.43

3,713.07

Total

293,097.71 108,154.11

2008

EC$11,590.00 & US$200 12,124.00 4,473.80

US$7,371, BD$5,022 & £7,380 47,897,49

17,674.35

Total

60,021.49 22,184.15

Total Forfeited 2004 -2008 EC$451,430.27 US$166,615.38

Note: No cash forfeitures occurred in 2005.

EC$: Eastern Caribbean Dollar; BD$: Barbadian Dollar; £: Pound Sterling; €: Euro

Table 13: Confiscation of Property, 2004 – 2008

Year Cash

(EC$)

Equivalent

(US$)

Property (EC$) Equivalent (US$)

2005

Nil Nil *One Catamaran yacht,

asset- sharing with US

(207,110.17)

76,424.41

2006

Land valued at

EC$55,000, one Go Fast

boat valued at

EC$40,000

Land valued at

$21,000 and a boat

valued at $15.000

2007

147,895 54,573.80

2008

Nil

NB: There is currently one confiscation hearing involving twelve motor vehicles pending in the

High Court of SVG.

*/ The catamaran confiscated in 2005 was done in conjunction with the US and the proceeds

were shared.

2.3.2. Recommendations and Comments

 The relevant laws should be strengthened to provide for an explicit provision to allow

competent authorities to take steps to prevent or void actions, whether contractual or

otherwise, where, as a result of the actions of third parties, the authorities would be

prejudiced in their ability to recover property subject to confiscation.

 In addition, given that drug trafficking is a serious concern in SVG, and continues to

flourish despite the efforts of law enforcement, the competent authorities should assess

the extent of possible predicate offenses and related ML conducted in or through SVG, to

determine whether there is a reasonable correlation with the amount of cash forfeitures

and confiscations of property.

 Finally, consideration should be given to amending POCA to provide for: (i) civil

forfeiture of all property, not just currency; the authorities have indicated that a bill to

accomplish this is currently being considered by parliament but has not yet been enacted;

(ii) in Section 3(4) of POCA for gifts that represent a value that is less than the value of

the property, rather than “significantly less” as provided under current law, to be subject

to confiscation; and (iii) an explicit provision subjecting to confiscation of indirect

proceeds of crime, including income, profits or other benefits.

2.3.3. Compliance with Recommendation 3

Rating Summary of factors underlying rating

R.3 LC

 There is no explicit provision of law empowering competent

authorities to take steps to void contractual or other actions that

would prejudice their ability to recover assets; and

 Effective implementation of laws is weak in light of low number of

cases and amounts with respect to forfeitures of cash and

confiscations of property relating to ML and related predicate

crimes.

2.4. Freezing of funds used for terrorist financing (SR.III)

2.4.1. Description and Analysis

Legal Framework:

150. Although UNATMA implements the SFT Convention, there is no explicit statutory

authority in SVG to implement UNSCRs relating to FT. Hence, the designation by relevant

UNSCRs or committees established pursuant to such UNSCRs of terrorists or terrorist

organizations would not have the effect of permitting the authorities to take certain actions to

freeze the assets of such terrorists and terrorist organizations.

Freezing Assets under S/Res/1267 (c. III.1):

151. While there is no explicit authority under the laws of SVG to implement the UNSCRs,

Section 17 of UNATMA provides in relevant part as follows:

17. (1) The High Court may make a restraint order to prohibit persons from dealing with

funds and other financial assets or economic resources of:

(a) persons who commit, or attempt to commit, a terrorist act or participate in or

facilitate the commission of a terrorist act;

(b) entities owned or controlled directly or indirectly by persons referred to at (a)

above;

to at (a) above or entities referred to at (b) above.

(2) The High Court may also make a restraint order to prohibit persons from dealing with

funds derived or generated from property owned or controlled directly or indirectly by

persons referred to in sub-Section (1)(a) above or their associated persons and entities.

(3) A restraint order:

(a) may be made only on an application by the AG or the Director of Public

Prosecutions;

(b) may be made on an ex parte application to a Judge in chambers; and

152. In addition, with respect to cash only, Section 13(2) of UNATMA provides that any

police, customs or immigration officer “may seize and detain any cash to which this section

applies if he has reasonable grounds for suspecting that- it is intended to be used for the purposes

of a terrorist act, or (b) it is terrorist property . . .”

Freezing Assets under S/Res/1373 (c. III.2):

153. See c. III.1 above.

Freezing Actions Taken by Other Countries (c. III.3):

154. See c. III.1 above.

Extension of c. III.1-III.3 to funds or assets controlled by designated persons (c. III.4):

155. See c. III.1 above.

Communication to the Financial Sector (c. III.5):

156. No such communications systems are in place.

Guidance to Financial Institutions (c. III.6):

157. No such guidance has been issued.

De-Listing Requests and Unfreezing Funds of De-Listed Persons (c. III.7):

158. There are no publicly-known procedures for considering delisting requests.

Unfreezing Procedures of Funds of Persons Inadvertently Affected by Freezing Mechanism

(c. III.8):

159. There are no procedures for unfreezing funds.

Access to frozen funds for expenses and other purposes (c. III.9):

160. There are no procedures for authorizing access to funds frozen pursuant to relevant

UNSCRs.

Review of Freezing Decisions (c. III.10):

161. There are no procedures to allow those with funds frozen pursuant to relevant UNSCRs

to challenge those measures.

Freezing, Seizing and Confiscation in Other Circumstances (applying c. 3.1-3.4 and 3.6 in

R.3, c. III.11):

162. Sections 7 and 8 of POCA apply to all relevant offenses, including FT. See responses to

c. 3.1 and c. 3.1.1 above.

Protection of Rights of Third Parties (c. III.12):

While there are no provisions explicitly relating to the UNSCRs, Section 8(2) of UNATMA

provides for the protection of the rights of bona fide third parties as follows:

163. “Where a person other than a convicted person claims to be the owner of or otherwise

interested in any money or property which can be forfeited by an order under this section, the

court shall give him an opportunity to be heard before making an order.” See also the response to

c. 3.5 above, since POCA covers all predicate crimes, including FT.

Enforcing the Obligations under SR.III (c. III.13):

164. No such measures or sanctions relating to the implementation of the relevant UNSCRs

are in place.

Additional Element (SR.III)—Implementation of Measures in Best Practices Paper for

SR.III (c. III.14):

165. No such measures have been implemented.

Additional Element (SR.III)—Implementation of Procedures to Access Frozen Funds (c.

III.15):

166. No such procedures have been implemented.

2.4.2. Recommendations and Comments

 The authorities in SVG should take immediate action to implement the relevant

UNSCRs, including, but not limited to UNSCRs 1267, 1373 and 1455, and any such

provision of law should be sufficiently flexible so as to apply as well to similar

designations by other states as well as any future UNSCRs that require UN member states

to freeze, seize and confiscate the assets of designated terrorists and terrorist

organizations, as well as such designations by other member states in the future.

2.4.3. Compliance with Special Recommendation III

Rating Summary of factors underlying rating

SR.III NC

Statutory provisions implementing relevant UNSCRs are almost

completely absent.

2.5. The FIU and its Functions (R.26)

2.5.1. Description and Analysis

Legal Framework:

167. The FIU Act 2001, Act No. 38 of 2002, was signed into law on December 18, 2001. In

addition to the organizational provisions and authority in the FIU Act, the FIU exercises

specified functions pursuant to POCA and UNATMA, both as are conferred directly upon the

FIU as an institution. It also engages in law enforcement functions though the legal authority of

police and customs officers assigned to it. The FIU Act establishes the FIU, and mandates the

composition of its personnel that include the director, an attorney, and a public accountant, all

appointed by the Minister, as well as assigned police officers and customs officers, who are

appointed by the Minister on the recommendation, respectively, of the Police and Customs

Commissioners. The FIU Act authorizes the FIU to receive all STRs required to be reported

under POCA. The FIU is legally an administrative FIU, insofar as it is not under the direct

authority of either the police, prosecutor or bank supervisory body. The FIU reports directly to

the Minister of Finance. Nevertheless, in its operations the FIU is a hybrid-administrative FIU

because of the regular use of the investigative powers of police and customs officers. It also

prosecutes specified cases in collaboration with the DPP. . Information gathering activities under

authority conferred on the DPP, under Section35 of POCA, is carried out by FIU personnel, on

the basis of specific delegations by the DPP rather than through any institutional authority

conferred on the FIU itself. Similarly, authority conferred by POCA to police officers to obtain

search warrants is carried out by police officers assigned to the FIU. Hence, the FIU personnel

directly conducts poliece investigatory functions under POCA Sections 25-27, 35, 37, and 49.

Establishment of FIU as National Centre (c. 26.1):

168. The FIU was established in May 2002 in accordance with the FIU Act 2001. The FIU is

the agency responsible for receiving, analyzing, obtaining and disseminating information which

relates to or may relate to the proceeds of offenses created by POCA and UNATMA. The FIU

reports to the Minister of Finance. The FIU’s dissemination authority includes competent

authorities, the Royal St. Vincent and the Grenadines Police Force and the DPP. The FIU in

addition to serving as the national centralized agency responsible for receiving SARs, also

carries out proactive ML and predicate offense investigations and intelligence gathering to

develop ML cases. The explicit source of authority to conduct such proactive investigations is

not clear within the FIU Act. Rather, the powers of the police personnel transferred to the FIU

are the basis for the FIU’s conducting such proactive investigations. This arrangement is not

uncommon in the Caribbean region.

FIU structure and functions.

169. Pursuant to the FIU Act, Section3, the FIU is comprised of:

 a Director appointed by the Minister of Finance;

 an attorney appointed by the Minister of Finance;

 public accountant appointed in writing by the Minister of Finance;

 such number of police officers assigned from the RSVG Police Force (recommended by

the Commissioner of Police and appointed by the Minister of Finance);

 such number of customs officers assigned from the Customs Service (recommended by

the Comptroller of Customs and appointed by the Minister of Finance);

 such other personnel as the Minister of Finance considers necessary.

170. There are currently 16 employees in the FIU, including a Director, 2 Lawyers, the Chief

Investigator and 3 Financial Investigators who are police officers and 2 Customs Officers.

Currently, there is one customs vacancy and at least one police vacancy. In addition, the FIU has

requested the NAMLC and Commissioner of Police 4-5 additional police officers. The request is

expected to be granted.

171. The FIU’s hybrid function provides some distinct advantages but also poses some

challenges. On the one hand, the direct capacity of the FIU to undertake investigations and

conduct prosecutions under the authority of the DPP allows for great consistency and potential

efficiencies in these functions. The FIU’s core staff includes experienced police officers and

qualified lawyers to manage the AML/CFT. The output in terms of the number of production

orders issued, cash detentions and seizures indicate a reasonable level of effectiveness in its

operations. On the other hand, the FIU’s core function to analyze financial intelligence, in

particular information obtained through SARs, has apparently not been given operational

priority. In practice, the FIU does not draw a distinction between its analysis and investigatory

functions, which may not facilitate prioritization of cases for investigation. This negatively

impacts on operational effectiveness and reduces the value added of the FIU’s statutory role to

analyze information originating from SARs.

Guidelines to Financial Institutions on Reporting STR (c. 26.2):

172. Pursuant to POCA, the NAMLC has issued guidance (the GNs) in 2002, which were last

updated in December 2004, for FIs that includes, inter alia, specific guidance for the detection

and reporting of suspicious transactions in SARs. [The FIU Director is a member of the

NAMLC.] The GNs also contain the SAR form that is expected to be filed along with brief

instructions. The FIU does not have separate, legal authority to issue guidance to reporting

entities on SAR filings. Nevertheless, the FIU has taken a leading role in informing reporting

entities of their obligations in other forms in order to elaborate on the guidelines issued by the

NAMLC. Under the FIU Act, Section 4(2)(g), the FIU shall inform financial and business

institutions of their obligations under measures that have been or might have been taken to

detect, prevent and deter the commission of offenses under POCA. The FIU has used this broad

authority to issue letters and newsletters to reporting entities concerning their obligations. In

addition, the FIU has also relied on this section of the FIU Act to conduct extensive training of

FIs and other businesses engaged in relevant financial activities that would be required to report,

as well as to provide AML/CFT specific training to judges, magistrates, and law enforcement

officials within SVG.

173. There is a need for updating of guidance on the content for SAR filing; the last update

was in 2004 and new typologies and risks should be addressed in the specific, written guidance

issued directly to reporting entities. In addition, the SAR form itself should be updated and

tailored. In addition, consideration should be given to updating the MLR to authorize the FIU to

issue specific, enforceable guidance on SAR filings, including with respect to new typologies.

This should be supplemented by detailed instructions to reporting entities on how to complete

SARs to help improve their quality, accuracy and consistency, which is issued to the reporting

entities and available on the FIU website when it becomes live. (Post mission in February 2010,

the authorities provided updated SAR forms with respect to banks, insurance companies and

money services businesses.)

Access to Information on Timely Basis by FIU (c. 26.3):

174. Under the FIU Act, Section 4(1) the FIU is the agency responsible for “obtaining”

information that relates to or may relate to the proceeds of the offenses created by POCA and

UNATMA. The FIU, AG and DPP assert that this general language of itself suffices to obtain,

directly and indirectly and on a timely basis, the financial, administrative, and law enforcement

information that it requires to properly undertake its functions. For this purpose, the FIU mainly

relies on information that is available from police and customs databases, which are accessible

by the police and customs officers who are assigned to the FIU. Additional specific legal

authority of the FIU as an organ is required to obtain necessary is warranted to ensure that the

FIU’s general access to information for both intelligence (FIU) purposes and investigations is not

compromised. Specifically, it should also have explicit legal access, directly or indirectly, to

other sources of information such as administrative databases e.g. corporate, property and trust

registries, tax, supervisory information databases, etc.

175. The FIU has concluded bilateral MOUs with the Police and Customs authorities. These

memoranda are needed to ensure that the FIU has timely access to information through these

bodies. The law does not vest the FIU with its own specific right to obtain information, and does

not define the types of information or its scope for fulfilling its core functions. A specific MOU

with Inland Revenue to obtain non-public tax information would be helpful to clarify the scope

of tax information required for the FIU to properly analyze and investigate matters.

Additional Information from Reporting Parties (c. 26.4):

176. Pursuant to the FIU Act Sec.(4)(2)(b), where there are reasonable grounds to suspect that

a relevant offense (as defined in the FIU Act to include POCA and UNATMA offenses) has been

committed, the FIU may require the production of such information (excluding information

subjected to legal professional privilege) from FIs or persons engaged in a relevant business

activity that the FIU considers necessary for the purpose of investigating the relevant offense.

While this authority is sufficiently broad to allow the FIU to obtain information from other

reporting entities from the one that filed the SAR, the legislation contains a two-part requirement

to exercise this authority. First, the FIU needs reasonable grounds to suspect that a relevant

offense has been committed, and second, the information that is sought must be necessary for the

purpose of investigating the relevant offense. It is the mission’s view that, at most, only one

threshold should apply as a basis for the FIU to obtain information from other reporting parties.

Of the two, only the first requirement should apply as the latter requires the FIU to move entirely

to investigating an offense rather than conducting intelligence analysis of the information

obtained. However, even this lesser threshold may be too high to obtain information relevant to

carrying out the statutory function to support the analysis of financial intelligence information

obtained from SARs. In addition, the FIU should have specific legal authority to go back to the

reporting party filing the SAR for any reason connected to that filing without qualification. It

should be noted that in practice, the FIU finds that approximately 25 percent of SARs filed

require additional information to complete the filing in accordance with the SAR filing

requirements and reports that in all requests information has been provided to the FIU.

Dissemination of Information (c. 26.5):

177. The FIU is required to provide information subject to any conditions specified by the

Minister of Finance, to the Commissioner of Police where the information may relate to the

commission of an offense. In practice, there is less need to disseminate information outside the

FIU to other police officers and the DPP is because the FIU houses police and customs officers

who conduct investigatory functions. The expected finalization of MOUs with the Commissioner

of Police, Customs, and Immigration will clarify the basis for dissemination from the FIU to

these agencies. (Post mission, the authorities informed that MOUs have been signed by the FIU

with the Police and Immigration Departments but that the MOU with the Customs Department

was still pending.) In addition, the specific authorizations granted by the DPP to conduct

functions under POCA and UNATMA reduce the use of and need for formal dissemination

processes.

Operational Independence (c. 26.6):

178. The FIU reports to the Minister of Finance, who is also the Prime Minister, the Minister

of Legal Affairs, and Minister of National Security. This raises an issue of whether the FIU can

operate independently without undue influence. The Director General of the Ministry of Finance,

who is the second in command of the ministry, is the Chair of the NAMLC, and also reports to

the Minister of Finance. The NAMLC itself also reports to the Minister of Finance.. In practice,

FIU officials indicate that their work at the operational level is conducted in accordance with the

strategic plan developed by the FIU’s director in consultation with specific members of the

NAMLC (including the DPP and Commissioner of Police). In addition, the Director of the FIU

appears to exercise independent authority to hire and fire FIU staff, with what is described by the

FIU personnel as perfunctory approval of the Minister upon the recommendation of the Director

of the FIU. The mission was not aware of instances of undue influence or interference from other

persons or parties.

Protection of Information Held by FIU (c. 26.7):

179. The FIU has a secure computer database system and informs that SARs themselves are

not disseminated beyond the FIU premises. The premises of the FIU are protected by electronic

entry locking systems and surveillance cameras, and remote monitoring by a security firm 24

hours per day. The reception desk at the FIU entrance is staffed by two administrative officers,

who may be assisted by an office attendant, with the objective that during operational hours that

one person is constantly monitoring visitor entry. Persons entering the FIU premises, they are

required to identify themselves via intercom to administrative staff before access is granted.

180. Despite these measures, additional security measures to protect the physical access to the

FIU could be implemented. At the initial entry, the wall separating the FIU from the rest of the

building premises is wooden, which could be vulnerable. In addition, the premises are frequently

accessed by messengers and reporting entities’ employees or agents that deliver SARs to the FIU

which should call for stricter confidentiality/security safeguards in the receipt of SARs and other

confidential information. SARs are delivered in hard copies rather than electronically, and the

number of persons entering the FIU premises can be quite high. So long as SARs are delivered

manually in hard copy, and FIU’s acknowledgements of receipt are delivered in a similar

manner, there will be a risk of potential in transit loss or interception of confidential information.

In this respect, an electronic SAR filing and acknowledgment system should be considered as a

more secure alternative.

Publication of Annual Reports (c. 26.8):

181. Section 8(1)(b) FIU Act requires filing of an annual report with the Minister of Finance

for purposes of reviewing the work of the FIU. This report is not published but the FIU Act

Section 8(2) requires that the annual report be submitted to the House of Assembly for its

review, but this report itself is not published or disseminated in the public domain. While there

are quarterly and other periodic disclosures through newsletters and to the media, the issuance of

annual reports on the FIU’s activities would be useful to raising the FIU’s profile and engaging

public awareness. Nevertheless, the FIU has sent out to reporting entities and other stakeholders

(including law enforcement) some sanitized information on typologies and trends, through its

periodic newsletters.

Membership of Egmont Group (c. 26.9):

182. The FIU became a member of the Egmont Group in July 2003.

Egmont Principles of Exchange of Information Among FIUs (c. 26.10):

183. The FIU has adopted Egmont’s Principles of Exchange of Information Among FIUs.

Moreover, the FIU Act Section 4(2)(f) allows it to enter into any agreement or arrangement in

writing with a foreign FIU, which the Minister considers necessary for the discharge of its

functions. To date, 9MOUs have been executed. Furthermore, through the Egmont secure

website, the FIU regularly responds to requests from other FIUs. The FIU has adopted a specific

and clearly-defined standard operating procedure for the provision of assistance to foreign FIUs

and foreign law enforcement agencies. Further consideration should be given to providing a

specific legal basis for direct FIU to foreign law enforcement assistance. The authorities inform

that nearly all law enforcement requests, in practice, are channeled through their FIUs.

Effectiveness of Implementation

184. The FIU is at the forefront of AML/CFT efforts in SVG, and is the single most

developed AML/CFT institution in the country. It leads operational implementation of the

authority under POCA and UNATMA and is the primary contact for reporting entities and the

public on AML/CFT issues. In this regard, the quality and professionalism of its staff is

considered to be high, as has shown concrete operational results through its competency in a

number of legal actions, such as the number of cash detention and forfeiture orders, production

orders and search warrants, in the context of ML and predicate offense investigations and

prosecutions. Their participation in investigations has resulted in successful prosecutions,

convictions and forfeitures. As noted by the authorities, the FIU is one of few in the region to

have fully developed successful ML prosecutions. The FIU’s level of cooperation and assistance

with foreign counterparts also supports the effectiveness of its operations. In this connection,

however, it should seek to enter into MOUs with other countries where SVG registered FIs and

entities operate or are managed, e.g. with Liechtenstein.

185. However, weakness in effectiveness was noted in a few key areas. First, the FIU seems to

emphasize its law enforcement and prosecutorial activities more than its analytical function. This

has the effect of limiting its analysis and financial intelligence outputs for the law enforcement

purposes. The composition of the FIU staff, which is predominantly law enforcement and

prosecutorial in nature, (at the time of the mission its core professional staff consisted of only

two analysts as compared to five police and customs investigators, and three lawyers out of 14

professionals) may partly explain this tendency. There has also been a decline in the analysis of

SARs in the last four years: in 2005 and 2006, 100 percent of the 108 and 118 SARs received

were analyzed, respectively; in 2007, 150 out of 190; and in 2008, 101 out of 489 (see box,

Analysis, para. 424). Second, in over six years of operation, the FIU has not developed a single

prosecution domestically of an ML or predicate offense arising directly from the intelligence

analysis of SARs originated information. The centerpiece of the FIU's key outputs – i.e., the

number of investigations and prosecutions of ML and predicate offenses – are not a product of its

primary statutory function but arise more from the ancillary authority of police and investigators

who are assigned to and housed in the FIU. Thus, its statutory role as the national central

authority to receive, analyze and disseminate financial intelligence submitted in SARs is not yet

operationally its centerpiece function, and is not fully effective. This statutory analytical role

needs to be strengthened and prioritized both to provide value added to the efforts of reporting

entities and to complement preventive measures, and to provide a more useful input to the

investigation function of the FIU. The FIU’s effectiveness in receiving useful SAR information

analyzing its contents is at risk of becoming entirely subsumed within the investigative function,

as it currently so operates. In this regard, the FIU should revise its operational procedures to

ensure that it provides adequate weight and attention to the analysis of the financial intelligence

obtained from SARs, even if law enforcement personnel are primarily responsible for this

analysis. Moreover, the authority of the FIU to obtain information from other governmental

bodies needs to be strengthened through more formal means, including finalizing MOUs. Greater

consideration should be given to including other staff, e.g. legal and accounting/forensic

accounting, at the analytical level. Second, the structure, composition of its personnel and its

reporting lines could compromise the independence of the FIU operationally. Clarifying the

FIU’s independence would also serve to strengthen the control mechanisms for dissemination of

confidential SAR information; while the FIU states that the SARs remain within the FIU

premises, as required under penalty of law, the existing reporting structure does not legally

ensure that dissemination of actionable intelligence is controlled.

2.5.2. Recommendations and Comments

 The FIU should strengthen its analytical function including through enhanced staff

capacity.

 The FIU Act should provide broad based authority to obtain information from other

governmental authorities to conduct analysis for financial intelligence purposes.

 The FIU should issue additional and comprehensive guidance to reporting parties on SAR

filings to increase the quality and consistency of reports.

 The FIU should publish an annual report on it operations. In this regard, sanitized

information on trends and typologies should be regularly included in a public document.

The FIU should consider creating a website with information on its operations, SAR

forms and instructions for reporting entities, and information for requesting authorities on

the FIUs exchange of information procedures.

 The FIU should consider entering into MOUs with counterparts in other countries,

especially where SVG registered institutions and entities operate.

2.5.3. Compliance with Recommendation 26

Rating Summary of factors relevant to s.2.5 underlying overall rating

R.26 LC

 Implementation of its analytical function is under pressure.

 The FIU has not directly developed a single case for prosecution of an

ML or predicate offense originating from a SAR filed.

 Insufficient legal authority in the FIU Act for general access to law

enforcement information.

to obtain information from other governmental bodies to support its

intelligence analysis.

 The FIU does not issue additional and comprehensive guidance to

reporting parties on SAR completions and filings.

 The ability of the FIU to obtain additional information from reporting

parties is subject to a threshold requirement that allows for reporting

entities to reject additional requests on the basis that the information

sought is not sufficiently correlated to a particular stated offense.

 The FIU does not publish an annual report on trends and typologies.

2.6. Law enforcement, prosecution and other competent authorities—the framework for

the investigation and prosecution of offenses, and for confiscation and freezing (R.27,

& 28)

2.6.1. Description and Analysis

Legal Framework:

186. Both POCA and UNATMA specify authority of law enforcement, prosecution and other

competent authorities for investigation, prosecution and for confiscation and freezing. Under

POCA Section 35, either the police or DPP may apply to the Court for a production order related

to a relevant offense. In addition to the powers specified for ML and FT offenses, similar

designations of powers are provided in the DTOA No. 45 of 1993. The CC Cap. 124 authorizes

the police officers to search persons and premises for information.

Designation of Authorities ML/FT Investigations (c. 27.1):

187. (See Rec. 26 above.) The FIU is the principal body undertaking ML investigations and

prosecutions, as well as seizure and forfeiture of cash and property related to ML (none with

respect to FT so far). Both POCA and UNATMA vest specific investigation and prosecution

powers for ML and FT with the Police and DPP respectively, with a clear division of

responsibility between the two functions. However, operationally, the FIU conducts most of the

front-line law enforcement activities de facto through the assignment of police and customs

officers to the FIU and specific designations by the DPP of FIU lawyers to undertake

prosecutorial mandates. The presence of these law enforcement officials makes the FIU, for all

practical purposes, a self-contained AML/CFT competent authority. The investigative powers of

the FIU, however, derives solely from the authority vested in the law enforcement officers

assigned to it. This is not uncommon in some commonwealth countries in the Caribbean and it

has worked reasonably well in practice. Nevertheless, there should be additional definition and

separation of the respective responsibilities of the FIU per se and the Police/Customs authorities

in ML and FT investigations; to this end, MOUs between the FIU and the Police and Customs

authorities should be finalized to define the scope of information sharing and separation of

functions. (Post mission, the authorities informed that MOUs have been signed by the FIU with

the Police and Immigration Departments but that the MOU with the Customs Department was

still pending.)

188. The DPP is constitutionally responsible for all criminal prosecutions in SVG but, due to

inadequate staff, on a case by case basis, the FIU prosecutes cases on its behalf. To allow the

FIU to conduct these activities directly, the DPP is required to sign off on each of the FIU’s court

filings, essentially deputizing FIU lawyers as assistant DPPs. The Customs Service has a limited

but related law enforcement authority regarding cash seizures. However, there have been some

coordination issues as described in Section 6.1 below.

189. In addition to the authority in POCA and UNATMA, there are specialized units within

the Police that complement the functions of the FIU. The major crimes and drug squad units of

the RSVG Police Force conduct ML and predicate offense investigations in coordination with

the FIU. In particular, the increase in drug transshipment operations in SVG have required

enhanced coordination between the FIU and the Police. To facilitate this arrangement, a MOU

has been agreed in principle between the Police and FIU to memorialize and clarify their

respective roles. The Customs Service has some related authority to pursue customs law

violations, however, some unevenness in coordination with the FIU has raised concerns. These

concerns may be mitigated by the adoption of a Customs-FIU MOU, which has been agreed in

principle between the FIU and the Customs. (Post mission, the authorities informed that MOUs

have been signed by the FIU with the Police and Immigration Departments but that the MOU

with the Customs Department was still pending.)

Ability to Postpone/Waive Arrest of Suspects or Seizure of Property (c. 27.2):

190. Neither POCA, UNATMA, nor the CC provide specifically for the waiver or

postponement of arrest for the purpose of identifying suspected persons or seizing of money.

Section 49(2) of POCA authorizes court-approved continuation of the detention of cash, “while

its origin or derivation is further investigated; this allows for the postponement of the arrest of

the suspected person and the seizure of the cash so as to identify other persons involved or for

evidence gathering persons”. Furthermore, the authorities inform that both waiving and

postponement of the seizure of property, either by the customs or police, have been used in

specific ML investigations targeting drug traffickers, which ultimately resulted in arrests for ML

and predicate offense prosecution. The DTOA, provides specific authority for postponing of

seizures, in Sections 6, 13 and 18.

Additional Element—Ability to Use Special Investigative Techniques (c. 27.3):

191. In practice, specific investigative techniques such as controlled delivery are used on a

case by case basis. The DPP has suggested that implementing wire tapping authority may be of

benefit to ML and FT investigations in SVG. However, implementing such wire tapping and

related authority within the Eastern Caribbean region has been considered from time to time but

without much political success.

Additional Element—Use of Special Investigative Techniques for ML/FT Techniques (c.

27.4):

192. The authorities cite two major joint controlled delivery operations with the Bermuda FIU

leading to the seizure of $103,000 and $1.7 million (both USD) in 2007-2008, respectively. The

latter case has led to charges against two persons for ML that are awaiting prosecution. No other

special investigative techniques are regularly used; wire-tapping is not legally authorized for

ML/FT.

Additional Element—Specialized Investigation Groups & Conducting Multi-National

Cooperative Investigations (c. 27.5):

193. As stated above, because of the structure and composition of the FIU, it in effect operates

as a specialized unit responsible for nearly all aspects of investigating and prosecuting ML and

FT offenses. However, the FIU is not designated by statute as the specialized investigation entity

but so operates de facto due to the composition of its personnel. Authorities cite the three

successful confiscation orders and numerous restraint and detention orders as evidence of the

benefit of the FIU’s consolidated operations. In addition, there are discussions between the

domestic law enforcement authorities and foreign counterparts for cooperative investigations.

The recent detention of US $1.7 million and property and the ML charges are cited as successful

outputs.

Additional Elements—Review of ML & FT Trends by Law Enforcement Authorities

(c. 27.6):

194. The FIU is the primary authority monitoring for trends used by suspected criminals and

money launderers. The FIU documents these trends, including typologies, in quarterly and

annual reports that are submitted to the Minister of Finance and the NAMLC. The annual report

is also presented to the House of Assembly.

Ability to Compel Production of and Searches for Documents and Information (c. 28.1):

195. Chapter V of POCA provide specific authority for production orders, search warrants of

persons and property, and monitoring orders for FIs in connection with ML and predicate

offenses. While UNATMA does not contain similar specific language in relation to FT offenses,

the authorities cite the Sections 11 and 12 of the Police Act, Cap. 280 that allows them to compel

production and conduct searches of property and persons. In addition, because FT offenses are

predicate offenses for ML that may generate proceeds of crime, the authorities are of the view

that the specific authority under the POCA is sufficient to cover FT. However, the POCA

provisions have not been used in relation to FT-related investigations mainly because there have

been no such FT investigations. Moreover, the extension of POCA authority to compel

production or and searches for documents and information directly to FT offense may be subject

to challenge, so the general provisions in the Police Act would be the sole basis upon which to

compel production of and searches for documents and information related to FT.

Power to Take Witnesses’ Statement (c. 28.2):

196. Section 12 of the Police Act Cap. 280 authorizes police officers to take witness

statements, which are admissible in court or any other trial. The authorities inform that such

witness statements are regularly procured in ML and predicate offense investigations. In

addition, to the authority of the police, the courts may compel witnesses to provide testimony.

Effectiveness of Implementation

197. The legal framework is sufficient for the designation of law enforcement authorities for

ensuring that ML and FT offenses are properly investigated. The execution of ML and FT

offenses falls almost entirely to the personnel at the FIU, by virtue of its composition of police

and customs officers, and lawyers that receive specific delegations from the DPP. The FIU has

therefore been transformed into the agency that takes the lead role for a broad range of law

enforcement actions related to ML and FT. Competent authorities may compel production of,

search persons and premises for and seize and obtain records, information or other evidence and

may compel witness testimony for ML offenses; the authority in for FT is less clearly defined in

the law.

198. The FIU, in consultation with the DPP, (and with specific delegation from the DPP) has

obtained production orders as follows:

Table 14:

Year Number of Production Orders

2004 21

2005 34

2006 13

2007 13

2008 28

Total

109

199. [See Rec.10 on effectiveness of record keeping.] Notwithstanding the above, the

authorities should review the efficiency and effectiveness of their ability to compel production of

records etc., to conduct searches, and to seize and obtain records etc., in cases where the records

and persons that would be the subject of such action are located in other countries. In this regard,

the mission noted that a number of the international (offshore) FIs and persons that hold manage

entities and records are physically domiciled outside of SVG.

2.6.2. Recommendations and Comments

 Specific FT-related investigative authority should be incorporated either in UNATMA or

by amending POCA to directly include any FT offense.

 The respective roles of law enforcement authorities should be formalized to provide

clarity in their respective roles, particularly given the preeminence of the FIU in the

development of investigations and prosecutions.

 The DPP’s staff should be expanded to allow it to play a greater role in ML/FT

prosecutions. In the meantime, consideration should be given to formally deputizing FIU

lawyers as assistant DPPs.

2.6.3. Compliance with Recommendations 27 & 28

Rating Summary of factors relevant to s.2.6 underlying overall rating

R.27 PC

 Authority for applying POCA investigative and prosecutorial techniques

measures to investigations of FT is not explicitly included in law.

 Inadequate resources in the DPP’s office.

R.28 C

2.7. Cross Border Declaration or Disclosure (SR.IX)

2.7.1. Description and Analysis

Legal Framework:

200. Customs (Control and Management) Act No. 14 of 1999, as amended by the Customs

(Control and Management)(Amendment) Act No. 43 of 2002, the Customs (Control and

Management)(Amendment) Act No. 4 of 2007, and the Customs (Control and

Management)(Amendment) Act No. 33 of 2007 (collectively the CCMA) and Statutory Rule and

Order No. 33 of 2001, the Prescribed Amount (Foreign Currency) Order 2001 (SR&O No. 33).

Mechanisms to Monitor Cross-border Physical Transportation of Currency (c. IX.1):

201. Pursuant to Section 81(1) of the CCMA, SVG uses a dual declaration and disclosure

system requiring all persons making a physical cross-border transportation of currency or bearer

negotiable instruments in an amount exceeding EC$10,000 (pursuant to Part I, item 20 of the

Third Schedule to the CCMA). It requires persons to submit a truthful written or oral declaration

at the request of a customs officer. According to the authorities, the written declaration

requirement applies only to passengers arriving by air. A targeted disclosure system is used for

those passengers departing by air as well as passengers arriving or departing by sea, based on

intelligence developed by the Customs Department. The written declaration is required to be

made on the official customs declaration form in accordance with SR&O No. 33. Under Section

26(1)(b), false declarations to customs officers relating to incoming packages may result in

forfeiture. In addition, according to the authorities, containerized cargo is also covered by

Section 81(1) of the CCMA.

Request Information on Origin and Use of Currency (c. IX.2):

202. Pursuant to Section 81(2) of the CCMA, all persons entering or leaving SVG are required

to answer questions of customs and police officers.

Restraint of Currency (c. IX.3):

203. (a) Where there is a suspicion that currency is related to money laundering or terrorist

financing, customs or police officers may seize and detain the cash for up to 48 hours in

accordance with Section 49(1) of POCA with respect to ML and Section 13(2) of UNATMA

with respect to FT. Any additional detention must be authorized by a magistrate under Section

49(2) of POCA or Section 14 of UNATMA for ML and FT, respectively. (b) In respect to a false

written or oral declaration, currency may forfeited under Section 81(3) of CCMA if not declared,

and, under Section 81(4) any person failing to declare may be fined for so doing. Under Section

108 of the CCMA, any person who knowingly or recklessly makes or signs a declaration that is

materially false commits an offense and currency may be forfeited. In addition, Section 125 of

the CCMA gives the authority to a customs or police officer to seize or detain anything

(including currency) that is liable for detention and forfeiture under any customs enactment.

Section 29(1)(f) allows detention where currency is concealed in a manner intended to deceive.

204. Retention of Information of Currency and Identification Data by Authorities when

appropriate (c. IX.4): Information relating to currency or bearer negotiable instruments that are

declared or otherwise detected, including the amount and the identification of the bearer(s), are

retained by Customs forming part of the statistics and available for use by the Customs

Intelligence Unit and where appropriate, can be shared with other key law enforcement agencies

including the FIU and various units of the Police Department. Please see chart at c. 30.2 below.

Access of Information to FIU (c. IX.5):

205. The Customs Department uses an internal procedure which requires reporting of

suspicious transportation incidents to the Customs Intelligence Unit by customs officials at the

ports. According to the authorities, the Customs Intelligence Unit is responsible for providing the

information directly to the FIU in a timely manner. This process is facilitated by the assignment

of two members of the Customs Intelligence Unit to the FIU and through an informal procedure

that is being used by Customs and the Police which will be formalized through a MOU between

the two agencies. A simplified form is used by customs officials at cash collecting centers

(designated points at seaports and airport) to report certain types of suspicious payments; such

information may, if necessary, be transferred to a SAR-type form to be submitted by Customs to

the FIU. The form also includes a list of red flags relating to payments of customs duties, such as

a single transaction paid for with more than one checking account, payment of a single

transaction by significant amount of cash and the payment of a significant amount of duties by

both cash and check. Hence, the information about suspicious payments and movements of cash

appears to be provided to the FIU on a timely basis.

Domestic Cooperation between Customs, Immigration and Related Authorities (c. IX.6):

206. While no formal cooperation arrangements (e.g. MOUs) have been established with

other departments, according to the authorities, the Customs Department, the immigration

authorities, the Special Service Unit of the police and the FIU have established a good working

relationship. There is an Intelligence Office established at the E.T Joshua Airport, the main

Airport where international passengers are processed, that is occupied jointly by the Customs

Intelligence Unit and the Police Special Service Unit. Information relative to passengers entering

or leaving SVG is collected from the offices of the Immigration and Customs on a daily basis by

officials assigned to this office. Where there is intelligence relating to any special monitoring of

passengers, that information is shared with the Intelligence Office where dissemination will take

place by customs and police officers to their respective departments.

207. International Cooperation between Competent Authorities relating to Cross-border

Physical Transportation of Currency (c. IX.7): The Customs Department is a member of the

Caribbean Customs Law Enforcement Council (CCLEC). According to the authorities,

cooperation, information sharing and mutual assistance is facilitated in respect of key issues

including ML and FT through a MOU in 1989 established between and among the membership,

currently 36 signatories. The Membership comprises customs departments from the Caribbean

and Latin America as well as Canada, France, the Netherlands, Spain, the United Kingdom and

the US. According to the authorities, CCLEC has also entered into MOUs with key enforcement

agencies such as Interpol and World Customs Organization thereby widening the information

network.

Sanctions for Making False Declarations / Disclosures (applying c. 17.1-17.4 in R.17, c.

IX.8):

c. 17.1. Effective, proportionate and dissuasive sanctions for false declarations:

208. Under Sections 81(4) and 29(1)(e) of the CCMA, conviction of an offence may result in a

fine of up to the greater of EC$5,000 or three times the value of the currency, and under Section

108, a fine of up to EC$5,000. There is also an administrative process under Section 119 that,

subject to the constitutional powers of the DPP over criminal prosecutions, applies to those

persons who admit their guilt in writing and agree to pay an administrative fine. In such cases,

under Section 119((1)(c), the liability of the offender will be discharged and the currency seized

may be returned, although in practice, according to the authorities, this does not occur. Once that

occurs, no further criminal liability will attach to such person, and, if they are foreign nationals,

they would be free to leave SVG.

c. 17.2. Designated authority to apply sanctions:

209. The DPP is the sole authority in SVG to prosecute criminal cases, which, in practice, is

accomplished with assistance from the FIU and police prosecutors, and with respect to the

imposition of administrative fines, the Comptroller of Customs is the sole authority.

c. 17.3. Sanctions applicable to legal persons and their directors and senior management:

210. Under Section 118((2), legal persons and their directors who have consented or connived

may be held liable for an offense under the CCMA.

c. 17.4. Range of sanctions should be broad and proportionate:

211. There are only two sanctions, a criminal penalty or administrative fine. Criminal

penalties under the CCMA range from a fine of EC$5,000 to imprisonment of up to five years or

both. Administrative penalties that may be imposed by the Customs Department range from the

greater of amounts ranging from EC$5,000 to EC$10,000, or to an amount equal to three times

the value of the currency seized. See chart, after c. IX.9, below, for administrative and criminal

penalties under the CCMA.

Sanctions for Cross-border Physical Transportation of Currency for Purposes of ML or TF

(applying c. 17.1-17.4 in R.17, c. IX.9):

c. 17.1: The offenses in Sections 41–43 of POCA would apply in relation to ML, and Sections 3–

6 of UNATMA relating to FT, and the criminal penalties for those offenses are found in Section

47 of POCA and Section 7 of UNATMA, and in each case are the same: On summary

conviction, a fine of up to EC$500,000 or imprisonment for five years or both, and on conviction

on indictment, an unlimited fine or imprisonment of up to twenty years or both. In addition,

under Section 29(1)(f) of the CCMA, conviction of an offence is subject to a fine not exceeding

$5,000 or three times the value of the currency, whichever is greater.

c. 17.2: The DPP is the sole authority in SVG to prosecute criminal cases, which, in practice, is

accomplished with the assistance of the FIU lawyers and police prosecutors. The Customs

Department has the power to impose administrative fines.

c. 17.3: See the responses to c. 2.3 and c. II.4 above.

c. 17.4: See response to c. 17.4 under c. IX.8, above.

Table 15: Sanctions for customs offenses (all references are to CCMA)

Customs Offenses Legislative

Reference

Penalty

Disclosure of confidential information or records (tipping-

off offence covering customs and police officers).

Section 6 A fine not exceeding EC$5000

or imprisonment not

exceeding twelve months or

both.

Importing goods, including currency, concealed or packed

in manner appearing to be intended to deceive.

Section 29 A fine not exceeding EC$5000

or three times the value of

goods involved and goods

forfeited.

Failure to declare anything contained in baggage. Section 81 A fine not exceeding EC$5000

or three times the value of

goods involved.

False declaration

a. Makes, signs, caused to be signed, delivers any

declaration, notice, certificate or other document

b. Makes a statement in answer to any question put

to him by an officer which is materially false.

Sections 108(a)

& (b)

A fine not exceeding

EC$5000, currency liable for

forfeiture .

a. Fraudulent Evasion: Fraudulent intent in relation

to any goods, in any way concerned in an evasion

of any prohibition or restriction.

Sections

111(2)(b)

A fine not exceeding

EC$10,000 or five years

imprisonment or both.

Confiscation of Currency Related to ML/FT (applying c. 3.1-3.6 in R.3, c. IX.10):

212. See the responses to c. 3.1–c. 3.6. In particular, Section 50 of POCA provides for the

forfeiture of cash seized under Section 49 of that Act, and Section 16 of UNATMA provides for

forfeiture of cash seized under Section 13 of that Act. In addition, currency is subject to

forfeiture under the CCMA, Sections 29(1)(f), which deals with concealment of cash with intent

to deceive a customs officer; 81(3), concealed or undisclosed currency; 83(4), currency

concealed on board a vessel at the port or an aircraft at the airport; and 89(1) currency concealed

in any building or place.

Confiscation of Currency Pursuant to UN SCRs (applying c. III.1-III.10 in SR.III, c.

IX.11):

213. See the responses to c. III.1 – III.10.

Notification of Foreign Agency of Unusual Movement of Precious Metal and Stones (c.

IX.12):

214. According to the authorities, since SVG is a member of the CCLEC, notification of such

transaction would be made in a manner consistent with principles relating to cooperation and

information-sharing provided in the MOU. As a copy of the MOU was not made available, the

mission was not able to verify whether the MOU covers unusual movements or precious metal

and stones.

Safeguards for Proper Use of Information (c. IX.13):

215. According to the authorities, information that is passed to the FIU is accomplished only

through the Customs Intelligence Unit, a small specialized group. There are three data systems

that are relevant, the first relating to the movement of vessels, the RCS (Regional Clearance

System), which is controlled by CCLEC, the second is the RSS, (Regional Security System), and

the third is the APIS (Advanced Passenger Information System); in each case information is

entered into these systems by units of the Customs Department, and, with respect to the RSS and

APIS, the Police Department. RSS and APIS are linked to INTERPOL Access to these systems

is controlled by a password requiring authorization; only certain units of Customs and the Police

have such access. According to the authorities, all three data systems cover information on cross-

border transactions. As a result, there appear to be sufficiently strict safeguards in place to ensure

proper use of information in the three databases.

Additional Element—Implementation of SR.IX Best Practices (c. IX.15):

216. According to the authorities, the Customs Department has adopted most of the best

practices stated in the paper, including targeting of couriers, risk management and intelligence

techniques, behavior analysis, domestic coordination with units of customs, police, coast guard,

immigration and the FIU, and the use of RSS and APIS to alert other customs units regionally

about high risk targets. One major area not covered is that the Customs Department does not

routinely use scanners, x-ray equipment, and canine units in its work nor is such equipment and

capabilities available to it.

Additional Element—Computerization of Database and Accessible to Competent

Authorities (c. IX.15):

217. RCS, RSS and APIS are all computer-based systems. In addition, according to the

authorities, a range of information is available on the internal database maintained by Customs,

including profiling, prior actions of suspects, and personal data on suspects such as photographs.

According to the authorities, all three data systems cover information on cross-border

transactions.

Effectiveness of Implementation

218. Given the potential for ML or FT-related offenses that should be prosecuted in a court of

law, it is not clear why the Customs Department continued until 2008 to use its administrative

powers over those detected with undisclosed, suspicious or concealed currency to impose fines,

accept an admission of guilt and discharge of liability, and then release the offender, who, if a

foreign national or resident, would then be free to leave SVG. While the authorities have

indicated that this administrative procedure is not routinely used and that there has been an

unwritten policy in place since 2004 for the Customs Department to refer all such matters to the

FIU, the ability of the DPP, the FIU and the Police Department to develop ML or FT cases could

be inhibited given that such administrative procedures were being used as recently as 2008 as

discussed immediately below. Finally, the range of administrative and criminal sanctions in the

CCMA is not sufficient dissuasive given the amounts of money being forfeited.

219. Statistics provided by the Customs Department indicate that there were three

administrative cases in 2005 (US$10,000 in forfeitures, US$2,100 in fines); 20 in 2006

(US$133,00 in forfeitures, US$6,300 in fines); seven in 2007 (US$115,00 in forfeitures,

US$1600 in fines); three in 2008 (US$14,000 in forfeitures, US$2,700 in fines); and none in

2009 to date. In addition, the following statistics reflect cases referred to the FIU for forfeiture

under Section 50 of POCA: four cases in 2005 (totaling US$40,000); three cases in 2006

(totaling US$15,000); no cases in 2007; one case in 2008 (US$15,000), and three cases in 2009

to date (totaling US$178,000). Hence, since 2006, more money has been forfeited by the

Customs Department through the administrative process (US$262,000, exclusive of fines) than

by the FIU through forfeiture cases (US$208,000). These numbers suggest at the very least that

the administrative procedures are, if anything, more effective than the criminal forfeiture

process.

2.7.2. Recommendations and Comments

 Amend Section 119 of the CCMA that empowers the Customs Department to conduct

administrative processes over those caught with undisclosed, suspicious or concealed

currency to require that the prior consent of the DPP be obtained before any such

administrative process may be initiated; such consent should also cover the amount of the

administrative fine and whether the currency will be returned to the suspect. In the

meantime, the Customs Department should condition any future exercise of its

administrative powers on the receipt of a written determination of the DPP, along the

lines that (a) no further investigation by law enforcement authorities, including the FIU,

Police and Customs, is required and/or (b) no criminal proceedings will be brought by the

DPP against the offender.

 In order to increase the dissuasive effect of such sanctions, administrative and criminal

fines in the CCMA should be substantially increased, from the current range of EC$5,000

– 10,000 to at least EC$100,000.

 The Customs Department should sign the pending MOU with the FIU regarding

cooperation, taking into account the following:

 In para. 4, it is not clear why it is necessary to wait as much as 14 days to

provide feedback and dissemination of intelligence;

 In para. 5, the imposition by the Customs Department of the administrative

fines, admission, discharge of liability and release of the offender referred to

above should be addressed; and

 Also in para. 5, any issues relating to the detention of the offender should be

addressed, since the FIU works with the DPP on major financial crimes cases.

2.7.3. Compliance with Special Recommendation IX

Rating Summary of factors relevant to s.2.7 underlying overall rating

SR.IX LC

 The administrative procedure by which the Customs Department seizes

and forfeits cash, imposes a fine, accepts an admission of wrongdoing,

and discharges the liability of the suspect does not allow the DPP, with

the assistance of the FIU, to investigate, develop and prosecute

criminal cases against suspects caught with undisclosed, suspicious or

concealed currency;

 Administrative and criminal fines of EC$5,000 – 10,000 in CCMA are

not effective, dissuasive or proportionate; and

 A long-standing proposed MOU between the Customs Department and

the FIU has not been signed.

3. PREVENTIVE MEASURES —FINANCIAL INSTITUTIONS

Customer Due Diligence & Record Keeping

3.1. Risk of money laundering or terrorist financing

FIs not covered or not explicitly covered in the AML/CFT legislation and other

requirements:

220. Mutual Fund Underwriters are subject to the Mutual Funds Act and, according to the Act,

can engage with customers in mutual fund subscriptions and redemptions in the same manner as

e.g. fund administrators. The Act, however, does not contain adequate provisions for their

regulation and supervision, and hence for AML/CFT purposes. Notwithstanding, the authorities

have indicated that they are not aware of underwriters operating in or from SVG and that the law

will be amended to remove this category of service providers as they are irrelevant in the SVG

context. In addition, it is being recommended that mutual fund administrators and managers be

specifically covered under the POCA Schedule to remove any doubt as to their AML/CFT

obligations.

221. There is no specific coverage of insurance brokers and agents in the POCA Schedule

except under a broad category of “financial intermediaries” the POCA Schedule. In practice,

insurance intermediaries (agents, brokers and sales representatives), are regulated under the

insurance laws but are not considered to be conducting insurance business. They should be

explicitly covered as for mutual funds administrators and underwriters above.

222. There are at least two well-known lending operations in SVG that are unregulated and

unsupervised, but may likely fall under relevant business in the POCA Schedule of covered

entities. At the time of the mission, no assessment or investigation had been conducted by the

authorities to establish the extent of their operations, ownership and control, and inherent risks,

and to ascertain whether or not they should be subject to the AML/CFT requirements. No

explanation was given, even though the issue was raised on several occasions by the Mission.

Post mission the authorities indicated that they had conducted an investigation into these entities

to establish, inter alia, fit and proper criteria and type of business being conducted. No adverse

information was identified on the owners. A determination is still to be made as to whether they

should be subject to regulation at which time they may be brought under the POCA and its

Regulations. In the meantime, they were advised to observe the AML/CFT requirements as a

matter of good practice.

223. There is one systemically important building society that is covered by AML/CFT

legislation but which has not been subjected to an oversight regime for compliance with the

AML/CFT requirements. This entity has been in operations decades before the AML/CFT laws

were introduced and has effectively been unsupervised. There are plans to bring it under the

supervision of the Ministry of Finance later in 2009, which is a positive development. According

to the authorities, the FIU has provided guidance to this entity on the implementation of its

AML/CFT obligations, and that a compliance Officer was appointed several years ago upon the

recommendation of the FIU. The mission confirmed that training had been provided by the FIU

and that the compliance officer is also the accountant. This creates a potential conflict of interest.

In addition, the accountant/compliance officer dedicates less than 10 percent of his/her time to

AML/CFT issues. Post mission, the authorities indicated that the SRD of the Ministry of Finance

had conducted a full examination of this entity in August 2009 but it was not specified if it

included an AML/CFT component.

224. Reg. 4 of the POCA Regulations exempts from customer identification requirements

customers that are introduced by other institutions. This is inconsistent with the provisions of

Rec. 9 of the FATF which does not provide for exemptions and which requires certain criteria

and conditions for relying on certain elements of the CDD process. In addition, the non-

mandatory Guidance Notes provides for other identification exemptions e.g. certain non-face to

face business and business conducted over the phone or mail. This is inconsistent with the FATF

and should, on the contrary, be subject to additional risk controls.

3.2. Customer due diligence, including enhanced or reduced measures (R.5 to 8)

3.2.1. Description and Analysis

Legal Framework:

225. The POCA 2001, as amended in 2002 and 2005, provides the basic AML/CFT

requirements for FIs. These requirements are further elaborated in the 2002 POCA Regulations

issued under the POCA. Prevention of Money Laundering Guidance Notes (GNs) have also been

issued by the NAMLC. New Anti-Money Laundering Guidance Notes for the insurance sector

have been prepared by the Ministry of Finance but as of mission date had not yet been issued to

the industry and implemented, and are not used for purposes of this assessment. The mission

advised that the procedure for issuing these guidelines should be consistent with the

requirements of the POCA and the POCA Regulations which do not provide for the issuance of

guidelines by the Ministry. In addition, the provision in the POCA Regulations that guidance are

to be appended to the POCA Regulations should also be reviewed for consistency with the

POCA provisions.

226. The NAMLC GNs represent non-mandatory good practice recommendations for covered

institutions and are not Other Enforceable Means for purposes of this assessment. (See e.g. GN

60 stating that they are not mandatory). They are described and used in this report only for

purposes of assessing the effectiveness of implementation to the extent that they are adhered to

and can influence the nature of compliance with the Recommendations. However, the mission

considered whether they meet the conditions as “drivers” for assessing effectiveness based on the

following two FATF criteria:

 The first condition is only partially met. The GNs have been issued by the NAMLC

which is an official body established by law under the POCA. These GNs are intended to

have directional effect, that is, represent recommended good practice. They address some

but not all of the issues in the essential criteria. In some cases, the GNs go beyond the law

and POCA Regulations both by expanding or clarifying on the provisions contained in

the POCA Regulations (positive) while in others they go against the POCA Regulations

by purporting to limit its application (negative) such as the inclusion of exemption from

identification requirements not contemplated in the POCA Regulations. For instance,

GNs 49-51 provide exemptions from identification requirements for certain postal,

telephonic, electronic, mail shots, off-the-page, and coupon business. These are not

exempted in the POCA Regulations;

 The second condition is also only partially met. Some of the supervisory authorities have

used the GNs as a guide for monitoring adherence to the POCA and POCA Regulations

but some supervisors have only recently commenced onsite inspections for AML/CFT in

some sectors, or only partially assessed for compliance, e.g. the insurance, credit unions.

Some have not been assessed at all e.g. money remitters, the building and loan society,

international insurance and mutual fund sectors. For these sectors in particular, there is no

evidence that enforcement powers have been used in a general or specific case for non-

compliance with the GNs.

227. Based on the above, use of the GNs as drivers for assessing implementation is limited and

in most cases maybe insufficient to justify an upgrade in rating based on effectiveness of

implementation. They will be analyzed, however, to reflect the general guidance such GNs

provide for industry practice and considered in assessing implementation where relevant.

228. Schedule 1 of the POCA lists the FIs, DNFBPs and other businesses to which the

applicable provisions of the Act apply. These cover all of the financial activities, most of the

DNFBPs (not clear if Jewelers covers dealers in precious metals and stones but the authorities

believe that it does and that barristers and solicitors cover attorneys. See Rec. 12 and 16 below)

and other businesses (See Rec. 20 below), as listed in the Schedule (bolded words are those of

the assessors):

Financial Institutions

1. A bank licensed under the Banking Act

2. A bank licensed under the International Banks Act 1996

3. A building society registered under the Building Societies Act

4. An insurance company registered under the Insurance Act

5. International Insurance business licensed under the International Insurance Act 1996

6. Registered agents and trustees licensed under the Registered Agent and Trustee Licensing

Act 1996 (DNFBPs)

7. A Trust licensed under the International Trusts Act 1996

A person licensed to operate an exchange bureau

9. A person licensed as a dealer or investment adviser

10. A person who carries or cash remitting services

11. A person who carries on postal courier services (other business)

12. Mutual Funds licensed under the Mutual Funds Act 997

13. Credit Unions

Other relevant business activities

14. Lending (including personal credits, factoring with or without recourse, financial or

commercial transactions including forfeiting check cashing services)

15. Finance leasing

16. Venture risk capital

17. Money transmission services

18. Issuing and administering means of payment (e.g. credit cards, travelers’ checks and

bankers’ drafts)

19. Guarantees and commitments

20. Trading for own account customers in:

a. money market instruments (checks, bills, certificates of deposit etc.)

b. foreign exchange

c. financial futures and options

d. exchange and interest rate instruments; and

e. transferable instruments

21. Underwriting share issues and the participation in such issues

22. Money broking

23. Investment business

24. Deposit taking

25. Bullion dealing

26. Financial intermediaries

27. Custody services

28. Securities broking and underwriting

29. Investment and merchant banking

30. Asset management services

31. Trusts and other fiduciary services (includes Trust settlement per POCA Regulations)

32. Company formation and management services

33. Collective investment schemes and mutual funds

34. Car dealerships

35. Jewelers

36. Real estate agents

37. Casinos

38. Internet gambling

39. Pool betting

40. Lottery agents

41. Barristers-at-law and solicitors

42. Accountants

43. Charities

229. Insurance companies are explicitly covered under the POCA and POCA Regulations per

Schedule 1 of the POCA. However brokers and agents are not so explicitly covered, except

under the general category of as ‘financial intermediaries’ under Relevant Business Activities.

The interpretation of this with respect to the coverage of brokers and agents (and sales

representatives) varies across the industry and the authorities and should be clarified in the law.

230. In addition, mutual fund underwriters are not regulated entities in the mutual funds law

but the authorities maintain that they are not aware of any in operation and that these entities will

be deleted from the Mutual Funds Act. In addition, there are two known lending operations that

are not subject to regulation and supervision. Until an investigation is conducted to ascertain the

extent and nature of their operations, they would effectively fall outside the scope of the POCA,

POCA Regulations and Guidance Notes. As noted above, post mission the authorities indicated

that they have conducted an investigation of these entities and that a determination is to be made

on whether they should be regulated.

231. In addition to the above entities and activities, the POCA Reg. 3 provides that any person

or entity not falling within the definition of a “regulated institutions” (these are those listed in

Schedule 1 of the POCA above) may apply to the Minister of Finance (Minister) to become a

“voluntary regulated institution”. Reg. 3(4) requires the Minister to issue a list of such

institutions and to-date no such list has been issued by the Minister since no application has been

made to/approved by the Minister.

232. For purposes of this report, the following FIs are in operation in SVG and assessment of

compliance will be based on these entities. Where there are FIs that are not covered by a

supervisory regime that should or are covered under the AML/CFT legislation, these are

discussed above under Section 3.1 above, and in the other applicable sections of the report.

Table 16:

Domestic FIs No. Regulator

Banks (includes securities broking by banks)

6 ECCB

Insurance companies (9 life) 23 Ministry of Finance

Brokers for insurance company 6 Ministry of Finance

Agents for insurance 10 Ministry of Finance

Sales representatives for insurance 85 Ministry of Finance

Pension fund plans 14 Ministry of Finance

Money transfer services 4 Ministry of Finance

Credit unions (active) 9 Registrar Credit Unions

Building society 1 None

Sub-total Domestic 158

International (Offshore) Financial Entities No. Regulator

Offshore banks 6 IFSA

International insurance companies 9 IFSA

International insurance managers/brokers 3 IFSA

Mutual funds 45 IFSA

Mutual fund managers/administrators 30 IFSA

Sub-total Offshore 93

Total 251

233. There is a systemically important building and loan society with about 25,000-30,000

clients and assets of approximately EC$252 million in assets. This entity is not subject to a

supervisory or regulatory regime for prudential or AML/CFT purposes but is covered by the

AML/CFT legislation. The intention is for the Ministry of Finance-SRD to assume supervisory

responsibility along with credit unions later in 2009. Post mission, the authorities indicated that

an onsite inspection of this building society has been conducted in August 2009. No indication

was given as to whether it included an AML/CFT component.

234. Section 46 of the POCA requires FIs that carry on business listed in Schedule 1 of POCA

to keep and retain records relating to their financial activities in accordance with the POCA

Regulations issued under Section 67 of the Act. These will be further discussed below and in

Rec. 10. Sections 42-45 also make provisions for reporting of suspicious activities, tipping-off,

etc. for FIs. These are elaborated under Rec. 12, 13, 14 and SRIV in this report. Furthermore,

Section 46 requires/provides under subsections (2) FIs to pay special attention to complex and

other transactions (See Rec. 11); (3) and (4) reporting of suspicious activities to the FIU (Recs.

The ECCB is responsible for the supervision of domestic banks in the eight countries comprising the

ECCU (Antigua and Barbuda, Dominica, Grenada, St. Kitts and Nevis, St. Lucia, St. Vincent and the

Grenadines, Anguilla and Montserrat). There are 39 domestic banks operating in the ECCU.

The Ministry of Finance may designate the Supervisor or is the Authority responsible for supervising

the various entities, as provided in the respective financial laws.

13 and 14); (5) exemption of liability for reporting suspicion (Recs. 14 and 16); (6) and (7) duty

to develop and implement a written training and compliance program to ensure and monitor

compliance with the POCA Regulations issued under the Act. (Rec. 15). The POCA also

established the FIU and the NAMLC.

235. The Drugs Trafficking Offenses Act also contains provisions under Sections 30-33 with

respect to FIs listed in that Act. Section 30 requires FIs to retain for a minimum prescribed

period, the original or other retrievable form of copies of documents, inter alia, with respect to

transactions, accounts, deposit box facilities, wire transfers and transmission of funds, and loans

(Rec. 10). Transactions of EC$5,000 or less are excluded. For this purpose FIs are domestic

banks, any other licensed financial institution under any Act, trust companies, finance companies

or any other deposit-taking company.

236. The UN (Anti-Terrorism Measures) Act, 2002, as amended, also contains provisions for

FIs. In particular, Section 10 imposes a duty on persons or citizens to provide information with

respect to terrorist property; Section 10A(1) for reporting of suspicious transactions relating to

terrorist acts; and Section 10(B) and (C) penalty for failure to report suspicions. (See Rec. 13, 14,

17 and SRIV.)

237. The POCA POCA Regulations establish mandatory customer identification and other

AML/CFT requirements for FIs. In particular, it makes provision for:

 Identification verification;

 Recordkeeping;

 Monitoring and verification;

 Internal reporting procedures and compliance officer (ML reporting officer or MLRO);

 Training;

 Offenses and penalties;

 Accounts in anonymous and fictitious names at time the POCA Regulations were issued;

 Schedule: Procedures for verification of identity of customers.

238. In summary, many of the legal requirements in the POCA Regulations are to

establish/institute and maintain procedures that require FIs and persons involved in relevant

business activity as defined, to take certain action. The following analysis will primarily focus on

technical compliance with the FATF Recs. based on the requirements established under the

POCA and the POCA Regulations. Therefore, reference in the analysis below to the lack of

requirements, refers to the lack of legal, regulatory or other mandatory and enforceable

requirements, and not to the GNs.

Note:

239. In this report, international banks licensed in SVG under the International Banks Act will

be referred to as either international (offshore) banks or simply offshore banks simply to

distinguish from other non-“offshore” foreign banks operating in or outside of SVG, and is not

intended to cast any adverse connotation on any particular bank or sector.

Prohibition of Anonymous Accounts (c. 5.1*):

240. There are no provisions in the POCA or the POCA Regulations that explicitly prohibit

the keeping of anonymous or fictitious name accounts. However, the customer identity

verification requirements in the POCA Regulations (esp. POCA Regulations 4, 5, 6 and its

Schedule) if strictly applied, would effectively avoid opening accounts under anonymous or

fictitious names. In addition, Section 19(8) of the International Banks Act (for offshore banks)

states that any account established by a licensee on behalf of a customer shall state the name and

address of the customer and/or the beneficiary of the account.

241. Notwithstanding the above, Reg. 10 contains a lacuna with respect to anonymous and

fictitious name accounts. The transitional provisions require FIs to establish the beneficial

ownership of all “anonymous” accounts and accounts in obviously “fictitious” names within one

year of the POCA Regulations coming into force. Where the beneficial owner cannot be

established within one year, FIs are required to report these to the FIU. There is no explicit

requirement to close such accounts which leaves the possibility of maintaining anonymous and

fictitious name accounts that existed prior to the POCA Regulations. Guidance should be given

in this regard, e.g. for closing them, or maintaining accounts on instructions from the competent

authorities.

242. There are no regulatory provisions with respect to the treatment of numbered accounts

which are permitted and treated differently from anonymous and fictitious name accounts in

c.5.1.

Non-mandatory Guidance Notes:

243. There are no provisions with respect to this issue in the GNs.

When is CDD required (c. 5.2*):

For all FIs

244. Reg. 4 (2) requires identification, but not the full range of CDD to be conducted when (a)

forming a business relationship and (b) conducting a one-off transaction when payment is to be

made by or to the applicant for business in an amount of EC$10,000 or more (equiv. to about

US$3,704 at exchange rate US$1.00=EC$2.7). For purposes of one-off transactions,

identification is also required when two or more such transactions that appear to be linked equal

or exceed EC$10,000. The requirement for one-off transactions where “payment is to be made

by or to the applicant for business” could be interpreted by institutions as excluding transactions

where payments could be made by and to the applicant, or where it is not clear if payments were

made such as e.g. currency exchange transactions and the provision of financial guarantees if e.g.

no fee payments are involved.

245. The one-off threshold of EC$10,000 (US$3,700) is in significantly in excess of the FATF

requirement (US$1,000) for wire transfers under SR.VII.

246. Reg. 4 (2) (d) also requires customer identification when there is knowledge or suspicion

of ML (does not cover FT) only in respect to one-off transactions. It is not clear whether the one-

off transactions are limited to those of EC$10,000 or more, or whether they include lower

amounts. In addition, it does not extend to business relationship in accordance with c. 5.2 (d) and

the interpretive notes to Rec. 5.

247. There is no legal requirement to conduct CDD when there are doubts as to the veracity or

adequacy of previously obtained customer identification data.

Non-mandatory Guidance Notes:

248. The GNs elaborate on the above requirements, including with respect to the need for

identification of joint applicants for business. In particular, it expands on the computation of one-

off transactions recommending that for purposes of linking transactions, only those that take

place within a period of less than three months should be linked. In addition, GN 80 states that

FIs should conduct CDD when doubts arise as to the identity of clients, and GN 82 states that a

report should be made the MLRO (compliance officer) if failure to complete verification raises

suspicion.

Identification measures and verification sources (c. 5.3*):

249. Reg. 4 (1) (a) requires FIs to implement procedures that require their customers to

produce satisfactory evidence of identity as soon as practical after first making contact with the

FI, in accordance with the particulars set out in the Schedule to the POCA Regulations. If

satisfactory evidence is not obtained, the business shall not proceed any further. One exception to

this requirement is when there is suspicion of ML in which case the business can proceed but

only in accordance with directions issued by the FIU, and only when they involve one-off

transactions. This seems to be a reasonable exception requirement but should extend to business

relationships as well. With regards to the identification verification procedures, the Schedule sets

out the following key requirements:

Individuals (no distinction between residents and non-residents):

250. Name, address, date and place of birth, nationality, contact details, occupation, copy of

passport or identity card and signature. In addition, information on the purpose and potential

activity of the account (not of the business whole relationship) is required as well as information

on the source of income and wealth, written authority to obtain independent verification of the

information provided, and written confirmation that all credits to the account are and will be

beneficially owned by the “regulated institution holder”. The terms “regulated institution holder”

should be defined to remove any doubt as to which regulated institution it refers. There is also a

general requirement to obtain any other document or evidence to establish the identity of the

client. This requirement also applies to verification of identity of the beneficial owners of the

regulated institutions themselves.

Corporate Entities (no distinction between local and foreign):

251. copy of certificate of incorporation, memorandum and articles, location of the registered

office or RA of the corporate entity; resolution of the Board of Directors authorizing the opening

of the account and conferring authority on the person who will operate the account, confirmation

that the corporate entity has not been struck off the register or is not in the process of being

wound up, names and address of all officers and directors of the corporate entity, names and

addresses of the beneficial owners of the corporate entity except a publicly traded company,

description and nature of the business including date of commencement of business products or

services provided and location of principal business, purpose of the account and the potential

“parameters” of the account (including size in the case of investment and custody accounts,

balance ranges in the case of deposit accounts, and expected transaction volume of the account),

written authority to obtain independent verification of any information provided, written

confirmation that all credits to the account are and will be beneficially owned by the “regulated

institution holder”, and any other official document and other information reasonably capable of

establishing the structure of the corporate entity.

Partnerships or Unincorporated Businesses:

252. FIs are required to verify all partners or beneficial owners in accordance with the

procedure for the verification of individuals and in particular: copy of partnership agreement (if

any) or other agreement establishing the unincorporated business, description and nature of the

business (including date of commencement of business, products or services provided, location

of principal place of business), purpose of the account and the potential “parameters” of the

account (including size in the case of investment and client accounts, balance ranges, in the case

of deposit and client accounts and the expected transaction volume of the account), mandate

from the partnership or beneficial owner authorizing the opening of the account and conferring

authority on those who will operate the account, written confirmation that all credits to the

account are and will be beneficially owned by the “regulated institution holder”, and any

documentary or other evidence reasonably capable of establishing the identity of the partners or

beneficial owners.

253. Reg. 6 states that once a FI has verified the identity of an “applicant for business”, no

further verification is necessary so long as the “applicant for business” maintains a business

relationship on a regular basis. In addition, where there has not been contact with the customer or

there has not been a transaction in five years, the FI shall confirm the identity of the account

holder.

254. There are no laws, regulations or other enforceable means that allow the application of

identification requirements on a risk sensitive basis.

Non-mandatory Guidance Notes:

255. (See Rec. 9 for a more comprehensive discussion of introduced business and exemptions

from customer identification.) Reg. 4 (9) sates that for purposes of establishing satisfactory

evidence of identity or reasonable measure of identity, regard “may” be had to the guidance

notes appended to the POCA Regulations. However, to date no such guidance notes have been

appended but the NAMLC has issued industry wide non-mandatory Guidance Notes that

elaborate on the above verification requirements.

256. While the GNs do not constitute laws, regulations or other enforceable means that allow

the application of CDD requirements on a risk sensitive basis, the GNs 45-51 state that FIs are

exempted from verification of identity requirements in certain cases. This is distinct from and

broader than the simplified or reduced CDD that may be allowed under c. 5.9 below. Those

clients exempted from verification fall into three broad categories as follows:

Licensed FIs:

257. Seven categories of “eligible institutions” licensed in SVG, or their equivalents in other

jurisdictions, including: (i) domestic banks; (ii) international banks; (iii) building societies; (iv)

domestic insurance companies; (v) international insurance companies; (vi) RAs and trustees; and

(vii) mutual funds. [Note that GN 46 refers to seven “eligible” institutions listed in the Schedule

to the POCA. However, the POCA has a much larger number of categories of institutions.]

258. For purposes of establishing whether exemption from identification of a customer is a

foreign regulated institution, or is introduced by a foreign financial institution subject to AML

laws equivalent to SVG, regard should be had to GN 53 and GN 162 which set out a list of 83

countries that may be used for such purpose. It is noted that for purposes of a customer that is a

regulated financial institution (not the full range of relevant business activities contained in

Schedule 1 of the POCA which includes non-financial entities), c. 5.9 allows for simplified or

reduced CDD, not a complete exemption. And even in the case of Rec. 9 for introduced business

(See Rec. 9 below), there is a need for an FI to immediately obtain information on the customer

from the introducer, and be able to obtain the underlying documentation (which would allow for

verification of identity) promptly on request. Therefore, these exemptions seem to go beyond the

FATF requirements.

Small one-off transactions:

259. These are consistent with the requirement to verify identity (but not conduct full CDD)

of customers above the established threshold of EC$10,000. In addition, please note the

comment under c. 5.2 with respect to the threshold exceeding the wire transfer requirements of

US/Euro $1,000.

Introduced business:

260. GNs 53 and 162 relate to introduced/intermediary business covered under Rec. 9 which

may also allow FIs the discretion not to verify identity in some cases. (See Rec. 9 below.)

261. GNs provide further details on verification methods that may be used by FIs, including

for legal arrangements such as trusts which are not covered in the POCA Regulations (e.g. GNs

60-79 ). GN 65 also recommends obtaining bank and professional references directly from the

issuers, which should be verified.

262. Part IV of the GNs also contain further sector-specific guidelines that would generally

apply the exemptions from the verification to Banking, Investment Business, Fiduciary Services

and Insurance business. But as discussed above, these would go beyond what is required under

the FATF Recs.

Identification of Legal Persons or Other Arrangements (c. 5.4):

263. Corporate Entities (See c. 5.3 above.) c. 5.4 (a)*. The Schedule to the POCA

Regulations requires that a FI obtains the resolution of the Board of Directors authorizing the

opening of the account and conferring authority on the person who will operate the account. It

does not explicitly require verification of the identity of the person so authorized.

264. The Schedule of the POCA Regulations require FIs to obtain certified copies of

incorporation documents, address, directors and officers and beneficial owners of the entity,

except for publicly traded companies. As indicate in the previous paragraph, the resolution

authorizing the opening and operating of the account is required but not identity of the person so

authorized, and this may be a narrow power to bind the legal entity.

Partnerships or Unincorporated Businesses (See c. 5.3 above):

265. Verification of all partners and beneficial owners of incorporated businesses is required

under the Schedule to the POCA Regulations. This includes a copy of the partnership or other

agreement establishing the unincorporated business, location of principal place of business,

mandate from the partnership or beneficial owner authorizing the opening of the account and

authority to operate it. The FIs can also require any other document or evidence to assist in

establishing the identity of partners or beneficial owners.

266. There are no other requirements in the POCA or POCA Regulations for FIs to identify

other legal arrangements such as trusts/trustees. There is a requirement to identify corporate

entities, which would cover corporate trustees, but no specific identification requirements for FIs

to identify the various parties to a trust relationship, that is in addition to the trustees, the settlors

and beneficiaries, as provided for in the GNs for the trustees. The provisions for identifying

unincorporated businesses is also not appropriate for trust relationships as the “agreement”

establishing the business may not consistent with the concept and structure of a trust which may

constitute a different type of instrument (e.g. deed, declaration, etc.) and which may be an oral

trust relationship.

Non-mandatory Guidance Notes:

267. GN 39 states that for purposes of identifying corporate entities, FIs should include

corporate trustees. While this would help meet the requirements of c. 5.4 if it were in the POCA

Regulations, it would still be insufficient as non-corporate trustees are not covered. GN 38 also

states that FIs should verify the identity of partners/directors of a firm who have authority to

operate an account or “otherwise to give relevant instructions” as if they were directors or

shareholders of a non-quoted corporate entity. In addition, it states that for a limited partnership,

only the general partner needs to be identified unless limited partners are “significant investors”

but these terms are not defined in the GNs.

268. The GNs (44) also state that for other legal arrangements such as associations, institutes,

foundations, charities, etc. that are not firms or companies, all signatories “who customarily

operate the account” should be identified. It is noted that GN 78 refers to the identification of

parties to a trust by the trustees (as DNFBPs), and not to the identification of the trustee

(corporate or non-corporate) by FIs.

Identification of Beneficial Owners (c. 5.5*; 5.5.1* & 5.5.2):

269. There is no explicit requirement in the POCA Regulations to identify beneficial owners

except in the Schedule with respect to corporate and incorporated businesses. Reg. 4(5) requires

FIs to establish and maintain procedures to identify persons on whose behalf an applicant for

business appears to be acting for, that is, where the applicant is not acting as principal. This is

not necessarily the same as identification of beneficial owners or beneficiaries. The Schedule to

the POCA Regulations for individuals does not address this issue except for a rather unclear

provision that requires FIs to obtain “written confirmation that all credits to the account are and

will be beneficially owned by the regulated institution holder”. It is unclear what a “regulated

institution holder” is but would also not be a sufficient requirement to identify beneficial owners

or beneficiaries such as those of a trust. Para. 2 of this part of the schedule for individual

customers also require identification of the beneficial owners of all “regulated institutions”

which is confusing. Similar provisions are included for corporate entities, partnerships and

incorporated businesses in the Schedule.

270. The Schedule to the POCA Regulations requires that for corporate entities, FIs are

required to obtain information that includes the “names and addresses of beneficial owners of the

corporate entity, except for a publicly traded company”.

271. For partnerships and incorporated businesses, the Schedule requires FIs to obtain

verification of identify for all partners or beneficial owners, using procedures applicable to

individuals under the Schedule.

272. For corporate entities, the Schedule to the POCA Regulations requires FIs to obtain

information or official documentation that is “reasonably capable of establishing the structural

information” of the entity. This may be interpreted as to include ownership and control structure

information but is not explicit enough. There is a requirement in the Schedule to obtain the

names and addresses of the beneficial owners of non-publicly traded companies as described

above.

273. For partnerships and unincorporated businesses, there is no specific requirement to obtain

information as to the ownership and control structure, only verification of identity of partners

and beneficial owners.

274. Reg. 4(6) provides that, where an applicant for business (customer): (i) is being

introduced to the FI by another regulated institution (both FIs and non-FIs as listed in Schedule 1

of the POCA); (ii) is acting for another (principal); and (iii) the applicant is another regulated

institution (domestic or foreign), then it shall be reasonable for the FI to accept a written

assurance from the applicant for business (the regulated institution) to the effect that evidence of

the identity of the principal has been obtained and recorded under procedures maintained by the

applicant. This requirement is very confusing and seems to go beyond the requirements for

introduced business under Rec. 9 below. It seems to describe a situation where a SVG FI can rely

on the identification of an underlying client conducted by a second tier regulated institution, that

is, one that is itself introduced by another regulated institution. This issue is further discussed

under Rec. 9.

275. While there are sufficient requirements to establish beneficial ownership of legal entities

and arrangements covered by the POCA Regulations and the Schedule, a requirement as to the

identity and information on natural persons that ultimately “control” a legal person or

arrangement is not explicitly required, particularly with respect to trusts/trustees as clients of FIs.

There is a need for provisions in the POCA Regulations, similar to those for trustees under para.

78 of the GNs, for FIs to identify settlors, beneficiaries, protectors in addition to the

identification of trustees. (See c. 5.4 above.)

Non-mandatory Guidance Notes:

276. The GNs provide additional identification guidance for clubs, societies and clubs, and

for those procedures that Trustees should take with respect to identification and information on

their clients and businesses. GN 33 states that “principals” should be understood in the widest

sense to include beneficial owners, settlors, controlling shareholders, directors, major

beneficiaries, etc. GN 32 further states that where there are a large number of verification

subjects, it may be sufficient to carry verification on a limited group only such as the principal

shareholders and main directors of a company which is reasonable. GN 39 also states that for

non-publicly traded companies, the underlying beneficial owners who ultimately own or control

the company should be identified. For public companies quoted in recognized stock exchanges,

subsidiaries thereof, and ‘private company with substantial premises and payroll of its own”, no

identification verification is required. This latter exemption, if put into practice, is not consistent

with the requirements under Rec. 5, and would also be ultra vires the POCA and POCA

Regulations.

277. The GNs further define “underlying beneficial owner/s” as any person/s on whose

instructions the signatories of an account, or any intermediaries instructing such signatories, are

for the time being accustomed to act”. This provision is insufficient and would not, e.g. cover

beneficiaries under a trust arrangement where beneficiaries would not be expected to provide

such instructions to e.g. to the trustee.

Information on Purpose and Nature of Business Relationship (c. 5.6):

278. The Schedule of the POCA Regulations. requires FIs to obtain information on the

purpose and potential activity of the account for individuals and legal entities. For individuals, it

requires the purpose of the account and potential activity. For corporate entities, partnerships and

unincorporated businesses, the purpose of the account and the potential parameters of the

account (including size in case of investment and custody accounts, balance ranges in case of

deposit accounts and expected transaction volume of the account). These requirements limit the

information to account activity and do not extend to information on potentially broader “business

relationships”.

Non-mandatory Guidance Notes:

279. Unlike the requirements under the Schedule of the POCA Regulations, there are no

requirements to obtain information on the purpose and nature of the account, nor business

relationship, except for corporate entities that require a statement of purpose of the account,

including expected turnover and volume of activity (GN75).

Ongoing Due Diligence on Business Relationship (c. 5.7*; 5.7.1 & 5.7.2):

280. The general rule under Reg. 6 is that once an FI has verified the identity of a client, no

further verification is required so long as the customer maintains a business relationship on a

regular basis. There is a limited requirement to verify customer identity when, in the course of

business, there are concerns regarding the identity of the client or beneficial owner. Where there

has been no contact with a client or no transaction within a period of five years, the FI shall

confirm the identity of the account holder. In addition, Reg. 6(2) requires FIs to monitor the

relationship for consistency with the stated account purpose, business and the expected account

activity. These requirements are consistent with c. 5.7 but it falls short of c. 5.7.2 which should

extend the obligation to update documents, data or information through periodic reviews of

existing client records, particularly with respect to higher risk business relationships.

Non-mandatory Guidance Notes:

281. The GNs reflect the requirements in the POCA Regulations and do not address the issue

of updating CDD documentation especially with respect to high risk business, and focuses

mainly on re-verification of identity.

Risk—Enhanced Due Diligence for Higher Risk Customers (c. 5.8):

282. There are no requirements in POCA or the POCA Regulations to perform enhanced CDD

for higher risk customers and transactions.

Non-mandatory Guidance Notes:

283. The GNs do not provide for enhanced CDD for higher risk customers and transactions.

Risk—Application of Simplified/Reduced CDD Measures when appropriate (c. 5.9):

284. There are no legal or regulatory requirement that allow FIs to apply reduced or simplified

CDD where it has been proven that ML/FT risks are lower, where information on identity can be

obtain publicly or where other controls exist in the national regime. On the contrary, the POCA

Regulations and GNs exempt certain categories of customers from verification of identity as

discussed under c. 5.3 above. (See Rec. 9 below.)

Non-mandatory Guidance Notes:

285. The GNs reflect the requirements under the POCA Regulations and further exempts FIs

from verification requirements for certain categories of customers, including other FIs (both

domestic and foreign), particularly GN 46, 49, 50 and 50. As indicated above, these exemptions

go beyond the simplified/reduced CDD procedures allowed in c. 5.9.

Risk—Simplification / Reduction of CDD Measures relating to overseas residents (c. 5.10):

286. There are no requirements that when simplified or reduced CDD. There is a requirement

for introduced business under Reg. 4(6) that exempts FIs from identification verification, where

an applicant for business is another domestic regulated institution (those listed in the Schedule to

the POCA) or a foreign regulated institution (those subject to POCA Regulations similar to the

SVG POCA Regulations.). In such cases, the FIs only need to obtain a written assurance from

the applicant that it has obtained and recorded evidence of identity of the principal/beneficiary of

such institution. This provision, however, is more relevant to Rec. 9, but in principle goes

beyond the simplified CDD regime allowed under c. 5.9.

Non-mandatory Guidance Notes:

287. See discussions above on exemptions from identification requirements in the POCA

Regulations and GNs.

Risk—Simplified/Reduced CDD Measures Not to Apply when Suspicions of ML/TF or

other high risk scenarios exist (c. 5.11):

288. There are no requirements in POCA or the POCA Regulations that would prohibit

simplified/reduced CDD when there is suspicion of ML/FT, or where higher risk scenarios

apply. There are no exceptions to the exempted cases for customer identification described

above, when there is suspicion of ML or FT. Only the GNs have these provisions as described in

the following paragraphs.

Non-mandatory Guidance Notes:

289. GN 45 states that where “a transaction” is suspicious, the exempted cases discussed

above with respect to verification of identity would not apply.

Risk Based Application of CDD to be Consistent with Guidelines (c. 5.12):

290. As mentioned above, the POCA and POCA Regulations do not allow for

simplified/reduced CDD, and the exempted cases covered in the GNs (Guidance Notes) go

beyond what is allowed under the legislation in some cases, e.g. for example, business conducted

by post, telephone, electronic means, coupons, etc. (See GNs 49-51).

Timing of Verification of Identity—General Rule (c. 5.13):

291. As a general rule, Reg. 4(2) states that if satisfactory evidence of identity is not obtained,

the business in question must not proceed any further except under directions of the FIU when

there is suspicion of ML. It does not cover suspicion of FT. This is a reasonable requirement, but

should consider the benefits of extending this provision beyond one-off transactions, e.g. under

circumstances described under GN 137.

Non-mandatory Guidance Notes:

292. The GNs contain provisions similar to those of the POCA Regulations.

Timing of Verification of Identity—Treatment of Exceptional Circumstances (c. 5.14 &

5.14.1):

293. There are no provisions in the POCA or POCA Regulations that allow for delaying of

verification of identity of customers and beneficial owners.

Non-mandatory Guidance Notes:

294. The GNs do not contain provisions for delaying verification of identification except for

Investment Business under GN 137 that allow delays when an investor has cancellation or

cooling off rights. In such cases, the repayment of investment funds during this cooling off

period is not to be considered as proceeding further with business under Reg. 4(2). When this

occurs, repayment of investment funds should not be made to a third party to avoid the risk of

ML.

Failure to Complete CDD before commencing the Business Relationship (c. 5.15):

295. Reg. 4(2) states that where satisfactory evidence of identity (as opposed to full CDD) is

not obtained, the business relationship or one-off transaction shall not proceed any further,

except under directions from the FIU when there is suspicion of ML. It is implicit, therefore, that

the FIU will be informed of the suspicion. However, the circumstances under which an FI can

proceed under directions from the FIU are limited to one-off transactions, and do not extent to

business relations. Nonetheless, this seems to be a reasonable provision in that it would provide

the opportunity for the FIU and/or other authorities to inquire/investigate the person should there

be an interest and avoid tipping off the subject of a SAR.

Non-mandatory Guidance Notes:

296. The GNs contain broadly similar provisions for dealing with an applicant for business

when verification is unsatisfactory. In particular, the second GN 82 (note that there are two GN

82s) states that where failure to complete verification and there are no reasonable grounds for

suspicion of ML, any business with or one-off transaction for, the applicant for business should

be suspended and any funds held to the applicant’s order should be returned in the form it was

received, until verification is subsequently completed, if at all. Funds should never be returned to

a third party and an internal report to the MLRO (compliance officer) should be made on how to

proceed. This provision should be reconsidered to require that where there is suspicion, a SAR

should be filed with the FIU.

297. The GNs are vague in that they do not prohibit the establishment of a business

relationship or carrying out of a one-off transaction when CDD cannot be completed. It mainly

requires the suspension of such business or transaction. In addition, it does not deal with

situations involving existing customers as discussed under c. 5.16 below.

Failure to Complete CDD after commencing the Business Relationship (c. 5.16):

298. There are no requirements to terminate an existing business relationship in the

circumstances covered by c. 5.16. There is only a requirement under Reg. 10 to report to the FIU

anonymous or fictitious name accounts when the beneficial owner of such accounts cannot be

established within one year of the POCA Regulations coming into effect (22 January 2002). Part

IV of the GNs contains broadly similar provisions for the sectoral guidelines esp. for Investment

Business. See c. 5.17 below.

299. Non-mandatory Guidance Notes: See c. 5.15 above.

Existing Customers—CDD Requirements (c. 5.17):

300. There is no requirement to apply CDD requirements to existing customers at the date the

POCA Regulations came into effect, except for those anonymous or fictitious name accounts

discussed under c. 5.16. The provisions of Reg. 6 apply to customers after the POCA

Regulations came into effect and do not address the issue of materiality and risk. Under Reg. 10,

when customer identification cannot be established on anonymous or fictitious name accounts

existing at the time the POCA Regulations came into effect, they shall be reported to the FIU but

there is no requirement to close the accounts.

Non-mandatory Guidance Notes:

301. There are no provision in the GNs with respect to this requirement.

Existing Anonymous-account Customers – CDD Requirements (c. 5.18):

302. See c. 5.16 above. There is only a requirement under Reg. 10 to establish the beneficial

ownership of anonymous or fictitious name accounts within one year of the POCA Regulations

coming into effect (22 January 2002), and to report to the FIU when the beneficial owner cannot

be established within one year. This is insufficient.

303. Non-mandatory Guidance Notes: The GNs do not address issues under c. 5.18.

Foreign PEPs—Requirement to Identify (c. 6.1):

304. There are no requirements to conduct additional CDD measures on PEP including risk

management systems to determine whether a potential customer, customer or beneficial owner is

a PEP.

Foreign PEPs—Risk Management (c. 6.2; 6.2.1):

305. No requirement for senior management approval for establishing business relationships

with PEPs.

Foreign PEPs—Requirement to Determine Source of Wealth and Funds (c. 6.3):

306. While there is no explicit requirement in the POCA Regulations to obtain source of funds

and wealth of PEPs, the Schedule to the POCA Regulations for individuals and beneficial

owners requires FIs to obtain source of income and wealth for purposes of identity verification

which would satisfy this obligation.

Foreign PEPs—Ongoing Monitoring (c. 6.4):

307. There is no requirement to conduct enhanced CDD on PEP relationships.

Domestic PEPs—Requirements (Additional Element c. 6.5):

308. No requirements on domestic PEPs.

Domestic PEPs—Ratification of the Merida Convention (Additional Element c. 6.6):

309. SVG has signed but not ratified the UN (Merida) Convention against Corruption.

Non-mandatory Guidance Notes:

310. The GN 168 asks FIs to apply enhanced CDD on PEPs and to identify sources of

information for establishing their position as PEPs. It describes the categories of persons that

should be considered as PEPs, implicitly from other countries. Part of the CDD should include

identifying related persons and companies, and identifying their source of funds, but not source

of wealth. It also includes applying ongoing due diligence on the account. The decision to

establish a PEP account/relationship should be taken at senior management level, but there is no

similar requirement to obtain senior management approval for the continuation of an existing

PEP or beneficial owner who is a PEP, or who subsequently become PEPs.

311. The GNs do not provide for domestic PEPs.

Cross Border Correspondent Accounts and Similar Relationships – introduction

312. It does not seem to be a general practice for domestic and international banks to provide

cross-border correspondent account facilities to other banks. However, for purposes of this Rec.,

the provision of correspondent account facilities to some of the six international (offshore) banks

in SVG would be analogous and are assessed under this Rec. In SVG, the domestic bank sector

does provide correspondent/ nested correspondent accounts to offshore banks licensed in SVG.

The provision of such correspondent accounts in SVG appears to be generally related to

difficulties or the inability to open correspondent accounts directly with other institutions abroad.

In some cases, it did not appear to the mission that the offshore banks had significant mind and

management presence in SVG. Most of the top officials the mission met that had operational

duties and knowledge of the banks business were residing overseas. To the extent that the

domestic banking sector provides correspondent facilities to these offshore banks, they would be

assuming the risks inherent in such business. It is noted that soon after the mission, two of the

offshore banks were intervened by the government and may be wound up. (See Rec. 18 for a

further discussion of this issue.)

International/Offshore Banks:

Requirement to Obtain Information on Respondent Institution (c. 7.1):

313. There are no specific requirements in the POCA Regulations with respect to the

provisions of correspondent accounts to banks or other FIs. And whereas the identification of

respondent institutions would have been required with respect to corporate entities under the

POCA Regulations, the GNs indicate that when such entities are other FIs (both domestic and

foreign) listed e.g. in GN 46, FIs are exempt from identification requirements subject to the

jurisdiction of domicile for respondent entities.

Assessment of AML/CFT Controls in Respondent Institution (c. 7.2):

314. There are no specific requirements in the POCA Regulations to assess the AML/CFT

controls of respondent institutions.

Approval of Establishing Correspondent Relationships (c. 7.3):

315. There are no specific requirements in the POCA Regulations to obtain senior

management approval before establishing correspondent account relationships.

Documentation of AML/CFT Responsibilities for Each Institution (c. 7.4):

316. There are no specific requirements in the POCA Regulations to document the respective

AML/CFT responsibilities of FIs.

Payable-Through Accounts (c. 7.5):

317. There are no specific requirements in the POCA Regulations with respect to the

provisions of correspondent payable-through accounts to other banks or other FIs institutions.

The correspondent accounts provided to offshore banks, while not strictly payable through in

nature, seem to be pass-through nested correspondent accounts.

Non-mandatory Guidance Notes:

318. GN 124A indicates that banks should pay particular attention to the provision of services

to other banks in jurisdictions where the respondent institutions do not have a physical presence.

When providing correspondent services, banks should obtain sufficient information to

understand the nature of the respondent’s business, including, inter alia, the reputation of the

AML (but not CFT) regime of the jurisdiction where it operates, the status of regulation and

supervision of such banks, and the adequacy of its know your policy (KYC) policies.

319. The GNs further indicate that correspondent banks should refuse to enter or continue a

relationship with respondents when they are “incorporated” in jurisdictions (but does not include

jurisdictions where they operate from) in which they do not have a physical presence and are

unaffiliated with a regulated financial group. They should also pay attention to correspondent

relationships in existence where the respondents are located in jurisdictions with poor KYC

standards or are known as being non-cooperative in AML (but not CFT) issues. Care should also

be taken to the use of correspondent accounts as payable-through facilities.

320. From discussion with the industry, it appears that the provisions of the GNs with respect

to correspondent facilities to offshore banks are not being strictly adhered to. In addition, the

ECCB on instructions from its Monetary Council (comprised of Ministers of Finance from the

ECCU member countries) issued prudential Guidelines for Correspondent Accounts in March

2001. These were directed at domestic banks for purposes of making them aware of and

managing ML risks inherent in correspondent banking facilities. The introduction to these

guidelines also made reference to the risks of providing “nested” correspondent facilities.

Consequently the ECCB, “in cognizance of the importance of correspondent banking

relationships to economic activity in the currency union, and of the risks posed to these

arrangements by the operation of accounts for offshore entities that are subject to a different

regulatory and supervisory framework,” recommended that:

“A financial institution shall not provide, or in any way facilitate, access to correspondent

banking facilities to third-party FIs not licensed under the provisions of the Banking Act

and/or supervised by the ECCB. Banks are also required to employ strict know-your-

customer standards and exercise adequate due diligence, particularly in maintaining

accounts for offshore entities, in order to minimize counterparty risks.”

321. In practice, international (offshore) banks licensed in SVG under the International Banks

Act and subject to supervision by IFSA maintain correspondent/nested correspondent accounts

with the domestic banking sector, apparently in breach of to the ECCB’s prudential guidelines.

Misuse of New Technology for ML/FT (c. 8.1):

322. There are no requirements to have policies or measures in place specifically to prevent

misuse of technological developments for ML or FT.

Risk of Non-Face to Face Business Relationships (c. 8.2 & 8.2.1):

323. There are no specific requirements to have policies and procedures in place to address

risks associated with non-face to face business relationships or transactions. There are provisions

in Reg. 4 (and GNs) that allow FIs to completely rely on customer identification conducted by

another regulated institution. In such cases, the Reg. completely exempts the FIs from

verification of identity of the customer subject to certain conditions. This would be contrary to

the requirements of c. 8.2.1 that include measures, by way of example, reliance on third party

introduction as one among other possible measures that can be taken. The general principle

should be to obtain “additional documentation to complement those which are required for face-

to-face customers.” See box under c. 8.2.1.

Non-mandatory Guidance Notes:

324. GN 44A deals with customers who may not be available for an interview at the time an

account or relationship is to be established, such as non-resident clients. (Note, under c. 5.8 non-

resident clients are an example of a high risk category of customer.) The GN states that in such

cases, FIs should apply the same identification and monitoring procedures as applied to

customers that are personally interviewed, and should have specific and adequate measures to

mitigate the higher risk of non-face to face business. This would be contrary to the provisions of

Reg. 4 which provides for possible exemption from identification verification provisions in cases

where a customer is introduced by another regulated entity, and which can involve non-face to

face and non-resident clients. Nonetheless, GN 44A states that risk mitigation measures should

be applied in line with the examples given under c. 8.2.1 which should include, inter alia,

certification of documents and independent verification of documents by contacting a “third

party”.

325. In addition to the preceding paragraphs, GNs 49-51 go beyond the POCA Regulations,

and are contrary to Rec. 8 in that they exempt from identification verification requirements

certain transactions such as postal, telephone and electronic business, “mail shots, off-the page

and coupon business. The mission did not ascertain the extent to which such business was

actually being conducted in or from within SVG.

Effectiveness of Implementation

326. The authorities have not conducted a formal ML/FT risk assessment of the financial

sector to better inform and support the development of more effective CDD, monitoring and

reporting policies and procedures by FIs. In this regard, the authorities should consider e.g. the

relative ML/FT risks inherent in the mutual funds industry as there is a perception of lower risk

in private/accredited funds. These are investment vehicles for high value/net worth investments,

broadly akin to private banking, which inherently is of higher risk. A reevaluation of the

supervisory thinking on this issue is advisable.

327. In particular, no AML/CFT supervision of building and loan societies has been

conducted, and limited or no CDD supervision has been undertaken with respect to the offshore

financial sector, credit unions, insurance companies and intermediaries, and money remitters.

328. In addition, there are two known money lending operations that are subject to the

AML/CFT laws and which openly advertise their activities. However, the authorities have not

conducted a review of their operations with a view to determining the need for an authorization

and oversight regime. Their beneficial ownership and control, and sources of their funding are

unknown.

329. From discussions with the FIs and regulators, it appeared that most FIs were conducting

reasonable CDD measures to comply with the SVG AML/CFT requirements, and in the case of

foreign banks, with their head office policies and procedures. There were however, some areas

that indicated lack of effective implementation as discussed in the following that relate to Recs.

5-8:

 FIs are mainly focused on ML risk, especially cash transactions and possible linkages

with drug trafficking. Little attention seems to be made on FT risks and some FIs were

unaware of the official UN terrorist lists;

 During the conduct of CDD for new clients, it seems that FIs do not report to the FIU all

cases where they are suspicious of ML/FT. The FIU on average only gives directions to

FIs on how to proceed with suspicious transactions about 3 times a year;

 With respect to on wire transfers, banks appear to be conducting CDD for amounts lower

than the regulatory EC$10,000 equivalent for one-off transactions which is positive but

there is a need for enhanced scrutiny of wire transfer activity. In addition, a mitigating

factor is that some banks are required by the SWIFT system to include full originator

information in all wire transfers. (See SRVII);

 Senior management approval generally required for opening correspondent accounts, but

enhanced CDD including for offshore bank respondents is weak, including for

establishment of nested correspondent accounts;

 CDD on beneficial owners/beneficiaries is weak in some FIs, including the identification

of all main parties to a trust, and lack of controls in some banks with respect to opening

accounts for bearer share companies. Weaknesses in account opening documentation

were evident in some FIs;

 Ongoing CDD monitoring seems to be less effective for some FIs, particularly offshore

entities that deal with customers in many jurisdictions where they do not have a physical

presence or representation and may involve non-face to face business relationships. Such

review would be particularly important for certain types of business transactions, e.g.

back-to-back loans by banks, and loans backed by insurance policies. These loans appear

to be common practice by some institutions and inherently carry a higher level of ML

risk, and should be subject to more enhanced CDD. In addition, insurance companies,

which generally conduct business through intermediaries, also do not require their

agents/brokers to have or to provide them with copies of their AML/CFT policies and

procedures. Consideration should be given to including this in their agency and broker

agreements;

 Supervisory findings indicate that FIs may not be adequately updating customer

documentation which would limit ongoing CDD and risk profile updating;

 CDD in the credit union and building society sectors appears to be generally weak, and

supervision of compliance has just commenced for credit unions and is non-existent for

the building and loan society. This is a significant weakness considering the risks

inherent in both sectors activities with respect to money remittance business and back-to-

back loans;

 Some banks, but not other FIs, require senior management and/or head office approval

for establishing correspondent and PEP accounts. Supervisors state that a number of

banks subscribe to database services for PEPs and other official ML/FT lists, and that the

FIU circulates terrorist lists. However, not all FIs interviewed were aware of the latter;

 Inadequate CDD and risk assessment for correspondent account relationships in the

domestic banking sector, including such facilities to offshore banks;

 There appears to be insufficient oversight and training on AML/CFT by insurance

companies over the activities of their agents and sales representatives, and where

applicable brokers, especially in the domestic sector. The agency contracts between the

insurers and intermediaries generally do not contain AML/CFT elements to assist the

insurers comply with their own CDD and other requirements. Most insurance

intermediaries accept cash from clients which raises the potential for placement stage ML

risk.

3.2.2. Recommendations and Comments

R.5

General Recommendations:

 Consider explicitly covering in the Schedule to the POCA (i) mutual fund administrators,

and managers; and (ii) insurance intermediaries i.e. agents and brokers.

 Implement an oversight and AML/CFT compliance regime for non-regulated lending

operations.

 Extend the Regulations to explicitly cover FT consistent with the requirements of Section

46 of POCA.

Other Recommendations:

 Explicitly prohibit anonymous or fictitious name accounts particularly those that were in

existence before the POCA Regulations were issued.

 Extend the full range of CDD (only identification verification) for business relationships

and one-off transactions.

 Reduce the threshold for one-off wire transfers to comply with SRVII.

 Extend the identification requirement when there is suspicion beyond one-off transactions

and cover FT.

 Introduce a CDD requirement for cases when there are doubts as to the veracity or

adequacy of previously obtained customer identification data.

 Remove/amend the provisions in the POCA Regulations that allow exemptions from for

customer identification, and review similar exemptions contained in the GNs.

 Introduce (i) an explicit requirement to verify the identity of the person authorized to act

on behalf of a corporate entity, partnership or other legal arrangement, and (ii) expand the

verification requirement of provisions regarding the power to bind entity, beyond the

power to open and operate accounts.

 Enhance requirements for identification of legal arrangements such as trusts/trustees,

including measures to identify settlors, beneficiaries and other parties to a trust.

 Extend the scope of the requirement to obtain information on the purpose and intended

nature beyond accounts to include business relationships.

 Extend the ongoing CDD requirements to include update of CDD records particularly

with respect to higher risk business relationships.

 Introduce enhanced CDD requirements for higher risk clients and review/delete

exemptions from identification verification as they go beyond the criteria for simplified

CDD.

 Require termination of existing business relationships in the circumstances covered by c.

5.16, subject to any directions from the FIU/competent authorities in case of suspicion or

other reason.

 Remove the identification exemptions in the POCA Regulations especially for cases

when there is suspicion ML or FT.

 Introduce a requirement to apply CDD requirements to customers existing at the date the

POCA Regulations came into effect, on the basis of materiality and risk. This may also

be relevant for any future changes to the POCA Regulations and other applicable laws.

 Extend the requirement to perform CDD on existing customers beyond the beneficial

owners of anonymous of fictitious name accounts, and require termination of such

accounts immediately to the extent that they may exist.

 Review the provisions of the GNs that only require the suspension, and not prohibition,

of a new or existing business relationship or transaction when verification of identity

cannot be completed.

 Enhance supervision and enforcement of compliance to address weaknesses across most

sectors in implementation of CDD, including with regards to beneficial owners and

bearer/nominee share companies.

R.6

 Require FIs to conduct additional and enhanced CDD measures, or to obtain senior

management approval, for on new and/or existing PEPs relationships.

100

R.7

 Require FIs to for perform, inter alia, additional and enhanced CDD on correspondent

banking relationships, assess the AML/CFT controls of respondent institutions, and

obtain senior management approval before establishing correspondent account

relationships.

 Introduce requirements with respect to the provisions of correspondent payable-through

accounts.

 Enhance supervision of risk management practices and compliance with R.7 by domestic

banks that provide correspondent/nested correspondent banking facilities to international

(offshore) banks in breach of R.7 and the ECCB’s prudential guidelines on correspondent

banking (March 2001).

R.8

 Require FIs to have policies or measures in place to prevent misuse of technological

developments for ML or FT, including non-face to face business relationships and

transactions, and review the exemptions provided in the GNs for this type of business.

3.2.3. Compliance with Recommendations 5 to 8

Rating Summary of factors underlying rating

R.5 NC

 No implementation of CDD and other AML/CFT requirements for

non-regulated lending operations.

 The POCA and the Regulations issued thereunder do not cover FT.

 No prohibition against keeping anonymous or fictitious name accounts

particularly those that were in existence before the POCA Regulations

were issued.

 Full range of CDD (only identification verification) is not required for

business relationships and one-off transactions.

 Threshold for one-off wire transfers significantly in excess of SRVII.

 Identification requirement when there is suspicion limited to ML and

to one-off transactions.

 No CDD requirement when there are doubts as to the veracity or

adequacy of previously obtained customer identification data.

 Exemptions from CDD in the GNs, to the extent implemented, go

beyond the risk sensitive measures allowed under c. 5.3 and c. 5.9, and

in some cases beyond the POCA Regulations.

 No explicit requirement to verify the identity of the ultimate natural

persons who control an entity, and of persons authorized to act on

101

behalf of a corporate entity, partnership or other legal arrangement, and

provisions of power to bind entity limited to the power to open and

operate accounts.

 Insufficient requirements for identification of legal arrangements such

as trusts/trustees, including measures to determine settlors,

beneficiaries and other parties to a trust.

 Narrow requirement to obtain information on the purpose and intended

nature; limited to accounts and does not extent to the broader business

relationship.

 Ongoing CDD requirements do not include update of CDD records

particularly with respect to higher risk business relationships.

 No requirements for enhanced CDD for higher risk clients and

exemptions from identification verification go beyond the criteria for

simplified CDD.

 No requirement to terminate an existing business relationship in the

circumstances covered by c. 5.16.

 The identification exemptions in the POCA Regulations should not

apply when there is suspicion ML or FT.

 No requirement to apply CDD requirements to customers existing at

the date the POCA Regulations came into effect, on the basis of

materiality and risk.

 Requirement to perform CDD on existing customers is limited to the

beneficial owners of anonymous of fictitious name accounts, and no

requirement to close such accounts existing at the time the POCA

Regulations came into effect.

 The GNs only require the suspension, and not prohibition, of a new or

existing business relationship or transaction when verification of

identity cannot be completed.

 General weaknesses in implementation of CDD, especially for

beneficial owners and bearer share companies.

R.6 NC

 No requirement to conduct additional and enhanced CDD measures, or

to obtain senior management approval, for new and/or existing PEPs

relationships.

R.7 NC

 No specific requirements for perform, inter alia, additional and

enhanced CDD on correspondent banking relationships.

 No requirements to assess the AML/CFT controls of respondent

institutions.

 No requirements to obtain senior management approval before

establishing correspondent account relationships.

 No requirements with respect to the provisions of correspondent

payable-through accounts.

102

 Domestic banking sector provides correspondent/nested correspondent

banking facilities to offshore banks in breach of the ECCB’s prudential

guidelines.

R.8 NC

 No regulatory requirements to have policies or measures in place

specifically to prevent misuse of technological developments for ML

or FT, including non-face to face business relationships and

transactions.

3.3. Third Parties And Introduced Business (R.9)

3.3.1. Description and Analysis

Legal Framework:

330. The POCA Regulations allow FIs to rely on introducers to perform CDD. In particular,

Reg. 4(3) covers CDD for customers (“applicant for business”) introduced to the FI by another

regulated institution (these are those entities covered under Schedule 1 of the POCA that

includes both FIs, DNFBPs and other specified businesses). Such reliance can also be placed

when an applicant for business is introduced by foreign regulated institution (Schedule 1 entities

that are subject to regulation at least equivalent to the SVG POCA Regulations.). In such cases,

the requirements to obtain satisfactory evidence of identity is met by receiving a written

assurance from the introducer to the effect that evidence of identity has been obtained and

recorded by the introducer. The SVG FIs are not explicitly required to obtain information (and

verification) of customers under these circumstances.

331. The above requirement to obtain a written assurance also applies in cases where the

applicant for business is another regulated institution, including a foreign regulated institution. In

such cases it is also acceptable to obtain a written assurance that identification information has

been obtained and recorded with respect to the underlying principal.

332. It is noted that “principal” is not a defined term under the POCA Regulations and is not

clear whether it extends to beneficial owners/beneficiaries.

Requirement to Immediately Obtain Certain CDD elements from Third Parties (c. 9.1):

333. There is no mandatory requirement to immediately obtain CDD information from

introducers.

Availability of Identification Data from Third Parties (c. 9.2):

334. Apart from the written assurance from the introducer that CDD information has been

obtained and recorded, there is no requirement for FIs to take steps to satisfy themselves that the

underlying documentation can and will be available from the introducers promptly on request.

There is a requirement under Reg. 4(4) that the FI obtains from a regulated institution (that is, a

103

SVG regulated entity as the POCA Regulations separately define and apply the terms “regulated

institutions” and “foreign regulated institutions”) a written assurance that information on

“identity” will be “exchanged” in the event that the International Finance Services Authority

(IFSA) or the FIU requests such information in connection with a criminal investigation.

335. It is also not clear whether the assurance under Reg. 4(4) is to be given by the introducer

regulated institution or the underlying applicant for business but it is assumed from the broader

context that the information will be exchanged between the FI and the introducer. Reg. 4(4) as

drafted imposes limitations. It would be useful to include in this Reg. a direct general obligation

on the FI to take steps to ensure that information will be made available promptly on request by

the FI, not only when required by IFSA and/or the FIU in connection with criminal

investigations. There may be other legitimate reasons for the FI to require such information

without delay, such as to conduct internal investigations and ongoing CDD, to respond to any

other supervisory request or purpose (e.g. court order), and to facilitate internal and external

audits and compliance checks. Such adequate steps required by c9.2 may include, for example,

ensuring that there are no legal secrecy, confidentiality, contractual or other restrictions to

provide information to the requesting FI whether domestically or on a cross-border basis. In

addition, as drafted and in light of the distinction made in the definitions and Reg. 4 between a

regulated institution and a foreign regulated institution, this requirement would also seem to

apply only to cases where the introducer is a SVG regulated institution and not a foreign

regulated institution, which would also be a limitation. (See para. 326 above.)

Regulation and Supervision of Third Party (c. 9.3) (applying R.23, 24 & 29, c. 9.3):

336. The POCA Regulations require that an introducer that is a foreign regulated institution be

subject to AML regulation that is at least equivalent to that of the SVG POCA Regulations

Regulated institutions, and their foreign equivalent, cover all of the entities listed in Schedule 1

of the POCA which includes e.g. car dealers, pool betting, lottery agents, and charities, which

fall outside the scope of FIs and DNFBPs covered under Recs. 23, 24 and 29. These non-

financial entities should not be considered regulated FIs for purposes of c. 9.3. SVG states that,

implicit in the process of developing its Guidance Notes (534 and 162), it has taken measures to

satisfy itself that the regulated institutions are subject to, regulated and supervised in accordance

with FATF Recs. (esp. Recs. 5, 10, 23, 24 and 29) . The Guidance Notes also provide guidance

on the discretion that may be applied in deciding who is acceptable as an eligible introducer.

Adequacy of Application of FATF Recommendations (c. 9.4):

337. See c. 9.3 above. There is a requirement that foreign regulated institutions (foreign

introducers) be subject to AML requirements similar to the SVGs POCA Regulations, but not

with respect to the adequacy of implementation of the FATF Recommendations. The GNs

provide further direction as to the countries that are acceptable for this purpose.

104

Ultimate Responsibility for CDD (c. 9.5):

338. There is no explicit statement that ultimate customer identification and verification

responsibility lies with the SVG FI in the case of introduced business. In addition, the lack of a

requirement to immediately obtain information on the underlying client under c. 9.1 above limits

the interpretation that an implicit responsibility exists.

Non-mandatory Guidance Notes:

339. See also Rec. 5 above on exemptions from customer identification verification. The GNs

expand on the exemptions from verification with respect to introduced business. GN 52 states

that where an FI exercises its discretion not to verify identity, it may do so under a reliable

introduction from an “eligible regulated institution”, that is, one of the seven categories of SVG

licensed FIs under GN 46 (banks, building societies, insurance companies, mutual funds, RAs,

and trustees) and their foreign equivalents. The latter are those from countries with AML

requirements at least equivalent to SVG’s listed in GN 162. In addition, the eligible introducers

list reflects those in Schedule 1 of the POCA which go beyond FIs and DNFBPs as discussed

above.

340. GNs 52 and 165 suggest using a written introduction letter in the form attached in

Appendix B of the GNs to be used for local introductions only. No sample letter is provided for

foreign introductions. The underlying key recommendations in the GNs is for: the eligible

introducing institutions to be from SVG or from one of the countries listed in GN 162, the AML

requirements of these countries to be at least equivalent to those of SVG, the introducer to be in

good standing, the introduction letter to provide an “assurance that evidence of identity would

have been taken and recorded in accordance with the set procedures of that institution and in

accordance with FATF recommendations, and for the introducer to have customer identification

and verification procedures that are as rigorous as those of the SVG FI. The introduction letter

requires that the name and country of the regulatory body of the introducer.

341. GN 53 states that the FIs should require a written assurance from the introducer that

identification data “should” be made available from the “third party” (presumably the

introducing institution) immediately upon request. However, it is noted that the recommended

introduction letter in Appendix B is not written in an explicit form that requires the introducer to

give firm assurance or undertaking, but simply provides statements such as: that the applicant for

business is an existing customer of the introducing party or that the latter has verified the

customers identity and her name and address, that the applicant for business is acting on his own

behalf or acting as a nominee, trustee of other fiduciary capacity for others and only in the case

of the latter that documentation has been obtained, held and “can” be produced on demand.

Nowhere in the introduction letter is there a requirement to indicate whether or not the

identification procedures are in accord with the SVG institution’s own procedures and the FATF

recommendations. The introduction letter is provided without any guarantee, responsibility or

liability on the part of the issuing entity or its officials.

105

342. GNs 54 and 55 provide further elaboration with respect to exemptions from verification

in cases of introduced business including from a FI’s overseas branch or member of the same

group to which the FI belongs. In such cases written confirmation from the parent or holding

company should be required as evidence of “the relationship”. This may not be sufficient for

purposes of obtaining the requisite identification information for purposes of Rec. 9, and it is

unclear as to whether the introducer needs to be one of the eligible categories of entities, and

inappropriate in cases where there is no parent or holding company.

Effectiveness of Implementation

For international business, over-reliance on introduced business that limit CDD by the service

provider institution, particularly with respect to underlying beneficiaries. See Rec. 5 above.

3.3.2. Recommendations and Comments

FIs should be required to:

 Immediately obtain CDD information from introducers.

 Ensure that documentation can and will be available promptly on request.

 Limit the eligibility of introducing institutions to those FIs and DNFBPs covered by the

FATF standard, consistent with the provisions given in the GNs.

 Explicitly state that ultimate responsibility for customer identification and verification

lies with the SVG FI and not the introducer. The exemptions allowed for by the POCA

Regulations and GNs are not consistent with this requirement.

3.3.3. Compliance with Recommendation 9

Rating Summary of factors underlying rating

R.9 NC

 No mandatory requirement to immediately obtain CDD information

from introducers.

 No requirement to ensure that documentation can and will be available

promptly on request, without limitation.

 The list of eligible introducers listed in the Regulations and the POCA

Schedule 1 goes beyond the FATF list of FIs and DNFBPs, and should

be limited as is intended in the Guidance Notes.

 Insufficient provisions that ultimate responsibility for customer

identification and verification lies with the SVG FI.

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3.4. Financial Institution Secrecy or Confidentiality (R.4)

3.4.1. Description and Analysis

Legal Framework:

343. SVG no longer has a general law on secrecy or confidentiality; the Confidential

Relationships Preservation (International Finance) Act, 1996 was repealed by the Exchange of

Information Act (2002). On December 15, 2008, a new Exchange of Information Act (Act. No

24 of 2008) (the”EIA”) was adopted which liberalized the previously criticized limitations on

access to information from regulators and other competent authorities under the 2002 EIA. While

the EIA has liberalized the confidentiality regime to allow for gateways of information, the acts

to which the EIA amendments apply still contain specific wording with respect to the limitations

of access to information that are contradictory to the import of the EIA.

344. It should be noted that for purposes of the EIA, the FIU is not a regulatory authority to

whom information may be shared pursuant to the EIA gateways. The Exchange of Information

Act 2002, Act No. 29 of 2002, 5/30/02) (the “2002 EIA”) repealed the Confidential

Relationships Preservation (International Finance) Act, 1996. This “Confidentiality Act 1996”

had broad reaching application to information no matter where located.

345. The ECCB, Eastern Caribbean Securities Regulatory Commission, IFSA and other

regional regulatory authorities are in the process of signing a multilateral MOU to facilitate open

information sharing among all regulatory bodies in the OECS (Organization of Eastern

Caribbean States).

346. The FIU regularly obtains information from regulators and reporting entities to facilitate

its functions. However, except with respect to reporting entities specifically listed in POCA, the

source or authority for the FIU to obtain other confidential information is not clear in the law.

Inhibition of Implementation of FATF Recommendations (c. 4.1):

347. The EIA provides Section 4(1) that if domestic regulatory authority is satisfied that

assistance should be provided to another domestic regulatory authority or foreign regulatory

authority it may request any person to furnish it with, inter alia, information relevant to the

inquiries to which the request relates. When information is supplied from a foreign regulatory

authority or obtained under the provisions of the EIA, the information shall not be disclosed by a

domestic regulatory authority or by any person who obtains the information directly or indirectly

from it, without the consent of the authority from whom the domestic regulatory authority

obtained the information. Prior to the EIA, the express consent was required from the person

about whom the information pertained or from whom the regulatory body obtained the

information, i.e., a regulated entity as set forth in the 2002 EIA.

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348. As noted above, although the Confidentiality Act 1996 was repealed, that repeal did not

also amend the financial sector specific acts that contained confidentiality provisions or

limitations to the information accessible to the supervisor. These include the Mutual Funds Act,

the RAs and Trustee Licensing Act and the International Banks Act. Because these provisions

have not been repealed or amended in the sector specific Acts, there could be some ambiguity

whether the repeal of the confidentiality Act wholly preempts these confidentiality provisions.

For instance, Section 15(4) of the RAs and Trustee licensing act does not permit the regulatory

authority (IFSA) to gain access to confidential or any other information regarding the trust and

company clients of the RA and trustee in the course of conducting its regulatory functions. Under

this section, the effect of the repeal of the Confidentiality Act 1996 is to only remove the

gateway for sharing obtaining the information – which itself was very limited one – thus keeping

in force the inhibitory language on access to information. Read on its face, this provision would

not authorize IFSA to compel access to such confidential or other information except by the

written consent of the company or of the beneficiaries or of each other trustee of a trust as the

case may be or an order of the Court made on the grounds that there are no reasonable means of

obtaining such document, information or thing. This limitation constitutes a significant

impediment on the regulator to access confidential customer information to ascertain if the

regulated entities are complying with e.g. the CDD obligations under the POCA and POCA

Regulations. This provision on limiting access should be removed and made consistent with the

provisions allowing full access to regulated entity information by the competent supervisor as

exists in other regulatory laws.

349. In addition, Section 19 (8) of the International Banks Act (and by reference Section 19(5)

which states access to information and examination of licensees shall be subject to any

confidentiality provision of the Act), limits access to the name or title of an account of a

customer or to any other confidential information about the customer that is in possession of a

bank, only to the Executive Director of IFSA. This varies from the other examination and

information access provisions under Section 19 of the Act which grants such authority to either

IFSA (“Authority”), the Executive Director, or any person or entity acting under or with either of

them. Therefore, for practical purposes, it would be difficult for the Executive Director to

effectively conduct examinations or access to information on an ongoing basis, without a

delegating power for its functions under Section 19(8) or under provisions similar to those where

such activities can be conducted by persons or entities acting under the Executive Director. The

authorities counter that the Executive Director would have introduced the Authority’s staff to the

banks and outlined how the examination would proceed, what information was required and this

would have clearly included accounts, etc. Further, they assert that where Executive Director was

in fact involved in the on-site examinations, that the Examiners and the Consultant(s) which the

Executive Director left behind at the bank to continue with the examination, would have been

acting upon and under the authority of the Executive Director. The authorities’ assertion is

understandable but not without risk in future examinations where the Executive Director is not a

participant. Therefore, the mission strongly recommends that access under Section 19(8) should

be extended to the Authority or to any of its authorized officers/examiners, agents, contractors or

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entities. It is noted that during the recent examinations of international (offshore) banks, IFSA

staff other than the Executive Director, conducted examinations and are reported to have access

to confidential customer account information. It is for consideration whether IFSA acted outside

the scope of the authority of the International Banks Act.

350. It is arguable whether the actual consequence of the repeal of the Confidentiality Act

1996 was to restore the common law definition (i.e., Tournier, case) of confidentiality for

purposes of applying Section 15(4) of the RAs and Trustee Licensing Act, as the authorities

assert. To the extent that similar confidentiality definitions are contained in the other financial

sector licensing laws, the same concerns would arise. Furthermore, it is not clear that the repeal

of the Confidentiality Act 1996 itself would cause the gateways established in the subsequent

Acts, i.e., the EIA 2002 and the EIA, to replace the former gateways.

351. In addition to the EIA, there are some sector specific gateways for information to

facilitate sharing of information. The Cooperatives Societies Act, Section 183(2) states “[i]n

addition to the powers set out in the order appointing him, an inspector may furnish to, or

exchange information or otherwise cooperate with, any public official in [SVG] or elsewhere

who is authorized to exercise investigatory powers concerning the society . . .and is

investigating, with respect to the society, an allegation of improper conduct . . . . ” This is a

useful provision because the Registrar of Cooperatives, unlike the other domestic financial sector

regulators is not a domestic regulatory authority for purposes of the EIA.

Effectiveness:

352. The continued application of confidentiality provisions in the RAs and Trustees Act, the

International Banks Act, and the limitations in other Acts to the scope of information available to

supervisors undermines effective implementation of the FATF recommendations. These

limitations could have knock on consequences for the effective transmittal and sharing of

information among competent authorities.

353. Further, the EIA – having liberalized the conditions upon which information may be

shared among regulators – has only been in effect for three months, so the capacity to test the

efficacy of the assigned gateways of information is limited.

3.4.2. Recommendations and Comments

 Each provision of confidentiality and limitation of access to information in sector

specific acts, in particular Section 15(4) of the RAs and Trustees Act, should be removed

from law.

 The AG should provide a legal opinion on the meaning of “confidential” information in

light of the repeal of the Confidentiality Act 1996, in particular the extent to which such

repeal restored the common law definitions of bank secrecy and confidentiality.

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3.4.3. Compliance with Recommendation 4

Rating Summary of factors underlying rating

R.4 PC

 Sectoral acts continue to have confidentiality and other limitations on

access to information for regulators.

 Ambiguity within the legal system as to the status of common law

definitions of bank secrecy and confidentiality.

3.5. Record keeping and wire transfer rules (R.10 & SR.VII)

3.5.1. Description and Analysis

Legal Framework:

354. There are a number of recordkeeping requirements for AML and CFT in the SVG

legislation, and some of these provisions are elaborated in the GNs. In addition, the various

financial and regulatory laws complement the recordkeeping requirements placed on FIs,

including access by the regulatory authorities. The recordkeeping requirements of the AML/CFT

legislation are discussed below.

POCA:

355. Section 46 of the POCA requires FIs and other regulated businesses (listed in Schedule 1)

to keep and retain records relating to financial activities in accordance with the Regulations

issued under Section 67 of the POCA by the Minister of Finance. Section 48(4(g) also states that

the regulations may provide, inter alia, for the keeping of records.

POCA Regulations:

356. Reg. 5 provides the main recordkeeping requirements for FIs. It states that “if” a FI

obtains evidence of identity in accordance with the POCA Regulations, it shall keep (i) a copy of

such evidence “or” a record indicating the nature of such evidence, and (ii) records or copies of

records of details of its business, as may be necessary to assist in an investigation of ML. The

requirement to keep records of “its business” is very broad, however, the “if” condition is

presumably to account for introduced business where the FI would not obtain and possess such

information except on request as provided for under Reg. 4. Such records or copies shall be kept

in a legible form that is retrievable within a reasonable period of time. Th1e minimum retention

period is seven years.

357. The UN (Antiterrorism Measures) Act does not contain applicable similar

recordkeeping provisions.

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Drug Trafficking Offenses Act:

358. Section 30 of this Act also requires FIs to retain for a minimum of seven years, in

original form, financial transaction documents including but not limited to those that relate to

account opening and closing, account operations, opening and use of safety deposit boxes,

telegraphic or electronic funds transfers, transmission of cross-border funds, and loans. FIs shall

also keep records of documents “that relates to a financial transaction carried out by the

institution in its capacity as a financial institution that is given to the institution by or on behalf

of the person, whether or not the document is signed by or on behalf of the person.” It is not clear

what this refers to but seems that it may include instructions from clients. Section 30 also defines

the start of the minimum retention period, e.g. following the closure of an account. The record

keeping requirements do not apply to a single deposit, credit, withdrawal, debit or transfer of

money under EC$5,000, or such larger threshold as may be prescribed.

359. Records may be kept under the requirements of the drug trafficking law in microfilm or

other retrievable form. Where a FI is required by law to release the original of the required

records, it shall retain a copy thereof until the minimum period expires or the original is returned.

A register of such released documents shall also be maintained. For purposes of the drug

trafficking law, a FI is a domestic bank, any financial institution of whatever kind licensed,

registered or otherwise regulated in SVG, and a trust company.

Note:

360. All of the main criteria of Rec. 10 are required to be in law or regulations as indicated by

(*) below.

Record-Keeping & Reconstruction of Transaction Records (c. 10.1* & 10.1.1):

361. Reg. 5 (1) requires that (1) “If” a FI obtains evidence of a person’s identity in accordance

with the POCA Regulations, it shall keep such records for the minimum prescribed period of

seven years. Such records shall include evidence of identity, the nature of the evidence and

information that would enable a copy to be obtained. Reg. 5(2) requires retention of records or

copies thereof for the seven-year period containing details relating to its business as may be

necessary to assist an investigation into suspected ML.

362. Reg. 5(5) also states that what constitutes records to assist in such investigation shall be

determined in accordance with guidance notes appended to the regulations. No such guidance

notes have been appended. Consequently, there is no specific provision that would require FIs to

ensure that records are sufficient to reconstruct individual transactions that may provide evidence

for prosecutions of criminal activity.

363. Reg. 5 (4)(c) requires FIs to keep records of transactions for a minimum of seven years

after the day on which the transaction “recorded” takes place. This requirement is broad (see

para. 354 above) and does not distinguish between domestic and international transactions, and

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whether or not it applies to transactions related to an existing or terminated account or

relationship. Rec. 5(4) also requires that where the FIU has notified the regulated institution in

writing that particular records are or may be relevant to an investigation that is being carried out,

records shall be retained pending the outcome of the investigation. The requirement to keep

records on request by the FIU only in connection with ongoing investigations is a good one and

generally applies when there is a requirement to hold records longer than the basic minimum

period. To emphasize this point, the Reg. could be clarified to also indicate that under these

circumstances, the records should be kept for a period of not less than 7 years even where such

investigations conclude before the minimum period expires.

364. In addition to the above, the financial laws contain various recordkeeping requirements

that complement the above. In particular, the Money Services Business (MSB) Act (Section 9(4)

state that without prejudice to the recordkeeping requirements under Section 46 of the POCA

(and by extension to the POCA Regulations.), MSBs shall maintain (a) a record of each

transaction and outstanding transaction for at least seven years after the date the transaction is

complete; (b) bank statements for at least seven years after the date the transaction is complete;

and (c) bank reconciliation records for at least seven years after the date of creation.

Record-Keeping for Identification Data, Files and Correspondence (c. 10.2*):

365. Reg. 5(1) requires FIs to keep records for seven years a copy of evidence of customer

identity or a record indicating the nature of that evidence including information as would allow a

copy to be obtained. Reg. 5(4) also states that for purposes of the minimum retention period,

such period will be seven years after an account has been closed or a transaction takes place.

Unlike the explicit requirement to keep records of accounts, transactions and identification, there

is no specific requirement to retain records of business correspondence. This may be captured by

the general requirement to retain copies or records of “details relating to its business” under Reg.

5(2).

Availability of Records to Competent Authorities in a Timely Manner (c. 10.3*):

366. Reg. 5(3) requires FIs to keep records or copies in a form to allow retrieval in legible

form within a reasonable period of time. This would provide the basis for making such records

available to competent authorities in a timely manner, especially when read in connection with

the requirement under Reg. 5(2) with respect to assisting with an investigation into money

laundering.

Mutual Funds:

367. Section 13 of the Mutual Funds Act allows public (retail) funds to keep such accounting

records and financial statements available for examination by the Registrar or any person

authorized by IFSA at (i) its place of business or registered office in the SVG; or (ii) such other

place as its officers may see fit, provided that copies of such records and statements or such other

documents or information as the registrar may consider adequate are kept at its place of business

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or registered office in SVG. The Act is silent about the maintenance and location of records with

respect to books, investor accounts, subscriptions, redemptions, etc. with respect to public funds,

private and accredited funds. In practice, customer related records are generally kept by fund

administrators and managers in other countries from which they operate, and at least in one

important case in a country with which IFSA has no formal supervisory cooperation

arrangements. The provisions of the Exchange of Information Act may be invoked to obtain

information from foreign regulatory and other authorities but it may not be practical for the IFSA

to access such records for purposes of ongoing supervision of mutual funds, managers and

administrators. IFSA maintains that it can and has obtained such records on request.

368. The International Insurance Act also contains broadly similar provisions that would

allow insurance companies, brokers and managers to maintain records abroad.

Non-mandatory Guidance Notes:

369. GNs 102 to 110 make provisions for recordkeeping by FIs which should “facilitate the

investigation of any audit trail” concerning transactions with customers. To achieve this, the GNs

recommend keeping, inter alia, records of account opening, identification verification, customer

instructions, for the seven year minimum period. FIs should also keep copies of account ledger

records including records that support entries in such ledgers such a credit and debit slips.

370. Where the FIU has initiated an investigation into ML, it may request FIs to keep records

open until further notice, notwithstanding the prescribed seven-year period. GN 103 states that

even if the FIU does not make a request and where an FI knows of an ongoing investigation, it

should not destroy records without the prior approval of the FIU even though the prescribed

period has elapsed. It is unclear how this would apply in practice as the likelihood of an FI

becoming aware of an investigation into ML would be rare.

371. GNs 104-108. Records to be retained should include, inter alia, details of identification

verification, transaction details including of securities and investments, and electronic transfers

(does not specify full originator information e.g. account number and address but SVG believes

that “transaction details” would cover this.) FIs should keep records in readily retrievable form

and be able to access them without undue delay in original, “microform” or electronic data. The

authorities state that electronic data would be admissible as evidence for prosecutions for

purposes of c. 10.1.1 subject to the requirements of the Evidence Act.

372. The GNs further state that records held by third parties are not regarded as being in a

readily retrievable form unless the FI is reasonably satisfied that the third party is itself an

institution which is able and “willing” to keep such records and disclose them to it when

required. This would be insufficient for purposes of c. 9.2 where a more explicit requirement to

satisfy itself that the relevant records have been obtained and retained. FIs should also maintain a

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Effectiveness of Implementation

373. Recordkeeping requirements seem to be generally met in the domestic financial sectors

largely as part of commercial business practices, which also cover AML/CFT requirements.

374. With respect to the international/offshore sector, however, the absence of records in SVG

(e.g. for the mutual fund and insurance sectors records are generally kept in other countries but

legal access to the IFSA is available and has been done in a few cases) can limit the ability of

supervise to effectively monitor for compliance on an regular basis.

Obtain Originator Information for Wire Transfers (applying c. 5.2 & 5.3 in R.5, c. VII.1):

375. No specific regulations with respect to wire transfers have been issued. The standard

CDD and record keeping requirements under POCA, POCA Regulations, and the Guidance

Notes that are analyzed above apply equally to wire transfers as well as to the other business

activities of FIs. Under Section 4(2)(b) of the POCA Regulations the threshold for identification

of a one-off transaction is EC$10,000, equivalent to US$3,750. c. VII.1 sets the threshold at

US$1,000. The standard CDD requirements have no provisions dealing with originators’ account

number or unique reference number.

Inclusion of Originator Information in Cross-Border Wire Transfers (c. VII.2):

376. No specific regulations with respect to wire transfers have been issued by any of the

regulators responsible for FIs in St. Vincent. The standard CDD and record keeping requirements

under POCA, POCA Regulations, and the Guidance Notes that are analyzed above apply equally

to wire transfers as well as to the other business activities of FIs. Under Section 4(2)(b) of the

POCA Regulations the threshold for identification of a one-off transaction is EC$10,000,

equivalent to US$3,750. The standard CDD requirements have no provisions dealing with the

contents of international wire transfer messages or payment orders.

Inclusion of Originator Information in Domestic Wire Transfers (c. VII.3):

377. No specific regulations with respect to wire transfers have been issued by any of the

regulators responsible for FIs in St. Vincent. The standard CDD and record keeping requirements

under POCA, POCA Regulations, and the Guidance Notes that are analyzed above apply equally

to wire transfers as well as to the other business activities of FIs. Under Section 4(2)(b) of the

POCA Regulations the threshold for identification of a one-off transaction is EC$10,000,

equivalent to US$3,750. The standard CDD requirements have no provisions dealing with the

contents of domestic wire transfer messages or payment orders.

Maintenance of Originator Information (c.VII.4):

378. No specific regulations with respect to wire transfers have been issued by any of the

regulators responsible for FIs in St. Vincent. The standard CDD and record keeping requirements

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under POCA, POCA Regulations, and the Guidance Notes that are analyzed above apply equally

to wire transfers as well as to the other business activities of FIs. Under Section 4(2)(b) of the

POCA Regulations the threshold for identification of a one-off transaction is EC$10,000,

equivalent to US$3,750. The standard CDD requirements have no provisions dealing with the

information that should be accompany transfers throughout the payment chain, nor with respect

to record keeping requirements for receiving intermediaries of such information.

Risk Based Procedures for Transfers Not Accompanied by Originator Information (c.

VII.5):

379. No specific regulations with respect to wire transfers have been issued by any of the

regulators responsible for FIs in St. Vincent. The standard CDD and record keeping requirements

under POCA, POCA Regulations, and the Guidance Notes that are analyzed above apply equally

to wire transfers as well as to the other business activities of FIs. Under Section 4(2)(b) of the

POCA Regulations the threshold for identification of a one-off transaction is EC$10,000,

equivalent to US$3,750. The standard CDD requirements have no provisions dealing with risk-

based procedures for handling wire transfers that are not accompanied by complete originator

information.

Monitoring of Implementation (c. VII.6):

380. No specific regulations with respect to wire transfers have been issued by any of the

regulators responsible for FIs in St. Vincent. The standard CDD and record keeping requirements

under POCA, POCA Regulations, and the Guidance Notes that are analyzed above apply equally

to wire transfers as well as to the other business activities of FIs. The standard CDD and record

keeping requirements do not have the detailed provisions for wire transfers that are called for in

SR.VII. Nor do the compliance monitoring systems of the various FI regulators cover the

detailed provisions for wire transfers contemplated in SR.VII.

Application of Sanctions (c. VII.7: applying c. 17.1 – 17.4):

381. No specific regulations with respect to wire transfers have been issued by any of the

regulators responsible for FIs in St. Vincent. The standard CDD and record keeping requirements

under POCA, POCA Regulations, and the Guidance Notes that are analyzed above apply equally

to wire transfers as well as to the other business activities of FIs. The sanctioning powers of the

financial regulators with respect to CDD and record keeping for wire transfers are limited to the

requirements imposed under POCA and the POCA Regulations and other St. Vincent regulations

and do not extend to the specific elements set out in SR.VII.

Additional elements: elimination of thresholds (c. VII.8 and c. VII.9) (c. VII.8 and c. VII.9):

382. St. Vincent does not require that all incoming and outgoing cross-border wire transfers

below a US$1,000 thresholds should contain full and accurate originator information.

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Effectiveness of implementation

383. Notwithstanding the absence of specific wire transfer requirements, operating practices of

most St. Vincent FIs with respect to wire transfers appear to follow some of the FATF standards

for international transfers. Banks handling wire transfers state that the Swift systems they use

require the inputting of complete originator information or the transactions will not go through;

and that these systems retain the originator information across the payment chain. The accuracy

of such information is reliant on the FIs effectively implementing their POCA CDD obligations,

and identification below a threshold of $3,750 is not assured. General record retention

requirements are for 7 years, although the detail expected under the FATF wire transfer

standards will not be achieved. Risks based procedures are not emphasized in St. Vincent

financial regulation and no risk based procedures specifically for dealing with wire transfers are

likely to be in place except in cases where the local bank is a subsidiary of a large international

bank.

384. Similarly, operating practices of money transmitters with respect to wire transfers address

several elements of the FATF standard, even if not specifically required under St. Vincent laws

and regulations. Money transmitters are all agents or sub-agents for regional or international

money service companies and they use these companies’ proprietary electronic systems for

transmitting payment instructions. As under the Swift system, complete originator information is

required in order for the system to accept payment instructions, although it was unclear whether

this information routinely included addresses. A money transfer control or reference number is

included, which identifies the specific transaction. Identification is required for all transactions.

One money transmitter stated that its internal procedures set a threshold of US1,000, at which

level additional verification details were required and at which level more complete records were

required to be maintained. Another service provider stated that its threshold was EC4,000,

slightly more than US$1,000. In the absence of sufficient originator information, transactions are

not accepted. Licensed money service providers have not as yet been examined by their

supervisor for their compliance with their CDD, record keeping, and internal control

requirements established under POCA, the POCA Regulations and the Money Service Business

Act.

3.5.2. Recommendations and Comments

R.10

 Clarify in the regulations the provisions to keep records longer than the minimum period

when required by the FIU, consistent with the GNs.

 Explicitly require FIs to retain business correspondence.

 Review for and remove potentially conflicting recordkeeping requirements between the

POCA/POCA Regulations and the DTOA and with some of the provisions in Guidance

Notes 102-110.

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 Review recordkeeping arrangements by some FIs that operate and keep records outside of SVG to

nsure adequate compliance supervision and efficient access by competent authorities.

SR. VII

 Binding regulations should be adopted requiring all wire transfer service providers,

including banks, money transmitters, and other FIs, to adhere to the wire transfer

recommendations of FATF SR.VII.

 All FIs subject to wire transfer requirements should be monitored for compliance by a

supervisor with the authority and capacity to enforce compliance.

3.5.3. Compliance with Recommendation 10 and Special Recommendation VII

Ratin

Summary of factors underlying rating

R.10 LC

 Need for explicit provisions in the POCA Regulations to retain

business correspondence. Recordkeeping by some FIs outside of SVG

(non-banks) may limit capacity for compliance supervision on an

ongoing basis.

SR.VII NC

 No wire transfer requirements.

 Partial implementation of SR.VII standards by banks and money

transmitters.

3.6. Monitoring of Transactions and Relationships (R.11 & 21)

3.6.1. Description and Analysis

Legal Framework:

385. FIs and persons engaged in relevant financial activities, as set forth in Schedules 1 and 2

of POCA, respectively (hereinafter “reporting entities”) are required under POCA Section 46.2

to verify accounts on a continuous basis (see also POCA REGULATIONS Section 6(2) and

Section7(a)). (The GN elaborate on circumstances where monitoring of transactions is required

and where reliance and third party introductions is allowed.

Special Attention to Complex, Unusual Large Transactions (c. 11.1):

386. POCA Section46(2) requires reporting entities to pay special attention to all complex,

unusual or large transactions, whether completed or not, and to all unusual patterns of

transactions, and to which insignificant or periodic patterns of transactions, which have no

apparent economic or lawful purpose. However, the GNs, which are not enforceable, exempt

specific transactions from CDD requirements, in particular in GN Sections46-50 (related to

exempt FIs) and Sections 52-53 (related to reliable instruction from regulated institutions or

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professional intermediaries). Accordingly, a subset of exempt transactions would not subject to

monitoring on an ongoing basis. Thus, there is an insufficient scope of monitoring for

consistency with the customer’s business or personal profile because the requisite such

background information would not be obtained or scrutinized.

Examination of Complex & Unusual Transactions (c. 11.2):

387. There is no specific legal requirement for reporting entities to examine as far as possible

the background and purpose of such transaction or to set forth their findings in writing. To some

extent, Section 6(2) of the POCA Regulations, which requires regulated institutions to at all time

monitor a business relationship for consistency with the stated account purposes and business

and the identified potential account activity, would address this criterion; in any case this is

limited to regulated institutions and not applicable to all reporting entities. As such there is

insufficient information for authorities or auditors of to assess the scope of the reporting entities

examination of complex or unusual transactions. In addition, assessors could not establish with

any certainty whether supervisors or external auditors have in fact reviewed the level of

compliance of reporting entities in their examinations into the background and purpose of

complex and unusual transactions or whether such examinations are documented.

Record-Keeping of Findings of Examination (c. 11.3):

388. Neither POCA, the POCA Regulations nor the GN require a reporting entity to keep

records of their analysis (background and purpose) with respect to complex and unusual

transactions, such information would not be available for competent authorities and their

auditors. Only records of those complex and unusual transactions that result in the filing of a

SAR are required to be maintained for a period of 7 years and hence available to competent

authorities but in practice are not made available to external auditors.

Special Attention to Countries Not Sufficiently Applying FATF Recommendations (c. 21.1

& 21.1.1):

389. FIs are not required to pay special attention to transactions and relationships with

persons, including legal persons and other FIs, from or in countries that do not or insufficiently

apply the FATF Recommendations. In addition, there is no formal mechanism or measures to

ensure that FIs are advised of concerns about the weaknesses in the AML/CFT systems of other

countries. To date no advisories have been issued to FIs in SVG.

Examinations of Transactions with no Apparent Economic or Visible Lawful Purpose from

Countries Not Sufficiently Applying FATF Recommendations (c. 21.2):

390. There is a general requirement under Section 46 of the POCA that requires FIs to pay

special attention to all complex, unusual or large transactions, whether completed or not, to all

unusual patterns of transactions, and to insignificant but periodic patterns of transactions, which

have no apparent economic or lawful purpose. This requirement would include transactions with

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persons in countries that do not or insufficiently apply the FATF Recommendations. However,

Section 46 should be broadened to include all transactions with such countries that do not have

an apparent lawful or economic purpose, not only those transactions that are complex, large,

unusual etc. (See also Recs. 11 and 13.)

Ability to Apply Counter Measures with Regard to Countries Not Sufficiently Applying

FATF Recommendations (c. 21.3):

391. There are no provisions that enable SVG to apply counter-measures against countries that

do not or insufficiently apply the FATF Recommendations and in practice no such measures

have been applied.

Non-mandatory Guidance Notes:

392. GN 17 contains provisions similar to Section 46 of the POCA except that they

recommend that FIs desist from entering into business relationships or significant transactions

unless FIs have fully implemented their AML regimes. In addition, GN 162 provides a long list

of countries that are considered to have an AML regime at least equivalent to that of SVG. There

is a possibility that not all countries on this list apply or sufficiently apply the FATF

Recommendations.

Effectiveness of Implementation

Monitoring of Transactions (R.11):

393. Reporting entities display wide discrepancies and unevenness in their monitoring of

transactions. This is due to a variety of factors:

394. First, there is a discrepancy among FIs that appears to apply the legal requirement for

monitoring transactions, which, while embodied in the law, is not supplemented with a specific

requirement to examine the background and purpose of complex or unusual large or unusual

patterns of transactions. Many of the reporting entities are conducting one-off transactions, in

particular the money remitters. As such, the depth of the background and purpose information

these entities obtain is shallow. As stated above, the only legal requirement to examine the

purpose of an unusual transaction applies to regulated institutions that enter into ongoing

relationships with a customer, under the POCA Regulations. The result is that nearly all large

transactions or transactions that are just below the EC $10,000 threshold, i.e., for $9,900 for

enhanced verification are reported by money remitters to the FIU in a SAR, without substantial

analysis.

395. (See also, Rec. 16 DNFBP STR reporting). Second, while not relevant to the rating of

Rec. 13, the inconsistency in SAR filing evidences some weakness in the guidance provided on

SAR filing; in particular there is limited reporting by offshore banks and an essential failure to

comply by a number of reporting entities, in particular DNFBPs that are not otherwise subject to

119

supervisory body oversight such as lawyers. As inferred from the SAR filing outputs of DNFBPs

(discussed in 3.7 and 4.2), certain DNFBPs are not instituting procedures for monitoring

transactions nor applying the legal requirements to their clients. These DNFBPs essentially

balance the cost and potential loss of business arising from the monitoring requirements (among

other requirements) against the likelihood of sanctions under POCA being enforced. Because all

POCA sanctions are criminal sanctions requiring the involvement at least nominally of the DPP,

charging in court and the high criminal threshold for prosecution, in particular lawyers, calculate

the odds of prosecution as low. Because there are no direct POCA and UNATMA administrative

sanctions and no regulatory sanctions apply, monitoring of transactions is virtually nil.

Compounding this problem in the case of lawyers is the wide interpretation of the exemption in

POCA relating to activities relating to legally privileged communications.

R.21:

396. FIs do not take account of business that originates from countries with weak AML/CFT

regimes. The assessors believe that reliance on the list of countries in the GNs that are

considered to have legal requirements at least equivalent to SVG’s is too liberal.

3.6.2. Recommendations and Comments

R.11

 The POCA Regulations should be amended to require explicitly that reporting entities be

required to examine as far as possible the background and purpose of such transactions

and to set forth their findings in writing.

 The POCA Regulations should be amended to require that the written findings of

reporting entities on their examination be subject to the POCA record keeping

requirements.

 POCA should be amended to provide for direct administrative sanctions for reporting

parties that fail to adhere to the requirements for monitoring transactions, including

failure to implement procedures to monitor, prepare written findings and maintaining

records on such monitoring.

R.21

 Require FIs to pay special attention to transactions and relationships with persons from

countries that do not or insufficiently apply the FATF Recommendations.

 Implement a formal mechanism to advise FIs of AML/CFT concerns with other countries

and where necessary advise FIs of such concerns.

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 Introduce provisions and procedures that would require SVG to apply counter-measures

against countries that do not or insufficiently apply the FATF Recommendations.

3.6.3. Compliance with Recommendations 11 & 21

Rating Summary of factors underlying rating

R.11 PC

 No requirement to examine as far as possible the background and

purpose of complex, unusual or unusual patterns of transactions as far

as possible and to establish such findings in writing.

 No requirement to keep records of findings of the examination of the

background and purpose of complex, unusual, or unusual patterns of

transactions, to be available to help competent authorities and auditors.

 In implementing unusual transaction detection and analysis, the

reporting entities are focuses almost exclusively on cash transactions.

R.21 NC

 No requirement to pay special attention to transactions and

relationships with persons from countries that do not or insufficiently

apply the FATF Recommendations.

 No formal mechanism to advise FIs of AML/CFT concerns with other

countries and no such advisories have been issued to date.

 No provisions to apply counter-measures against countries that do not

or insufficiently apply the FATF Recommendations and no such

measures have been applied.

3.7. STRs and Other Reporting (R.13-14, 19, 25 & SR.IV)

3.7.1. Description and Analysis

Legal Framework:

397. The legal requirements to make SARs are contained in: (1) POCA Section 46(3) and (2)

and in UNATMA Section 10A. Both obligations are direct, mandatory obligations. These

statutory obligations are complemented by the POCA Regulations, which define SARs, and the

non-mandatory GNs which elaborate on detection of suspicious transactions and include the

SAR form and instructions. In addition, the FIU Act establishes the FIU to which all SARs are

filed (as described in detail above, in Section 2.5.1).

The description of the system for reporting suspicious transactions in Sec. 3.7 is integrally linked with

the description of the FIU in Sec. 2.5 and the two texts need not be duplicative. Ideally, the topic should

be comprehensively described and analyzed in one of the two sections, and referenced or summarized in

the other.

121

Requirement to Make STRs on ML and TF to FIU (c. 13.1 & IV.1):

398. Under POCA Section 46(2) and UNATMA Section 10A, FIs and persons engaged in a

relevant business activity are required to file SARs. The combined requirement under both

statutes mandates that a person or financial institution to file a SAR upon suspicion that a

transaction or financial activity could constitute or be related to money laundering, the financing

of a terrorist act or the proceeds of criminal conduct. SARs are required to be filed as soon a

reasonably practicable but in no case, more than 14 days from the date the financial activity was

deemed to be suspicious as relating to ML, the proceeds of crime or the financing of a terrorist

act. The authorities confirmed that Section 46(2) of POCA, which authorizes filing the SAR

upon the reporting party’s drawing a conclusion of suspicion that the transaction is related to

money laundering or the proceeds of criminal conduct, does not unduly delay filings of SARs.

Because SVG takes an “all-crimes” approach to predicate offenses for ML, activities related to

the proceeds of all such predicate offenses would be captured. The standard for SAR filings in

SVG is a subjective standard of a “suspicion” rather than an objective test of reasonable basis to

suspect. The authorities inform that in practice reporting entities frequently file based on their

conclusions that there are reasonable grounds to suspect ML or proceeds of crime exists.

399. However, under Section 46(3) of POCA, there is a two-part requirement for SAR filings.

First, a determination must be made under Section 46(2) that the transaction that fall under one

of the following three categories: “Complex, unusual or large transactions, whether completed or

not;” “unusual patterns of transactions;” or “insignificant but periodic patterns of transactions,”

that, in each case, “have no apparent economic or lawful purpose.” This is partly a R.11

requirement and not an R.13 reporting obligation.. Second, once the determination is made under

Section 46(2) that a transaction falls under one of these three categories, a second determination

is required under Section. 46(3) that the transactions as described under Section 46(2) “could

constitute or be related to ML or the proceeds of criminal conduct.” Consequently, the

requirement to report for purposes of R.13 is limited to those described under Section 46(2), that

is, those that are complex, unusual or large, etc. This formulation is not sufficient for purposes of

R.13.

STRs Related to Terrorism and its Financing (c. 13.2):

400. UNATMA Section 10A requires FIs and persons engaged in relevant financial activities

to file SARs directly to the FIU for suspicions constituting or that may be related to the financing

of terrorist acts. The wording of the direct filing requirement in UNATMA is narrow. However,

there is no legal requirement to file a SAR for suspicions of financial activity constituting or

being related to financing of terrorist organizations or financing of an individual terrorist in the

absence of an identified terrorist act.

No Reporting Threshold for STRs (c. 13.3):

401. Neither POCA nor UNATMA requirements for filing of SARs impose a reporting

threshold for SAR filing. POCA Section 46 requires filing of SARs when reporting entities

122

detect complex, unusual or large transactions, whether completed or not, upon suspicion that

such transaction could be related to ML or the proceeds of crime, thus capturing attempted

transactions. However, c.13.3 requires that all transactions be reported, not just those that fall

under the three-part determination set forth in Section 46(3) of POCA, as described in more

detail in the discussion of c.13.1 above.

Making of ML and TF STRs Regardless of Possible Involvement of Tax Matters (c. 13.4, c.

IV.2):

402. Neither the POCA nor UNATMA contain any limitation on reporting in connection with

tax matters.

Additional Element - Reporting of All Criminal Acts (c. 13.5):

403. POCA’s SAR filing requirements cover the proceeds of all criminal acts that constitute

predicate offenses for ML. Because SVG has taken an all crimes approach to criminalizing ML,

all crimes are predicate offenses for ML and therefore, would be subject to SAR filing if the

reporting entity has a suspicion that such an offense would constitute or be related to the

proceeds of crime.

Protection for Making STRs (c. 14.1):

404. POCA Section 46(5) provides the legal protection for persons filing SARs related to

transactions that could constitute or be related to ML or the proceeds of criminal conduct. When

a SAR is filed in good faith, the FIs or persons engaged in relevant business activities, and their

employees, staff, directors, owners or other representatives as authorized by law, are exempted

from criminal, civil, or administrative liability as the case may be for complying with the SAR

filing requirement in Section 46(3) POCA. This protection applies regardless of the result of the

communication; as applied within SVG, this language has the effect of protecting a SAR filer for

disclosures in SARs to the FIU for attempted transactions. UNATMA Section 10A provides a

separate legal protection for persons filing SARs for transactions or financial activity that could

constitute or be related to the commission of a terrorist act. Specifically, a person or financial

institution who in good faith files a SAR on an activity suspected to be related to the financing of

a terrorist act, and their employees, staff, directors, owners and other representatives, are

exempted from criminal, civil or administrative liability arising out of contract or by any

legislative, regulatory or administrative provision.

405. In addition to the direct protection for filing a SAR in Section 46(2)(5) and in UNATMA

Section 10A, POCA Section 44 provides the legal protection for persons reporting suspicions of

ML. This protects a person who discloses in good faith to a police officer his suspicion or belief

that another person is engaged in ML, or any information or other matter on which that suspicion

or belief is based. Such disclosure shall not be treated as a breach of any restriction upon the

disclosure of information imposed by statute or otherwise and shall not give rise to any criminal,

civil or administrative liability. One advantage of this particular provision – while not completely

123

coextensive with the tipping-off provision in Section 45, is that it protects a person who is not

required to file a SAR, i.e., a voluntary filer for reporting to a police officer. There is a one

important defect in this additional provision because it includes a defense to the criminal offense

contained in this Section. if the person had “a reasonable excuse for not disclosing the

information or other matter in question.” This defense is too broad for effective implementation

of the legal protection.

Tipping Off Offenses:

406. POCA Section 45 contains the criminal offense for tipping off for ML and criminal

conduct that generate proceeds.

Prohibition Against Tipping-Off (c. 14.2):

407. Under POCA Section 45, a person commits an offense if discloses to any other person

that he knows, suspects or has reasonable grounds to suspect that a police officer is acting, or is

proposing to act, in connection with an investigation into money laundering or the proceeds of

criminal conduct, and the disclosure is of information or any other matter which is likely to

prejudice the investigation or proposed investigation. In addition, the same section provides that

it is a criminal offense for a person to disclose to any other person, if he knows, suspects or has

reasonable grounds to suspect, that a disclosure has been made to a police officer or to an

appropriate person related to an offense under POCA.

408. There are three significant limitations in the tipping off offenses.

 First, the fact of filing a SAR itself is not explicitly covered by the offense of tipping off

in Section 45 of the Act. That is, the fact of filing the SAR would not be an offense

unless it is established that the disclosure relates to a police officer acting or proposing to

act in connection with an investigation and the disclosed information is likely to

prejudice the investigation or proposed investigation.

 Second, the defense provided in Section 45(4) to a person charged with a tipping-off

offense under this section renders the offense ineffective. It provides that it is a defense

for the person charged “to prove that he did not know that the disclosure was likely to be

prejudicial in the way there mentioned.”

 Third, there is no direct offense for tipping off with respect to the FT. Although POCA

has been amended to make the FT offenses in UNATMA (Sections 3-6) predicate

offenses for ML offenses under POCA, for FT offenses that do not generate proceeds of

criminal conduct, such offenses would not be captured for the purposes of POCA. As

such, the prohibition on tipping off is not sufficiently broad to meet the requirements of

the criterion.

124

Additional Element—Confidentiality of Reporting Staff (c. 14.3):

409. The approach is to rely on the provisions of Section 7(1) of the FIU Act, which provides

that a person who obtains in any form as a result of his connection with the FIU shall not

disclose that information to any person except insofar as it is required or permitted in the FIU

Act or other law.

Consideration of Reporting of Currency Transactions Above a Threshold (c. 19.1):

410. The FIU has proposed to the NAMLC the establishment of a currency transaction

threshold. The expectation is that the reporting volume would not be significant and the FIU

would receive these reports. The threshold currently under contemplation is EC $10,000. This

threshold may be too high for the level of cash transactions conducted within SVG, which while

numerous are normally well-below the threshold.

Additional Element—Computerized Database for Currency Transactions Above a

Threshold and Access by Competent Authorities (c. 19.2):

411. Not applicable.

Additional Element—Proper Use of Reports of Currency Transactions Above a Threshold

(c. 19.3):

412. Not applicable.

413. Feedback and Guidelines for FIs with respect to STR and other reporting (c. 25.2) [Note:

guidelines with respect other aspects of compliance are analyzed in Section 3.10]:

414. Feedback to FIs with respect to STR and other reporting (c. 25.2):

Effectiveness of Implementation:

SAR Reporting:

415. The following table shows the level of SAR reporting by entities covered by the POCA,

the POCA Regulations and the UNATMA.

125

Table 17: SARS filed with the FIU during 2005 through 2008

416. The table above shows a rather uneven but generally increasing pattern of reporting with

a large concentration of SARs filed by banks and money remittance businesses, particularly in

the last two years. No SARs have been filed by the systemically large building and loan society.

Particularly worrying also is the absence of SARs from the international (offshore) mutual funds

and insurance sectors both of which have significant numbers. Banks, credit unions and money

remitters are on one end of the spectrum, filing the vast majority of SARs since 2004. (On the

other end, certain DNFBPs – in particular those that are not subject to regulatory oversight – are

not reporting altogether.)

417. This level of under-reporting by some sectors is worrisome and appears to be due to

combination of deficiencies in training of FIs, lack of effective compliance oversight,

enforcement and sanctions. It does not appear to be a matter of outreach by the FIU and

regulators as the sole obligation to report and to provide training is on the FIs themselves and

their management. Addressing these deficiencies should be a priority. In addition, administrative

sanctions and assigning a competent authority like the FIU as the default supervisor for

otherwise not supervised entities would be an effective step in increasing such compliance.

Table 18: ANALYSIS

IFSA reporting SARs as regulator of offshore banks.

Year

Domestic

Banks

Offshore

Banks

Money

Remitters

Insurance

companies

Credit

Unions

IFSA

Trust

Services

Customs Annual

Total

2004 38 5 41 – 3 –

(87 + 2 other)

2005

–

– –

108

2006

–

– –

114

2007

119

–

– –

190

2008

121

383

–

570

(556+14 other)

Total

332

616

1,071

(1,055+16)

Year

Received Analyzed Under

analysis

Disseminated Result in

Invest

Result in

Prosecution

Result in

Conviction

Closed

2005

108

2006

118

107

126

Quality of SAR Reporting:

418. Even with respect to the FIs that are regularly filing, there are quality issues that need to

be addressed. The authorities distinguish two types of SARs, those filed by FIs such as banks and

credit unions and those that are filed by money remitters. The former are generally of a higher

quality, shows greater analysis of underlying factors, including background and purposes of the

activity. The SARs from money remitters are by very nature of the activity is less likely to elicit

substantial analysis by themselves. The FIU reports that about 50 percent of SARs filed require

the FIU to return for additional information. Nevertheless, the FIU reports that when combined

with other available information, the information contained in the SARs is very useful and

actionable. The FIU finds both types of SARs are useful. Nevertheless, the guidance for SAR

filing provided in the GNs and SAR form could be significantly improved including e.g., a field

in the form for the amount of suspected transaction. The authorities state that one of the long-

term objectives is to implement a more secure electronic SAR filing system that will provide an

updated SAR tailored to each main sector. In doing so, the authorities should be cautious about

creating unnecessary confusion among reporting entities.

419. Another concern is that not all offshore FIs with substantive physical presence/mind and

management in SVG. This has led in some instances of the FIs and/or their managers and

administrators not being fully aware of the reporting procedures to the FIU, and at least in one

case they did not even have copies of the SARs. This tends to support the statistics above that

indicates 0 SARs from the non-bank offshore financial sectors.

Tipping Off Protection:

420. As detailed above, the limitations on the protection for breach of disclosure and tipping

off effectively undermine the legal strength of these provisions. While the authorities assert,

persuasively, that the reporting populace views the breach of disclosure and tipping off

provisions as broadly applicable, including in relation to the SAR itself, the law is not so

generous.

3.7.2. Recommendations and Comments

 POCA (Section 46(3)) should be amended to require FIs to report all suspicion with

respect to funds that are the proceeds of criminal conduct and not only those described

under Section 46(2).

2007 190 150 40 15 08 00 00 142

2008

489

101

388

Total

905

477

428

442

127

 Either POCA or UNATMA should be amended to require the filing of SARs for

transactions or financial activities that are suspected to constitute or be related to the

financing of individual terrorists or terrorist organizations.

 POCA Section 45 should be amended to prohibit tipping off of the fact of the filing of

the SAR itself.

 The defense in POCA Section 45(4) should be removed.

 UNATMA and/or POCA should be amended to prohibit the tipping of the filing of SARs

and any related disclosure of information to a police officer of suspected terrorist

financing activities or transactions.

3.7.3. Compliance with Recommendations 13, 14, 19 and 25 (criteria 25.2), and Special

Recommendation IV

Rating Summary of factors underlying rating

R.13 PC

 The two-part threshold for filing of SARs does not meet the

requirement of R.13.

 Offshore insurance and banks are reporting at a very low level.

 SAR filing guidance is outdated, the last update was in 2004,

contributing to low quality SARs.

R.14 NC

 UNATMA and/or POCA do not prohibit tipping off of the filing of

SARs related to terrorist financing.

 POCA Section 45 does not explicitly prohibit tipping off of the fact of

filing of the SAR itself.

R.19 C

R.25 C

SR.IV NC

 There is no requirement in UNATMA or POCA to file SARs for

transactions or financial activities that could constitute or be related to

financing of individual terrorists or terrorist organizations.

Internal controls and other measures

3.8. Internal Controls, Compliance, Audit and Foreign Branches (R.15 & 22)

3.8.1. Description and Analysis

Legal Framework:

421. Section 46 of the POCA requires every FI to develop and implement a written

compliance program that is reasonably designed to ensure and monitor compliance with the

POCA Regulations made under the POCA. Such program shall include a system of internal

128

controls to ensure ongoing compliance, internal or external independent testing of compliance,

staff training in the identification of suspicious transactions, and the appointment of senior staff

or a senior staff member at management level for ongoing compliance with the POCA and

POCA Regulations. Section 48(4) of the POCA also empowers the Minister of Finance to issue

regulations under the POCA to, inter alia, require FIs to establish and maintain procedures for

customer identification, recordkeeping, making of “reports” (taken to denote SARs), and

training. See discussion of Reg. 8 below.

422. The POCA Regulations issued under the POCA make provisions that require FIs to: (a)

Reg. 4 establish and maintain customer identification procedures; (b) Reg. 5 maintain records of

identification, accounts and transactions, etc.; (c) Reg. 6 conduct ongoing verification of

accounts; (5) Reg. 7 institute and maintain internal reporting procedures for reporting of

suspicious activities including identification of a money laundering “reporting officer” (“MLRO

or compliance officer”) to whom the internal reports are to be made and for making reports to the

FIU; (6) Reg. 8 train staff on the POCA, POCA Regulations and any other statutory provisions

relating to ML and of its compliance procedures.

423. For domestic banks, the ECCB also has the power under Section 19 of the Banking Act

to appoint annually an auditor whose duties shall be, inter alia, to certify whether suitable

AML/CFT measures have been adopted by a bank and are being effectively implemented in

accordance with the applicable laws. Auditors are required to report to the ECCB any evidence

of criminal activity involving fraud (but not ML or FT), or if they detect serious irregularities.

No similar provisions are contained in the other financial laws.

424. Some of the financial laws provide for FIs to maintain systems of internal controls, as

part of their prudential management functions. These provisions are complementary to those

requirements established under the POCA and POCA Regulations discussed below.

Establish and Maintain Internal Controls to Prevent ML and TF (c. 15.1, 15.1.1 & 15.1.2):

425. There are requirements to establish AML/CFT procedures and controls, but no explicit

requirement for AML/CFT policies. Nonetheless, the SVG authorities have indicated that they

interpret the procedures and controls requirement more broadly to encompass policies. In

particular, the POCA Regulations require measures with respect to identification, recordkeeping,

detection and reporting of suspicious transactions. The limitations in the legal requirements

discussed in the preceding Recs. would also apply here, especially with respect to the need to

have policy and procedure requirements that cover the full scope of CDD, and for the detection

of unusual transactions, and FT. Therefore, an explicit and comprehensive policy requirement

would be recommended to more directly commit the board of directors and top management to

implement ML/FT risk management controls and compliance with the applicable legislation. As

mentioned below under effectiveness of implementation, most banks met had an AML/CFT

policy in place but deficiencies were noted in the non-banking sectors.

129

426. There are requirements in the POCA and POCA Regulations for FIs to establish a

compliance program that includes the appointment of a money laundering reporting (MLRO or

“compliance officer”) for purposes of implementing the internal and external suspicious activity

reporting regime. Section 46 (7) of the POCA requires the appointment of the MLRO at a senior

level who shall be responsible for ongoing compliance with the POCA and the POCA

Regulations. It also includes a provision for FIs to have a system of internal controls to ensure

ongoing compliance.

427. The internal reporting procedures requirement under Reg. 7 would allow the MLRO to

have access to any other information that may be of assistance to him in considering an internal

report of suspicion. The provisions of Reg. 7 could be expanded to make them consistent with

the much broader compliance requirements established under Section 46 of the POCA.

428. The International Banks Act, Section 13, requires the directors (presumably the board of

directors) of offshore banks to manage and supervise the business and affairs of banks and to

establish, inter alia, anti-money laundering policies. There is also a general requirement to

establish controls and procedures.

Independent Audit of Internal Controls to Prevent ML and TF (c. 15.2):

429. Section 46 of the POCA requires FIs to have a compliance program that includes internal

or external testing for compliance. There are no similarly broad provisions in the implementing

POCA Regulations that would require FIs to maintain an adequately resourced and independent

audit function for testing compliance with the applicable policies, procedures and controls.

Consistency between the obligations under POCA and the POCA Regulations is desirable.

430. Under Section 19 of the Act, the ECCB can appoint annually an auditor whose duties

shall be, inter alia, to certify whether suitable AML/CFT measures have been adopted by a bank

and are being effectively implemented in accordance with the applicable laws. Auditors are

required to report to the ECCB any evidence of criminal activity involving fraud, but not ML or

FT, or if they detect serious irregularities. Similarly, Section 13 of the International (offshore)

Banks Act requires an international bank to appoint an external auditor to audit its accounts and

to report to the bank and IFSA any evidence of a criminal offence that may come to their

attention during their audits involving fraud, money laundering or dishonesty. It does not include

the duty to report on suspected FT crimes. While the authorities interpret the requirement by

domestic banks to report serious irregularities as encompassing ML and FT issues, such

requirements should be consistent for all FIs, and for the avoidance of doubt should specify ML

and FT, in the same manner as ML and fraud are covered.

431. Section 21 of the Money Services Business Act also imposes the duty to maintain a

system of internal controls and recordkeeping, a system of inspections and reporting. It also

requires that the direction and management of the business be conducted with prudence and

integrity by a sufficient number of fit and proper persons.

130

Ongoing Employee Training on AML/CFT Matters (c. 15.3):

432. Both the POCA and the POCA Regulations contain provisions for FIs to provide training

to their staff. Section 46 of the POCA requires that, as part of a written compliance program to

ensure and monitor compliance with the POCA Regulations, such training includes the

identification of suspicious transactions. In addition, Reg. 8 requires FIs to take measures from

time to time to make “relevant employees” aware of the POCA, the POCA Regulations, any

other ML statutory provisions, and of the procedures maintained by the FIs in compliance with

the duties imposed under the POCA Regulations. These duties would include customer

identification, recordkeeping, reporting, etc. Reg. 8 also requires FIs to train staff with respect to

the handling and reporting of suspicious ML transactions. There are no specific requirements to

train staff on current ML and FT trends, typologies, techniques, etc. Training under Reg. 8 shall

be given to all new relevant employees as soon as practical after their appointment.

433. For purposes of Reg. 8, a “relevant employee” are those that at any time in the course of

his/her duties has or may have access to any information that may be relevant in determining

whether a person is engaged in ML. The authorities are of the view that relevant employee

covers most employees but it would be useful to clarify the scope of this requirement is unclear

and to ensure that it does not restrict its application.

Employee Screening Procedures (c. 15.4):

434. There are no legal requirements to screen employees to ensure high standards.

Additional Element—Independence of Compliance Officer (c. 15.5):

435. Neither Section 46 of the POCA nor the POCA Regulations requires that the compliance

officer/MLRO is operationally independent and reports to senior management above their

positions, or to the board of directors, or a committee thereof.

Application of AML/CFT Measures to Foreign Branches & Subsidiaries (c. 22.1, 22.1.1 &

22.1.2):

436. Neither the POCA nor the POCA Regulations requires that FIs apply AML/CFT

measures to any foreign branches and subsidiaries under any of the circumstances covered under

these criteria.

Requirement to Inform Home Country Supervisor if Foreign Branches & Subsidiaries are

Unable Implement AML/CFT Measures (c. 22.2):

437. There are no requirements in the POCA or the POCA Regulations that require FIs to

inform their supervisors of cases where their foreign branches and subsidiaries cannot observe

appropriate AML/CFT measures when prohibited by local law or other measures.

131

Additional Element—Consistency of CDD Measures at Group Level (c. 22.3):

438. There are no requirements for Core Principles institutions to apply CDD measures at

group level.

Non-mandatory Guidance Notes (Rec. 15 Internal Policies, etc.):

439. While the GNs do not explicitly require FIs to have comprehensive policies, procedures

and controls to prevent ML and FT, and to communicate those to employees, they contain some

of these elements in several of its provisions. GN 15 would require FIs to exercise a duty of

diligence to prevent assisting ML operations through customer verification, recordkeeping,

recognition and reporting of suspicion, and training. This would require them to have systems

that would enable them to achieve these objectives and to cooperate with the NAMLC on

vigilance issues concerning ML policy and systems. It should also involve internal audit and

compliance departments to regularly monitor implementation of such systems.

440. GN 18 states that the nature and scope of vigilance systems should be appropriate to the

size, structure and nature of the business of FIs but that nonetheless they should be consistent

with the GNs. GNs 19 and 20 also cover training as part of the vigilance systems to help staff

comply with their responsibilities, including providing them with copies of FIs manuals with

regard to customer acceptance (entry), verification and records. GN 21 also deals with the

appointment of a MLRO at senior level that should act as the contact point for the FIU, and who

should have authority to ensure compliance with the GNs. GN 21 also allows for the possibility

to delegate such authority to other Prevention Officers with respect to their regular compliance

duties. For large FIs, the compliance and audit functions could be by way of departments out of

which the MLRO would be appointed.

441. GNs 23-25 make provisions for having “know your employees” policies which include

hiring policies and due diligence checks on new employees, and for monitoring their lifestyles.

442. (Rec. 22 Application to Branches and Subsidiaries): GN 9 states that where a group

whose headquarters are in SVG operates foreign branches and subsidiaries, it should ensure that

such operations observe the recommended measures contained in the GNs or to adhere to local

standards if those are at least equivalent to the GNs. In addition, it states that branches and

subsidiaries are to be informed of the group policy and of the local reporting procedures for

SARs and of the reporting procedures to the SVG FIU. However, GN 9 states that the local

reporting point should be the equivalent of the NAMLC, and not the FIU, which would be

inconsistent with the reporting requirements and practice for suspicious activity in SVG.

Effectiveness of Implementation

 There is a need to fully implement the requirement to file AML/CFT policies and

procedures, particularly in respect of the non-banking sectors.

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 The offsite surveillance process should also focus on the ML/FT risk assessment policies

and controls being developed by FIs, and not only on regulatory compliance issues. Most

AML/CFT policies and procedures provided to IFSA are compliance based. It seems that

the other supervisors do not implement this practice.

 While most FIs interviewed have appointed an MLRO/compliance officer as required by

the POCA and POCA Regulations, in many instances such persons share multiple

operational tasks and devote anywhere between 10 percent to 50 percent of their time to

AML/CFT issues. In some cases there could be conflicting functions such as the

compliance officer also being the accountant or internal auditor, which may not be senior

enough and also adversely affect their reporting lines within the FIs organizational

hierarchy.

 Insufficient use of the external audit function to review adequacy of internal controls and

procedures for AML/CFT, including in some cases, reporting of deficiencies through

management letters.

 There seems to be insufficient internal audit oversight with respect to compliance with

AML/CFT policies and procedures from the parent companies of foreign FIs operating in

SVG.

 Training programs seems to be more adequate in the domestic banking sector, except for

the smaller banks, and less developed in the rest of the financial sector including offshore

banks.

 With respect to Rec. 22, most FIs do not have foreign branches and subsidiaries, so this

requirement would largely be in applicable. However, in the international (offshore)

financial sector where the large majority of cases involve a significant part of the

business activities conducted outside of SVG, an analogous situation exists where the

local registered office/principal office in SVG should be charged with ensuring that

AML/CFT policies, procedures and legal requirements are observed by their overseas

operations, including representative offices. In addition, there are other mitigating

controls in the system such as the regulatory controls that would require the written

approval of the regulator to open branches or subsidiaries overseas, which could in

principle be used to apply AML/CFT controls similar to those required under R 22. For

instance, Section 12 of the International Banks Act states that “A licensee shall not,

without the prior written approval of the Authority….. (b) acquire, open or operate

outside the State any subsidiary, agency, representative office or branch.” In addition,

Section 8 (4) of the Banking Act (domestic institutions) states that “No local financial

institution shall open a place of business elsewhere that in SVG without the prior

approval of the Minister after consultation with the Central Bank”. Section 6 also

provides for the closing of foreign branches when the Central Bank determines that

supervision in the host country is inadequate relative to its risks. Other regulatory laws do

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not contain explicit provisions as is the case for banking but do have general licensing

requirements that could also extend to approvals or at least notification of significant

changes in business arrangements.

3.8.2. Recommendations and Comments

 Enhance the requirements for FIs to have comprehensive policies, and consider revising

the compliance and independent audit requirements under POCA Regulations 8

(narrower) to make them consistent with those under Section 46 of the POCA (broader).

 Require FIs to train staff on current ML and FT trends, typologies, techniques, etc.

 Clarify the scope of the training requirement to ensure that the term “relevant”

employees, i.e., to those that have/may have access to information that can be relevant to

determine the existence of ML, does not restrict the training requirement.

 Require FIs to properly screen employees for fit and proper criteria to ensure high

standards.

 Supervise and require FIs to ensure that compliance officers devote sufficient time and

seniority to AML/CFT, and avoid inherent conflicts when multi-tasking such officers.

 FIs, especially banks, should emphasize AML/CFT training for high risk areas e.g.

money remittance business, correspondent accounts, wire transfers, back-to-back loans,

and credit card operations.

3.8.3. Compliance with Recommendations 15 & 22

Rating Summary of factors underlying rating

R.15 PC

 Insufficient provisions for comprehensive policies.

 No requirements to train staff on current ML and FT trends,

typologies, techniques, etc.

 No requirements to screen FI employees to ensure high standards.

 Insufficient time and seniority of compliance officers devoted to

AML/CFT functions by some FIs, including inherent conflicts in

multi-task responsibilities.

 Lack of specific training in on AML/CFT for high risk areas e.g.

money remittance business, correspondent accounts, wire transfers,

back-to-back loans, and credit card operations.

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R.22 LC

 No requirements for FIs to apply AML/CFT measures to their foreign

branches and subsidiaries.

 No requirements for FIs to inform their supervisors when their foreign

branches and subsidiaries cannot observe appropriate AML/CFT laws

or measures.

3.9. Shell Banks (R.18)

3.9.1. Description and Analysis

Definition of Shell Bank in the FATF Methodology:

443. “A Shell bank means a bank that has no physical presence in the country in which it is

incorporated and licensed, and which is unaffiliated with a regulated financial services group that

is subject to effective consolidated supervision. Physical presence means meaningful mind and

management located within a country. The existence simply of a local agent or low level staff

does not constitute physical presence.”

Legal Framework:

Domestic Banks:

444. While not explicitly prohibiting the establishment of shell bank in SVGs, the provisions

of the Banking Act, 2006 would effectively preclude the establishment of such banks. All banks

have substantial physical presence and mind and management in SVG. The definition of

“principal place of business” and of “place of business” in Section 2 of the Act would require a

principal office in SVG. Section 8 authorizes licensed banks to carry on business in SVG at the

place of business designated in their licenses, and no new place of business (whether in SVG or

elsewhere) or change in location of business shall be made without prior approval of the Minister

after consultation with the ECCB.

International (offshore) banks:

445. Section 8 of the International Banks Act, 2004 requires a licensee to have a physical

presence in SVG. Neither physical presence or place of business is defined per se except that

under Section 8 physical presence shall include the following:

 a physical place of business in SVG where all the books and records are kept;

 a minimum of two employees, one of whom shall be of senior management level;

It is not a common practice that SVGs FIs have overseas branches and subsidiaries. Therefore, from the

perspective of implementation, Rec. 22 is largely not applicable at the time of the mission.

135

 a designated RA, that IFSA has received notification of and who is not an officer of the

licensee.

446. International banks are also required to designate a resident director, and in practice, such

director can act as director for more than one bank. Licensees not having a physical presence as

outlined above were required to do so within six months of the Act coming into force or as

otherwise authorized by IFSA. Changes in the location of banks’ offices in SVG and of the RAs

shall be notified to IFSA (as opposed to requiring approval as for domestic banks). These are

license conditions. In practice, a number of offshore banks do not have meaningful mind and

management in SVG.

Prohibition of Establishment Shell Banks (c. 18.1):

Domestic banks:

447. Banks are required to have their principal business office in SVG and any change

requires approval. In practice, all domestic banks licensed to operate in SVG have a significant

presence in terms of office and fairly large number of staff. With respect to the branches or

subsidiaries of foreign branches operating in SVG, certain business decisions, such as large

credit exposures and opening of correspondent accounts, may require the approval from their

head or regional office, but this would not affect the fact that they maintain substantial mind and

management residing in SVG, as supported by discussions with domestic banks.

International (offshore) banks:

448. At the time of the mission, there were six licensed offshore banks but soon thereafter two

were closed for different reasons. (See para. 52 above.) The legal requirements for a physical

presence in SVG under Section 8 of the International Banks Act provide for basic physical

presence requirements including the designation of a RA for the bank, and the minimum

requirement that two employees of which only one shall be of senior management level. While

this may be sufficient for a small (or limited scope) institution, (most SVG offshore banks are

small), it may not be appropriate for larger banks (existing entities could grow or new larger

banks may be established in the future.) to meet the meaningful mind and management

requirement as defined under the Methodology. (“The existence simply of a local agent or low

level staff does not constitute physical presence.”) In practice, most international banks the

mission met generally have low levels of staff in SVG and for some, the senior management

requirement may be met by having a manager responsible for general administrative work. There

were two offshore banks where mind and management were outside of SVG. All of the offshore

banks are privately held and are not members of a regulated financial group.

449. Section 14 of the International Banks Act also requires that a bank to have at least two

directors who shall be individuals of whom one shall be a resident of SVG as defined under the

Act. In practice and as indicated above, persons can participate as resident directors for more

than one bank.

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450. Prohibition of Correspondent Banking with Shell Banks (c. 18.2):

451. There are no prohibitions on banks from entering into, or continuing correspondent

banking relationships with shell banks. In practice, the domestic banking sector provides

correspondent banking facilities to offshore banks licensed in SVG, some of which, as

mentioned above, do not maintain meaningful mind and management in the country.

Requirement to Satisfy Respondent FIs Prohibit of Use of Accounts by Shell Banks (c.

18.3):

452. There are no requirements that FIs satisfy themselves that respondent FIs in another

country do not permit their accounts to be used by shell banks.

Non-mandatory Guidance Notes:

453. GN 124A contains potentially conflicting statements and may be inconsistent with the

requirements of Rec. 18 in light of the FATF definition of shell banks. (See beginning of Rec.

18) Para. 2 of GN 124A does not require a prohibition from entering or continuing correspondent

relationships with shell banks (banks that have no physical presence) but rather states that banks

should pay particular attention to correspondent account services in jurisdictions where banks

have no physical presence. On the other hand, in para. 3 it states that banks should refuse to enter

into or continue a correspondent banking relationship with a bank incorporated in a jurisdiction

in which it has no physical presence and which is unaffiliated with a regulated financial group.

This apparent contradiction should be clarified and resolved.

ECCB guidelines on correspondent banking (2001):

454. In March 2001, the ECCB issued prudential guidelines to domestic banks for purposes of

making them aware of and for managing risks inherent in correspondent banking. The ECCB, “in

cognizance of the importance of correspondent banking relationships to economic activity in the

currency union, and of the risks posed to these arrangements by the operation of accounts for

offshore entities that are subject to a different regulatory and supervisory framework,”

recommended that:

“A financial institution shall not provide, or in any way facilitate, access to correspondent

banking facilities to third-party FIs not licensed under the provisions of the Banking Act

and/or supervised by the ECCB. Banks are also required to employ strict know-your-

customer standards and exercise adequate due diligence, particularly in maintaining

accounts for offshore entities, in order to minimize counterparty risks.”

455. In practice, international (offshore) banks licensed in SVG under the International Banks

Act and subject to supervision by IFSA maintain correspondent/nested correspondent accounts

with the domestic banking sector. As mentioned above, the mission identified a number of

offshore banks that have very low staff levels and do not meet the test of meaningful mind and

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management in SVG. None of the international banks are members of a financial group subject

to consolidated supervision.

Effectiveness of Implementation

 There is non-compliance within the domestic banking sector with respect to opening

correspondent facilities for international banks that do not have a substantive physical

presence/mind and management in SVG, contrary to Rec. 18 and the ECCB’s prudential

guidelines. In some cases it appears that such relationships did not benefit from a risk

assessment before business take on.

3.9.2. Recommendations and Comments

 Review the physical presence of all offshore banks against the meaningful mind and

management criteria of FATF Rec. 18 above and prohibit the continuation of any shell

banks.

 Introduce explicit prohibitions against entering into, or continuing correspondent banking

relationships with shell banks, consistent with the ECCB’s prudential guidelines.

 Require FIs to satisfy themselves that respondents in other countries are not used by shell

banks.

 Require domestic banks to comply with Rec. 18, the ECCB’s prudential guidelines and

the GNs with respect to correspondent banking facilities.

3.9.3. Compliance with Recommendation 18

Rating Summary of factors underlying rating

R.18 NC

 Two offshore banks were identified as not having meaningful mind

and management/significant physical presence in SVG.

 No prohibitions against entering into, or continuing correspondent

banking relationships with shell banks.

 No requirements for FIs to satisfy themselves that respondents in other

countries are not used by shell banks.

 Offshore shell banks maintain correspondent accounts locally, contrary

to Rec. 18, the GNs, and ECCB’s prudential regulations.

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Regulation, supervision, guidance, monitoring and sanctions

3.10. The Supervisory and Oversight System—Competent Authorities and SROs. Role,

Functions, Duties, and Powers (Including Sanctions) (R. 23, 29, 17 & 25)

3.10.1. Description and Analysis

Legal Framework: (See Recs. 17 and 29 below for powers to enforce compliance and

sanction, and for supervision.)

Regulation and Supervision of FIs (c. 23.1):

456. Not all FIs that are subject to the AML/CFT requirements and are operating in SVG are

subject to effective AML/CFT regulation and supervision. Those that are subject to an

AML/CFT supervisory regime are listed below:

Table: 19

Domestic FIs No. Regulator

Banks (includes securities broking by banks)

6 ECCB

Insurance companies (9 life) 23 Ministry of Finance

Brokers for insurance company 6 Ministry of Finance

Agents for insurance 10 Ministry of Finance

Sales representatives for insurance 85 Ministry of Finance

Pension fund plan for insurance company 14 Ministry of Finance

Money transfer services 4 Ministry of Finance

Credit unions (active) 9 Registrar Credit Unions

Building Society 1 None

Sub-total Domestic 158

International (Offshore) Financial Entities No. Regulator

Offshore banks (reduced to 4 shortly after the

mission)

6 IFSA

International insurance companies 9 IFSA

International insurance managers/brokers 3 IFSA

Mutual funds 45 IFSA

Mutual fund managers/administrators 30 IFSA

Sub-total Offshore 93

Total 251

The ECCB is responsible for the supervision of domestic banks in the eight countries comprising the

ECCU (Antigua and Barbuda, Dominica, Grenada, St. Kitts and Nevis, St. Lucia, St. Vincent and the

Grenadines, Anguilla and Montserrat). There are 39 domestic banks operating in the ECCU.

The Ministry of Finance may designate the Supervisor or is the Authority responsible for supervising

the various entities, as provided in the respective financial laws.

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The principal entities subject to IFSA’s supervision total 120 (subtotal of 92 plus RAs and

trustees 28).

457. There is one systemically large building and loan society registered under the Building

Societies Act that is not being supervised. The authorities state that there are plans to bring

building societies (and credit unions) under the supervision of the Ministry of Finance and it is

expected that the legislation, which was passed earlier in 2009, will be put into effect soon. A

budget has been prepared to increase the number of examiners for the Ministry of Finance–SRD

in 2009. See Rec. 30 with respect to the adequacy of resources. Building societies and lending

activities are covered as FIs under the POCA (Schedule 1) and hence legally required to comply

with the POCA, the POCA Regulations and the UN (Anti-Terrorism Measures) Act. As they

engage, inter alia, in deposit taking, lending and money remittance services, they are exposed to

ML/FT risks and should be brought under effective supervision soon, as planned.

458. In addition, there are at least two well-known money lending operations that are

apparently not covered under any legislation for regulatory or supervisory purposes that openly

advertise their services. It is not officially known who owns or controls these lending operations,

or what is/are the source(s) of their funds. The Authorities did not indicate any plans with respect

to these lending operations, that is, plans to regulate and supervise them, to review of the size

and nature of their operations, and their ownership.

Domestic FIs:

Domestic banks:

459. No detailed statistics that were requested were provided by the ECCB with respect their

AML/CFT supervisory procedures and the number of onsite examinations that included

AML/CFT, over the past three years. From discussions with the sector, it seems that the

frequency of onsite inspection and AML/CFT reviews varies with some banks inspected on

average about once every 2 to 3 years, while some have not been inspected for 4 to 6 years. One

large bank stated that it had not been inspected since 2002. In addition, the coverage of

AML/CFT would average about 1 day per visit. For banks that are branches or subsidiaries of

foreign institutions, the home supervisors have not conducted onsite inspections for AML/CFT

under consolidated supervision arrangements.

460. From discussions with the ECCB, they indicated that most banks had been examined for

AML/CFT compliance during 2002-2005, and that subsequent follow up examinations had been

conducted as part of general inspections. Examinations on average last about 5-10 days with

AML/CFT components taking between 1-2 days on average. Between 1 and 2 examiners conduct

the AML/CFT the review depending on the size of the banks. Examination teams average about

5 examiners. The ECCB claims that its AML/CFT examinations are risk-based, but it seems that

the review process tends to focus more on technical compliance with the AML regulations. The

offsite planning process and inspections does not seem to place priority to sectors that are

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generally perceived as high ML risk in SVG, e.g. those involving cash and money transmission

business conducted directly by either banks or by other money remitters that use the local

banking system.

461. In its last annual report, the ECCB stated that it will establish risk profiles for all FIs

licensed under the Banking Act based on a stress-testing model and a consolidated supervisory

framework. It is not clear if it will take into account ML/FT risk in such developing institutional

risk profiles. A risk-based review should also take into account the significant business activities

by e.g. clients, products, services, processes, etc. and their inherent ML/FT risks. Risk profiling

could also benefit from a review of suspicious activity reporting trends by institution and sector

in SVG and the broader ECCU region. More focus on risk-profiling for ML/FT as part of both

the offsite and onsite risk-based supervisor process would assist in focusing supervisory attention

on the higher risk areas, including to prevent banks from undertaking unauthorized

money

transmission business. Such activities could partly be done on an offsite basis, and could focus

on other areas such as identification of correspondent banking activities, and the absence of

AML/CFT policies. The ECCB should also focus on other potentially high ML risk areas such as

identification of banks that provide cash secured loans (back-to-back loans) which appears to be

a common practice across the deposit-taking financial sector, including offshore banks.

462. A risk-based supervisory focus should also take account of banks that provide

correspondent banking facilities, and in particular focus supervisory attention to those banks that

provide correspondent/ nested correspondent banking facilities offshore banks licensed in SVG

or elsewhere. It is known that the domestic banking sector provides such facilities (see Rec. 18

above) contrary to the ECCB’s own 2001 prudential guidelines for correspondent banking. These

guidelines considers this business high risk and aims to prohibit banks from providing

correspondent facilities to banks that are not licensed under the domestic Banking Act and

supervised by the ECCB.

The ECCB should take steps to ensure compliance with its prudential

guidelines.

463. In summary, the offsite and onsite supervisory practices can be improved with respect to

AML/CFT, by paying more attention to those areas that are inherently of higher risk, and

adopting the frequency and scope of examinations accordingly. While the ECCB claims to

follow a general risk based approach, it would be useful to review the existing AML/CFT

supervisory policies and procedures should to ensure that they are consistent with the risk-based

and institutional risk profiling being developed, as discussed above.

The mission was aware of at least one apparently unlicensed money transmission service that has

recently started operations in SVG though a licensed institution.

The ECCB prudential guidelines state that: “A financial institution shall not provide, or in any way facilitate,

access to correspondent banking facilities to third-party financial institutions not licensed under the provisions of the

Banking Act and/or supervised by the ECCB. Banks are also required to employ strict know-your-customer

standards and exercise adequate due diligence, particularly in maintaining accounts for offshore entities, in order to

minimize counterparty risks.”

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464. No information was provided with respect to the ECCB’s total available examination

staff but it is acknowledged that they have a comparatively larger pool of examiners given their

scope of their supervisory activities which include all of the 8 ECCU member countries. No

statistics were provided for the ECCB’s supervisory resources available for offsite and onsite

supervision of the 39 domestic banks operating in the ECCU region which could serve as a rough

proxy of the adequacy of resources available for the supervision of SVG-based domestic banks.

The ECCB supervision department has 7 staff positions at management level, and the last annual

report of the ECCB showed operating income of EC $111 million and operating expenditure of

$59.7 million. The annual report also shows that staff are generally well trained and of sufficient

professional caliber.

Insurance companies and intermediaries and pension funds:

465. The Ministry of Finance (Supervisor of Insurance) is responsible for the regulation and

supervision of the insurance sector. The Ministry has recently established a SRD that will be

responsible for supervision, including for AML/CFT, of all 57 entities currently under its

jurisdiction (excluding 85 sales representatives). The SRD currently has two examiners on its

staff that engages in general supervision and have only recently commenced limited AML/CFT

supervision. At the time of the mission the SRD had commenced to draft supervisory procedures.

They have recently started to conduct onsite inspections of insurance companies for the first time

and have relied on AML/CFT questionnaires used by IFSA. These first two inspections took

place in October-November 2008, and lasted about two days each and were largely focused on

AML issues. Given the size of these two companies and the fact that this was the first

examination, the duration and scope of supervision seems to be very short and narrow. There

have been no AML/CFT examinations of insurance brokers, agents, sales representatives, and

private pension funds.

466. The SRD believes that the level of ML/FT risk is low in the insurance (life) sector.

However, while inherently there may be a lower degree of risk in life and other types of

insurance, many insurers provide savings/deposit type accounts which would be broadly similar

to the deposit taking activities of other entities. They also provide high value investment

policies/products for high net worth customers, and on the basis alone their risk level would be

inherently high and broadly similar to that of other FIs. Most insurance business is conducted

through intermediaries who routinely accept cash, and who have not been subject to AML/CFT

supervision by either the insurance regulator or the insurance companies on whose behalf the

conduct business. This is a significant lacuna in that insurance intermediaries are generally

regarded as one of the weakest links in the insurance sector for ML.

467. There are plans to increase the supervisory capacity of the SRD. Budget estimates

provided to the mission after the visit show the following:

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Table 20:

Number of

Positions

Salaries

2008 2009 2008 2009

STAFF POSITION Grade

Management and administrative

2 3 47,796 106,992

Insurance and Pension Plan Unit

Examiners 3 4 88,942 196,728

Credit Union Unit/Building Societies

Examiners - 3 - 141,300

Total (of which 7 are examiner positions)

5 10 136,738 445,020

Provision for salary adjustment - 13,351

5 10 136,738 458,371

Less provision late filling of posts

- 75,000

Total Permanent Staff

5 10 136,738 383,371

468. The authorities have indicated that the supervision of money remitters will be done by the

examiners specifically assigned to the sectors above. Given the relatively large number of

entities subject to the SRD’s supervision, it is clear that the need for additional well-trained

examiners will continue.

469. As mentioned under Rec. 5, it is not clear whether insurance intermediaries (brokers and

agents) were intended to be covered under per Schedule 1 of the POCA for purposes of

compliance with the POCA and POCA Regulations Insurance companies are explicitly covered

in the Schedule but brokers and agents are not, except perhaps and only in a general manner as

“financial intermediaries” under Relevant Business Activities. The interpretation of this with

respect to their coverage of brokers and agents (and sales representatives) varies across the

sector.

Money remitters:

470. The Ministry of Finance is the designated Authority for supervising money remitters

under the Money Services Business Act of 2005. The SRD within the Ministry has been charged

with supervision but as of mission date, no inspections had been conducted of the four remitters

for AML/CFT or for any other purpose. The SRD believes that the risk of ML/FT is low in this

sector, but this view is inconsistent with the broader perception of the financial sector and law

enforcement which considers this sector as high risk particularly with regards to drug trafficking.

This perception is supported by the relatively large proportion of SARs connected with money

remittance business. In addition, the authorities should conduct a thorough review the money

remittance sector to ascertain if it is consistent with e.g. the level of cross-border business in the

relevant sectors, the size of SVG nationals living abroad, etc. and assess the patterns of inward

143

and outward flows. Such analysis would provide a clear basis for ascertaining areas of higher

risk and for focusing oversight resources and priorities.

Credit Unions:

471. The Registrar of Co-operative Societies is the designated supervisor of credit unions.

They are however subject to the POCA and the POCA Regulations. There are plans to transfer

supervision of credit unions later this year to the SRD.

472. There are some 9 active credit unions with about 47,500 members of which one is

relatively very large accounting for about 30,000 members, or about 25 percent of the population

of SVG. Onsite inspections take place every year, but AML reviews only commenced around

December 2008. Most general onsite visits are on average of 1 hour duration depending on the

size of the credit union, with 2-3 staff participating. The Registrar has a total of six employees

available for supervision. An examination of the largest credit union, with some 47,500

members, lasted only 1 hour. In addition, under Sections 19 and 18 of the Co-operative Societies

Act, it seems that the Registrar does not have the legal authority to conduct thorough

examinations of e.g. CDD because of limitations on access to customer related documentation

which would limit their effectiveness for AML/CFT purposes. In summary, AML/CFT

supervision has only recently started and is inadequate given the size of the sector. There is one

very large credit union that undertakes banking type activities including, inter alia, deposit-

taking, (if authorized under law can also open checking accounts), money remittance business

and back-to-back loans. The authorities believe that some of these societies may be used for

small scale drug-related ML. All of these activities are inherently risky with respect to ML,

which should call for enhanced supervision.

Building Societies:

473. Building societies are registered with the Registrar of the High Court, but there is no

mechanism for their ongoing regulation and supervision. They are subject to the AML/CFT laws

and later this year the Ministry of Finance-SRD will assume responsibility for their supervision.

There is only one building and loan society in SVG that, by virtue of its size is systematically

important with about 25,000-30,000 members or about 25 percent of the population of SVG. It

also engages in a broad range of activities, including money remittance business.

474. Given the size of the SRD and the fact that it has only recently been staffed, there is a

need for additional examination staff and AML/CFT training especially in light of the additional

sectors being transferred for its supervision. In addition, the SRD should develop sector specific

AML/CFT supervisory and inspection procedures to be used as part of its offsite and onsite

activities.

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International (Offshore) FIs:

International Banks:

475. IFSA is the designated authority responsible for the supervision of offshore banks.

Earlier inspections appeared to have focused more on fit and proper issues to ascertain the need

for continuation or license revocation. This resulted in sharp reduction of banks from 40 plus in

the early 2000s to six in 2009. Post mission the number was reduced to four operating offshore

banks. However, this process should continue as ongoing activities of IFSA as discussed under c.

23.3 below.

476. In 2006, only 1 bank was inspected while in 2007 there were no inspections. All six

banks were inspected during the past year, 5 during Oct.–Dec. 2008, and 1 in Jan. 2009. The

duration of these inspections ranged around 2–6 days. On average, the examination teams

consisted of 3 IFSA examiners and 1 outside consultant, with the Executive Director forming

part of the examination teams. While IFSA indicates that about half of the inspection time was

devoted to AML/CFT, the results of inspections suggest a much narrower scope of AML/CFT

issues as reflected by the type of analysis and recommendations made. There also seemed to be

insufficient focus on certain high risk business areas, including back-to-back loans (a main

activity of some entities), wire transfers and off balance sheet activities. This may be influenced

by a number of factors including but not limited to: (1) lack of staff resources, training and

experience; (2) limited duration of inspections; and (3) insufficient mind and management in

SVG for most of the offshore banks.

477. With respect to the scope of examinations, IFSA should establish the overall ML/FT risks

inherent in the conduct of the banks correspondent accounts (as respondent institutions) to see if

their correspondent banks are conducting the necessary due diligence with respect to their own

AML/CFT systems and controls. This would be an indirect and complementary approach to risk

assessment and supervision, and should clearly establish the reasons for the offshore banks

conducting most/all of their correspondent banking through the domestic banking sector. Their

stated inability to open correspondent accounts directly with banks outside of SVG should be

reviewed for purposes of risk supervision. In this regard, close supervisory cooperation with the

ECCB, the supervisor of domestic banks, should be enhanced at least in this area.

478. Offsite supervisory processes and activities for AML/CFT (and even for prudential

purposes) should be strengthened and include enhanced analysis of the business and financial

risk profiles as indicators of potential ML/FT risks. Onsite examinations should also focus on a

continuing review of the fit and proper criteria of owners, controllers, and top management. And

it should include a review of compliance with the physical presence requirements of the

International Banks Act to ensure that the structure does not inhibit effective ongoing

supervision (AML/CFT) of such banks, and avoid the presence of shell banks contrary to Rec. 18

of the FATF. Both of these issues are relevant to effective AML/CFT supervision. Enhanced

training of examiners may be required in all of the above areas.

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Mutual Funds, Managers and Administrators:

479. Little or no AML/CFT supervision has been conducted of this sector, in particular onsite

inspections. The lack of meaningful mind and management, and documentation in SVG by of

most of these operations would also limit the capacity of IFSA for ongoing effective AML/CFT

supervision. A significant number of these funds are managed in Liechtenstein and there are no

formal supervisory and FIU cooperation agreements or arrangements with Liechtenstein to

facilitate cross-border supervision of these entities and service providers. A similar situation

appears to exist with respect to the trust and company service sector. Where similar situations

exist involving other countries, cross-border supervisory arrangements should be established,

including with countries where the owners or parent companies of FIs exist, beyond the mutual

funds sector.

International Insurance Companies, Managers and Brokers:

480. Little or no AML/CFT supervision has been conducted of this sector, particularly onsite

inspections. As for the mutual fund sector, the absence of substantial physical presence in SVG

by a number of entities would limit the capacity for ongoing effective AML/CFT supervision, as

for international (offshore) banks and mutual funds above.

481. [See also Rec. 24 with respect to supervision of RAs/Trustees by IFSA. No inspections

were conducted of these licensees before 2008. In 2008, 2 inspections were conducted and 1

inspection before the mission in 2009.]

IFSA:

482. IFSA is a professionally run supervisory body and its staff are generally of a high

professional caliber, but its supervisory resources are limited. At the time of the mission, IFSA

had on staff the following: 2 examiners, 1 senior examiner, 1 compliance officer and the

Executive Director. There was also a full time consultant for IFSA. Post mission IFSA informed

that they had hired three additional supervisory staff. There are a total of some 120 licensees,

excluding trusts and international business companies, and on current staff levels and business

trends (particularly in the mutual funds, insurance and RA/trustee sectors), IFSA is significantly

understaffed. There is a vacancy for a Deputy Executive Director, and a consultant has been

contracted to assist/advise IFSA. IFSA also contracts services of outside consultants when

needed to assist with training and inspection. IFSA’s total operating budget for 2008 was

approximately EC$1.8 million, and for 2009 it is projected at EC$1.9 million. Funding for IFSA

comes from the government normal budget resources. (Section 4 of the IFSA Act.)

483. The organization chart below was provided by IFSA after the mission in August 2009 to

show the updated staffing arrangements.

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484. A key issue is the relatively high turnover in the Executive Director/Offshore Inspectors

position of IFSA and its predecessor organization. In the past 8 years, there have been 4 different

chief executives in IFSA which can inhibit continuity and development of an experienced cadre

of supervisors at the top management level. This can limit the effectiveness of ongoing

AML/CFT supervision of entities under its jurisdiction, including for dealing with crisis

resolution issues, such as the closure of FIs.

485. There is also a need for IFSA to review and strengthen its supervisory procedures

particularly with respect to AML/CFT inspections, and consider developing risk-based

methodologies to supervise for ML/FT risks in its offsite and onsite supervisory functions. These

procedures should be further adapted to the specific characteristics of each sector it is responsible

EXECUTIVE DIRECTOR

Registrar of Mutual Funds and Trusts

DEPUTY DIRECTOR

Commissioner of International Insurance

Consultant x 2

Compliance

Officer

Manager

Administration

Administrative Officer

Office Attendant/

Filin

Cler

Office Cleaner

Senior Examiner

Registrar of IBC/

Deputy Registrar of

Examiner x 3

Trainee

Examine

Data Entry

Officer

Temp Clerk

Systems

Senior Registry

Cler

Registry Clerk/

IT Technician

Junior Registry

Cler

BOARD OF DIRECTORS

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for supervising, including the supervisory issues raised with respect to the offshore sectors

above.

486. IFSA has also issued internal guidelines and regulations to foster professionalism and

ethics by its staff members, including the duty to observe confidentiality requirements and

related criteria for assessing staff performance.

Designation of Competent Authority (c. 23.2):

487. See the tables under c. 23.1 above with respect to the designated regulators/supervisors

for the various FIs. In addition, see Rec. 29 with respect to their AML/CFT supervisory powers.

IFSA is the authority explicitly designated under the International Banks Act to monitor

compliance with Section 46 of the POCA with respect to offshore banks. Similarly, the Ministry

of Finance is the designated authority under the Money Services Business Act with respect to

money remitters. While these designations are limited to Section 46 of the POCA (the main

AML provisions), there are no similar provisions with respect to other FIs. As discussed under

Rec. 29, there is a need to extend such powers in all the financial and regulatory laws to

supervise and enforce compliance that also include the AML Regulations and the UN (Anti-

Terrorism Measures) Act. Where appropriate such powers could also extend to supervision for

compliance with applicable guidelines or guidance notes.

488. The Banking Act does contain some broad supervisory powers for the ECCB that in a

general sense could extend to AML/CFT issues. However, they need to be more explicit and

similar to those provisions contained in the International Banks Act and the Money Services

Business Act.

Fit and Proper Criteria and Prevention of Criminals from Controlling Institutions (c. 23.3

& 23.3.1):

ECCB: domestic banks:

489. There are only six licensed banks in SVG with three being branches or subsidiaries of

larger regional and international banks. One of the domestic banks is owned by the government

of SVG. The ECCB has in place detailed licensing procedures to ensure fit and proper tests are

made, but in practice these are rarely used given the small number of institutions and the relative

infrequency of applications. In particular, Section 5 of the Banking Act and the Schedule

attached thereto require relatively strict fit and proper criteria for applicants, owners, directors

and management of banks. While these procedures seem to be put in practice, there may be a

need for regular review and updates on the ownership of banks, particularly those that were

established before the Act came into effect, and those that are standalone privately held

institutions.

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Domestic non-bank FIs, except for money transmission business:

490. Considering the relative infrequency of new license applications, the existing legal

requirements and procedures for licensing of insurance entities and credit unions seems to be

adequate. The mission did not identify any significant gaps that would facilitate ownership and

control of these entities by criminals or their associates. Nonetheless, the existing procedures

should be aligned with those of banks particularly as some insurance and credit unions, (and

building societies) conduct bank-like activities such as deposit-taking and/or money remittance

business. In particular, the sole building and loan society should be brought under a regime of

ongoing supervision by an appropriate authority given its systemic significance. Plans are

underway for the SRD in the Ministry of Finance to undertake this role.

Money lending businesses:

491. It is imperative that the authorities review the operations of the known money lending

businesses that openly advertise their services in SVG, with a view to implementing a suitable

authorization and oversight regime, including for AML/CFT purposes. There are at least two

such businesses known to be operating in SVG without any AML/CFT oversight even though

they are subject to the POCA and POCA Regulations.

International (offshore) FIs:

492. IFSA has developed relatively comprehensive licensing criteria for all international

entities subject to its supervision, and also relies on outsourcing services to support its licensing

due diligence functions. It has not licensed any new offshore banks in the past few years and has

revoked most of the offshore banking licenses that were in effect in the early 2000s. Nonetheless,

IFSA should continue to review, on regular basis, the ownership and control of offshore FIs.

Enhanced “know your bank” procedures should also be implemented including through a more

thorough analysis of financial information available to IFSA. It should also discourage

ownership and control structures of banks and other institutions that could reduce transparency,

and could limit capacity to conduct regular reviews of fit and proper criteria. In particular,

entities owned or controlled through holding companies, trusts and/or similar arrangements,

especially in other countries, should be strongly discouraged as they tend to obscure ownership

and control, and make it more difficult to establish compliance with fit and proper criteria. It also

makes it more difficult to conduct supervision on a consolidated ongoing basis requiring suitable

cross-border cooperation mechanisms. The latter seem to be largely absent with respect to

countries where SVG FIs ownership is legally held and/or where they are managed or operate.

493. The growth area in the international sector appears to be in the mutual funds, insurance

and company and trust services area. Consequently, the licensing of such operations should

continue to adhere to strict fit and proper criteria, including due diligence of license applicants

and their promoters to complement the outsourcing of this process.

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Application of Prudential Regulations to AML/CFT (c. 23.4):

494. There are several domestic banks and insurance companies that are branches or

subsidiaries of foreign institutions. In several cases, there is a lack of consolidated supervision by

their home supervisor and inadequate contact/cooperation with the host supervisors for purposes

of ongoing supervision and onsite AML/CFT inspections in particular. Supervisors should

review and apply the relevant principles contained in the Basel core principles (banks), IOSCO

principles (for securities and mutual fund entities) and IAIS principles (for insurance) especially

in the areas of consolidated supervision, supervisory cooperation, audit and licensing criteria.

495. There a no offshore banks that are affiliates of other banks abroad but there some are

owned under trust arrangements. In such cases, there is a need to strengthen supervisory

cooperation with the authorities of countries where the trustees/trusts are domiciled, and where

offshore entities operate. In this regard, IFSA should enter, as planned, into supervisory

cooperation arrangements with Brazil and Liechtenstein, and should consider others countries

such as e.g. Switzerland and Malta, and CARICOM where these are lacking.

496. To enhance the independence of the regulators, especially with respect to the

international financial sector, the regulatory laws should be reviewed to ensure that key

regulatory powers and operational decisions such as authorization and administrative

enforcement, lie within the legal jurisdiction of the main supervisory body, as appropriate.

497. In addition to the above, the marketing/promotion function of IFSA under the IFSA Act

should be removed as that function has been transferred to NIPI (National Investment and

Promotion Inc.)

Licensing or Registration of Value Transfer/Exchange Services (c. 23.5): Money

transmission businesses:

Money remitters:

498. All money services business are required to be licensed mainly under Sections 4 to 6 of

the Money Services Business Act, 2005. The Act covers business that involves (i) the

transmission of money or monetary value in any form; (ii) check cashing; (iii) currency

exchange; (iv) issue, sale or redemption of money orders or travelers checks; and (v) any other

service that the Minister of Finance may specify by notice published in the Gazette; or (vi) the

business of operating as an agent or franchise holder of any of the forgoing five business

activities. A licensed domestic or international/offshore bank does not require a license if it

conducts money services business in conjunction with its other activities. However, they require

a license if the bank conducts such business as an agent or franchise holder of a money service

business.

499. The mission is aware of one possible case of unauthorized money services business in

SVG.

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Monitoring and Supervision of Value Transfer/Exchange Services (c. 23.6):

500. All of the money services businesses described under c. 23.5 above are subject to the

AML/CFT requirements under the POCA and POCA Regulations and are listed in Schedule 1 of

the POCA. However, other than money transmission business conducted by domestic banks that

have been supervised by the ECCB, standalone MSBs have not as yet been supervised by the

Ministry of Finance for compliance with the AML/CFT requirements. There is a requirement

under Section 10 of the Money Services Business Act that requires MBSs to file a quarterly

return to the Ministry of Finance in the requested format. Post mission, the authorities stated that

since June/July 2008, monthly and quarterly returns are being filed with IFSA for transactions

exceeding EC$$10,000 as required under the POCA Regulations. However, the mission could

not review these returns or their use, and the POCA Regulations do not specify any transaction

reporting requirements.

Licensing and AML/CFT Supervision of other FIs (c. 23.7):

501. In SVG, there are two known money lending operations that openly advertise their

activities and that, apart from the corporate registration requirements, are not subject to a

licensing and supervision for AML/CFT. While the authorities claim that they would fall under

the supervision of the FIU, this had not been done at the time of the mission. They are subject to

the POCA and POCA Regulations and are listed as a relevant business activity in Schedule 1 of

the POCA. The size of their operations has not been established, nor has their beneficial

ownership, control and source of funding been ascertained by the authorities. The uncertainty as

to the size of their operations, sources of funding, and their beneficial ownership and control,

raise the potential of significant ML/FT risk to the jurisdiction, and any other FI that provides

services to these operations.

Guidelines for FIs (c. 25.1):

Power for Supervisors to Monitor AML/CFT Requirement (c. 29.1):

502. (For the sake of order and simplicity, c. 29.2, c. 29.3 and c. 29.4 are described under

this heading by regulator, regulated entity and applicable law. Summary analysis and

conclusions are provided under the respective criteria that follow.) (See also Rec. 17. Also,

for purposes of this part, “international” and “offshore” may be used interchangeably or

together.)

503. Except for international (offshore) banks and money services businesses (MSBs), there

are no specific provisions in the POCA, POCA Regulations, or the UN (Anti-Terrorism

Measures) Act or any other law that explicitly designates the authorities responsible for

monitoring and enforcing compliance with the AML/CFT requirements. The emergency powers

of the ECCB and those for domestic banks can be generally used for AML/CFT purposes but are

inconsistent with and not as explicitly stated under Section 23 of the International Banks Act and

the Money Services Business Act. The authorities, mainly IFSA and the ECCB, also have

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general powers to supervise FIs and to enforce compliance with the applicable financial and

regulatory laws which could usefully be extended to AML/CFT requirements as for entities

under their jurisdiction. The following describes these powers.

ECCB

Domestic Banks:

504. The ECCB is the regulator and supervisor of domestic banks in SVG (and in the other six

ECCU members). Certain functions are carried out in coordination with the Minister of Finance

for certain issues, e.g. licensing and enforcement. Its functions and powers are provided under

the ECCB Agreement Act that established the ECCB, and is complemented by more specific

supervisory duties under the Banking Act, 2006. The following provisions apply with respect to

domestic banks:

ECCB Agreement Act:

505. Section 3 of the Act empowers to the ECCB to, inter alia, regulate banking business on

behalf of and in collaboration with Easter Caribbean Currency Union (ECCU) governments

(Ministers of Finance) which includes the exercise of all powers specifically granted by the

provisions of the Act to do all such things as shall be necessary to carry out such powers.

506. Under Part IIA of the Act, the ECCB has been granted broad emergency powers to

intervene, assume control of and take other necessary action against a bank when the ECCB is of

the opinion that, inter alia, a bank is not acting in the interest of depositors and creditors or is not

maintaining high standards of financial probity or sound business practices. Such powers

include, inter alia, investigation the bank and its affiliates, assume control of its affairs, and

ensure that the financial institution maintains high standards of financial probity and sound

business practices. For that purpose it can examine and supervise the operations of the financial

institution, issue cease and desist orders and stipulate prudential criteria to be followed by the

FIs. In the exercise of such powers, the ECCB shall have access to books and records of a bank.

507. However, these powers are limited under Section 5B to those circumstances where the

ECCB is of the opinion that the financial system of any of the territories of ECCU governments

is in danger of disruption, substantial damage, injury or impairment. In principle this could

involve criminal activities.

508. Under Section 41 of the Act, the ECCB shall act as agent for the ECCU governments in

the administration of any law or regulation relating to the licensing of any offshore banking or

offshore trust operation. In this connection, the ECCB shall monitor the operations of offshore

FIs in accordance with the laws or regulations under which such FIs have been licensed to

operate and shall take account of such guidelines as the ECCB’s Monetary Council may issue for

this purpose. In practice, the ECCB no longer participates in the supervision of offshore banks as

a matter of routine.

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Banking Act:

509. Section 20 of the Act also provides the ECCB with the power to examine banks from

time to time or whenever it believes that such examination is necessary or expedient in order to

determine that such financial institution is in a sound financial condition and that the

requirements of this Act have been complied with. These powers, as those under the ECCB Act,

can apply only in a very broad basis (e.g. safety and soundness issues) but not specifically for

AML/CFT purposes. Section 21 further provides that banks shall produce for the inspection of

any examiner appointed by the ECCB at such time as the examiner specifies, all books, minutes,

accounts, cash, securities, documents and vouchers relating to its business and the business of its

affiliates as requested by the examiner for the purpose of this Act. It is an offence not to produce

such records for inspection, or where such records are false, and banks can be subject to

monetary fines on summary conviction.

510. Section 23 (1) of the Act requires banks to furnish the ECCB from time to time and in

such form such manner information and data for the proper discharge of its functions and

responsibilities. Under Section 23(6), the ECCB may further require banks to submit any other

information which it may require for the purposes of this Act from any financial institution about

its operations and those of its affiliates in SVG and abroad. Fines can be applied for non-

compliance on summary conviction.

511. Under Section 19 of the Act, the ECCB can appoint annually an auditor whose duties

shall be, inter alia, to certify whether suitable AML/CFT measures have been adopted by a bank

and are being effectively implemented in accordance with the applicable laws. Auditors are

required to report to the ECCB any evidence of criminal activity involving fraud (but not ML or

FT), or if they detect serious irregularities.

512. The sanctioning powers available to the ECCB can only broadly and indirectly apply for

non-compliance with the AML/CFT requirements. Under Section 22 of the Act, where the

results of an examination of a bank shows that the entity or its directors, officers, employees,

significant shareholders, etc. are engaging in unsafe or unsound practices in conducting the

business of the institution, is violating any law, regulation or guideline issued by the Central

Bank to which the institution or person is subject, or the ECCB has reasonable cause to believe

that the practices or violations are likely to occur, the ECCB may take one or more sanctioning

or corrective measures including the issue of warnings, directions, conclude written agreements

(in practice memoranda of understanding are mainly used), cease and desist orders, and make

recommendations to the Minister for restricting or revoking a license. Directors, officers,

employees, significant shareholders, etc. are subject to financial penalties for non-compliance on

summary conviction. Under Section 29 monetary fines can also be applied, on summary

conviction, against, a director, manager, secretary, employee or agent of a bank who with intent

to deceive: (i) makes any false or misleading statement or entry; (ii) omits any statement or entry

that should be made in any book, account, report or statement of the financial institution; or (iii)

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obstructs or endeavors to obstruct the proper performance by an auditor under the Act or of an

examination by an authorized examiner.

513. Section 11 of the Act provides the ECCB with a broad power to recommend to the

Minister of Finance the revocation of a bank license where a bank is conducting its affairs in a

manner that is detrimental to the national interest and those of its depositors. This could again

broadly cover AML/CFT issues.

514. The ECCB Act and the Banking Act do not contain explicit provisions for the ECCB to

supervise banks for compliance with the POCA and the AML POCA Regulations, except for the

general indirect powers described above. It would be useful to include explicit powers to

supervise and enforce compliance with the POCA and the POCA Regulations as well as the

relevant provisions of the UN (Anti-Terrorism Measures) Act. Such explicit provision would be

consistent with and complementary to those obligations imposed on external auditors to review

and certify the existence and implementation of AML and CFT measures by banks. The range of

enforcement powers, particularly the application of administrative measures, contained in the

Banking Act should also be available for enforcement of the AML/CFT obligations. The ECCB

should also be empowered to initiate/refer enforcement proceedings with/to the competent SVG

authorities for enforcement of violations of under the POCA, POCA Regulations and anti-

terrorism legislation. The AML/CFT legislation could also identify the ECCB as the competent

authority with respect to the supervision of entities under its supervision, and for the application

of administrative sanctions for non-compliance with the AML/CFT requirements using powers

under the financial regulatory laws.

IFSA

SVG International Finance Authority Act:

515. Section 3 of the Act establishes IFSA as the authority responsible for administering and

supervising international (offshore) legislation. The international legislation currently in place,

while not mentioned under Section 3, include those sectors relating to international (offshore)

banks, international insurance, mutual funds, ITRs and trustees, RAs, international business

companies, and any other future offshore legislation. To the extent that these laws include or are

linked to AML/CFT supervisory requirements (see sector-specific discussions that follow), the

Act provides IFSA with supervisory jurisdiction.

516. In addition, Section 8 of this Act also expands on the duties under Section 3 stating that

IFSA shall have the “duty, ultimate authority and exclusive right” to, inter alia, administer the

licensing and supervision provisions in the laws relating to trusts and trustees, RAs, international

banks, and to oversee the activities of the Registrar of IBCs (international business companies)

and the Registrar of trusts in accordance with the applicable legislation. Section 8 does not

explicitly cover the full range of international entities that could be covered under Section 3

above. This should be reviewed for consistency to remove the uncertainty with respect to the

scope of IFSA’s supervisory jurisdiction under this Act. Section 8 also designates the

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International Finance Inspector as the person responsible for discharging the duties of IFSA

where these have been delegated under this Act or other international legislation.

517. With respect to enforcement, IFSA may call on the government of SVG to assist in

carrying out and enforcing decisions, rulings and resolutions it makes, and for purposes of

carrying out its duties and responsibilities under the Act and under other applicable laws of SVG.

These provisions should be explicitly extended to the AML/CFT laws, and similar powers would

also be useful for the ECCB for the supervision and enforcement or initiation of enforcement and

sanctions proceedings under the AML/CFT legislation, including for enforcement through the

courts.

International (offshore) banks:

The International Banks Act:

518. Section 23 of the Act states that IFSA “shall be responsible for monitoring compliance by

a licensee with the requirements of Section 46 of the POCA. However, for the avoidance of

doubt, the mission recommends that this power extends to the POCA Regulations issued under

the POCA. The POCA Regulations have specific compliance requirements as well as

corresponding sanctions for violations. In addition, the POCA does not provide for sanctions

(administrative or otherwise) for breaches of Section 46 of the POCA, except for Section 46(4)

which is limited to failure to report a suspicious transaction. (See discussion under Money

Services Business below with respect to the similarities to Section 46). Neither are there

sanctions in the POCA for non-compliance under Section 46 that deal with the duty to

implement compliance programs to ensure and monitor compliance with the POCA Regulations.

The POCA Regulations provide explicit sanctions for non-compliance.

519. There is a need, therefore, to extend the provisions of Section 23 of the International

Banks Act (as well as in Section 9 of the MSB Act and all the other financial and regulatory

laws) to the POCA Regulations. In addition, it would be important to specify (in this Act, or the

POCA and POCA Regulations.) that IFSA also has the power to enforce compliance and to

apply the administrative sanctions under the International Banks Act, and to initiate (through the

competent SVG authority e.g. FIU, police or DPP) enforcement action for breaches of the

AML/CFT legislation.

520. Section 19 (1) of the Act states that IFSA’s functions under the Act shall be conducted

under the supervision of the Minister of Finance. Section 19(2) establishes the broad functions of

IFSA that include, inter alia, (i) to examine the affairs or business of licensees including the

conduct of onsite inspections to determine if they are conducting their business in a satisfactory

manner; (ii) to inspect the books and records, and request information from the appropriate

authorities in any country with respect to the holding company, parent company or shareholder

company of a licensee; and (iii) to assist with investigations of violations of SVG laws or of any

other country where that country has sought assistance in connection with offenses by a licensee

or any of its officers or directors. In the exercise of its powers, IFSA can under Section 19 (3)

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call upon an auditor, director, officer or employee of a bank to produce books, records,

documents, etc. relating to its business generally and any other information about its affairs and

business. These provisions can facilitate AML/CFT supervision.

521. For purposes of performing its functions, Section 19 (5) of the Act empower IFSA to,

subject to any applicable confidentiality provisions (see Rec. 24 with respect to Section 15(4) of

the RAs and Trustees Act for restrictions on access to information held by certain DNFBPs),

have access to books, records, documents, cash, securities, etc. and may request any information,

matter or thing from any person IFSA believes is carrying on business without a license. Under

this subsection, it can also examine or cause to be examined the foreign affiliates of a licensee to

the same extent that a licensee can be examined. However, Section 19(9) states that for purposes

of Section 19(5) it is the “Executive Director” and not IFSA who shall have access to the name

or title of an account of a customer and any other confidential information about the customer

that is in possession of a licensee. There are no explicit powers for the Executive Director to

delegate or appoint someone to conduct this specific function/activity which may create practical

limitations for routine ongoing supervision. Any account established by a licensee on behalf of a

customer shall state the name and address of the customer and or the beneficiary of the account.

522. Section 19(10) authorizes IFSA to examine or cause to be examined the affairs of

licensees (or previous licensees) from time to time or to determine, inter alia, if they are

complying with the Act. This covers AML elements such as under Section 14 (3) where e.g. the

directors of the bank are required to manage and supervise the conduct of business and to

establish AML policies, internal controls and procedures. Section 19(11) further provides for

IFSA to examine or cause to be examined any affiliate of a bank to ascertain compliance with the

Act and whether they are engaging in unsafe and unsound practices. This would also broadly

cover AML/CFT issues.

523. Section 13 of this Act has provisions that are broadly similar to those in the Banking Act

that requires an international bank to appoint an external auditor to audit its accounts and to

report to the bank and IFSA any evidence of a criminal offence that may come to their attention

during their audits involving fraud, money laundering or dishonesty. It does not include the duty

to report terrorism finance crimes.

524. Under Section 19(9), IFSA may petition the court for an order authorizing it to take any

action it considers necessary in the interest of depositors or other creditors and to preserve the

assets of a bank that is subject to such an order. It can make this petition when it suspects that

there is a contravention of the Act or where a contravention is likely.

525. Section 20 enables IFSA to take one or more remedial measures when a bank is engaging

in unsafe and unsound practices or is in violation of laws, regulations (can include the AML/CFT

laws) or guidelines. Such measures can include: (i) a written warning; (ii) enter into a written

agreement with the bank providing for a program of remedial action; (iii) issue a cease and desist

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order that requires the bank, director or officer with respect to practices or violations of law

specified in the order; or (iv) issue any directions to the bank it deems necessary.

526. Section 21 provides additional powers to IFSA to take certain actions, with the advice of

the Minister of Finance, when, inter alia, a bank is carrying on business in a manner detrimental

to the interest of the public, depositors or other creditors, has breached the Act, where a director,

officer or manager is not a fit and proper person, or where it has not managed its business in a fit

and proper manner. These issues broadly cover AML/CFT issues. The measures that IFSA can

take in these circumstances are to: (i) revoke the license; (ii) impose new or additional conditions

on the license; (iii) substitute a director or officer; (iv) appoint a person to advise the bank on the

conduct of business; (v) appoint a person to assume control of the bank; (vi) require the bank to

take any other action IFSA considers necessary. IFSA may take other consequential or ancillary

actions in relation to the forgoing, in some cases under the advice of the Minister.

527. Section 27 (1) provides for sanctions against licensees, directors, shareholders or officers,

or applicants for licenses, for supplying false or misleading information to IFSA which can be,

on summary conviction, a fine of EC$100,000 and/or to imprisonment of two years. Under

Section 27(4), a person can be subject to similar penalties if, inter alia, he fails to comply with a

request made by IFSA or contravenes any provisions of the Act or its regulations where no

punishment is specifically provided.

Mutual Funds

Mutual Funds Act:

528. There are no provisions under this Act, as under the International Banks Act, for IFSA to

monitor, supervise or enforce compliance with the POCA and the AML POCA Regulations. In

addition, IFSA does not have statutory powers to supervise fund underwriters who, under the

Act, can offer fund shares to the public, or as agent for a mutual fund, offers for sale or sells to

the public shares issued by the mutual fund. (Section 2 of the Act).

529. Section 3 of the Act provides for the appointment of a Registrar by the IFSA (an

employee of IFSA), with the approval of the Cabinet. In particular, the Registrar is responsible

for supervising mutual funds, mutual fund managers and fund administrators, (but not

underwriters) and for issuing directives and policy guidelines for the purpose of this Act or

regulations issued thereunder. IFSA may also appoint other staff to administer the Act. Such

powers do not legally extend to the AML/CFT requirements applicable to the mutual fund

industry.

530. Under Section 35 of the Act, the Minister of Finance may, on the recommendation of

IFSA, direct that all or any of the provisions of this Act or the regulations shall (a) not apply, or

(b) apply subject to such modifications as he may specify to any person or any class of persons.

Such broad discretionary powers for the Minister if used could result in effectively exempting

certain funds, managers or administrators from provisions that could affect supervision and

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enforcement generally. The assessors were informed that the authorities have not used such

powers.

531. The Act allows mutual funds to keep its accounting records and financial statements,

“and such other documents or information” outside SVG [see e.g. Section 13 (1)(b)(ii)] as the

funds’ officers see fit, provided that the Registrar may require that copies of such records,

statements, other documents and information be kept in SVG. Apart from books and records

under Reg. 23 and Section 13 of the Act, other documents and information would seem to refer

mainly to prospectuses and offering documents per Regulations 22 and 14 of the Act. These

requirements would make it impractical and expensive, for any purpose, for IFSA to access such

records and information for purposes of examination and ongoing supervision of funds,

administrators and managers, and would not be suitable for AML/CFT purposes. In addition,

Regulation 3(2) refers to access to financial statements by investors under Section 12(2)(c) to the

effect that where a fund has issued bearer shares, an investor must produce the “original” of the

shares to the officer of the fund in order to inspect such statements. To the extent that mutual

funds have issued bearer shares to investors that are physically under the possession or control of

investors, it could have implications on the fund administrators’ ability to conduct effective CDD

and for IFSA to examine for compliance with the same. This regulatory provision should also be

reviewed with respect to the immobilization requirements for bearer shares of SVG international

business companies (IBCs). See also Rec. 33 below.

532. Under Section 36 of the Act the Registrar or any other person authorized by IFSA may

direct in writing any person to whom this Act applies to (a) furnish information, or (b) provide

access to any records, books, or other documents relating to the mutual business of that person

that are necessary to enable him to ascertain compliance with the provisions of this Act or the

regulations. As indicated above, the Act does not address compliance with the POCA, POCA

Regulations and the UN (Anti-Terrorism Measures) Act but these provisions on access to

information could facilitate an examination of compliance with the AML/CFT requirements.

However, it would be useful to have explicit powers to monitor for AML/CFT compliance as

exist under the International Banks Act.

533. Notwithstanding the above, the Mutual Fund Regulations (Regulation 23) require that

books and records of a mutual fund be kept “at the principal office in the state” of each fund.

Furthermore, each fund shall maintain permanently at “its principal office in the State” such

books of accounts and records of this business and financial affairs as will, inter alia, enable the

Registrar to conduct at any time a proper examination of the mutual fund’s affairs. (The latter

“State” means SVG but unclear whether the former “state” also means SVG or any other country

where it may have a principal office. Principal office is not defined.) These records shall include,

inter alia, general and subsidiary “ledges” (presumably ledgers) and general journals, and any

other registers or records as may be directed or authorized by the Registrar. It is not specified

that any of these include investor records including of investment subscriptions and redemptions

but these may implicitly be covered. It should also be clarified whether such records may or may

not be kept outside of SVG, but in practice the records of a large majority of SVG registered

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funds are kept in other countries, which would make ongoing supervision less practical and cost

effective, particularly onsite inspections. Where such funds may also be subject to regulation in

another country, “legal” access to such records may also require formal procedures with the

authorities of those other countries making the ongoing supervision.

534. Under Regulation 24, the Registrar may also appoint an accountant to examine the affairs

of a mutual fund where it believes that the books and records are not kept in accordance with the

Regulations. The purpose of such an examination appears to be to establish the financial

accounts/position and accuracy of filings of the fund per Exhibit 18 of the Regulations. It would

be useful to specify that such examination will cover AML/CFT compliance. The authorities

assert that such purpose is broad enough to include AML/CFT compliance.

535. Under Section 29, IFSA may take enforcement action against mutual funds, licensed

managers or administrators (but not underwriters) that include cancellation of a certificate or a

license, or imposition of conditions, restrictions or limitations on such certificates or licenses

where a licensee has, inter alia, been convicted of an offence under this Act or of a criminal

offence in any country or jurisdiction; has supplied false, misleading or inaccurate information or

failed to disclose material information required for the purposes of any provision of this Act or

the regulations; or is carrying on business in a manner detrimental to the interests of mutual

funds investors or to the public interest. There should be provisions to use such enforcement

powers for AML/CFT supervision and compliance purposes.

536. Under Section 29 of the Act, IFSA may cancel a certificate or license if, inter alia, the

holder thereof has been convicted of a criminal offence or is carrying on business in a manner

detrimental to the interest of mutual funds investors or the public interest. In its broadest these

provisions can cover AML/CFT issues. In addition, under Section 37 (2), IFSA “may bring

actions and institute proceedings in its name or office for the enforcement of any provision of

this Act or the regulations, or for the recovery of fees and other sums of money payable under

this Act or the regulations”. These provisions should explicitly extend to non-compliance with

the AML/CFT legal requirements. Sanctions can also be applied to any person who: (a) makes a

misrepresentation in any document required under this Act or the regulations (b) makes false

statements or information required under this Act or the regulations (c) fails to disclose any fact

or information required to be disclosed for the purpose of this Act or the regulations, or (d)

refuses or neglects to comply with a request for information and documentation under Section 36

(see above). The sanctions are, on summary conviction, a fine of not less than EC$5,000 and not

more than EC$50,000 or to imprisonment for a period not exceeding two years or both such fine

and imprisonment. In addition, a person who contravenes a provision of this Act or the

regulations for which no penalty is provided may be liable on summary conviction, (a) in the

case of a body corporate or unincorporated, to a fine of not more than EC$50,000 and (b) in the

case of an individual, to a fine not more than EC$5,000 or to imprisonment for a period not

exceeding one month or to both such fine and imprisonment.

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537. Section 5 of the Act also requires the Registrar to submit an annual report to IFSA, which

shall send a report to the Minister of Finance that includes enforcement proceedings or

disciplinary measures taken under the Act.

Domestic Insurance Companies

Insurance Act:

538. There are no provisions under this Act or any other legislation that explicitly empowers

the Supervisor of Insurance to monitor, inspect and enforce compliance with the AML/CFT

requirements.

539. Under Section 4 of the Act, the Minister of Finance shall designate a Supervisor of

Insurance (“Supervisor”) who shall comply with any special directions given to him in writing

by the Minister. Section 5 states that the Supervisor may engage other persons to, inter alia,

conduct investigations, inquiries or functions under this Act, and may delegate all or some of his

powers under the Act to other employees of the Ministry. Under Section 46, the Supervisor may

require an insurer to furnish information with regards to its business including securities, books,

accounts, papers, documents, etc. at a time, manner and place the Supervisor determines. Such

documentation shall be furnished even when they are in possession of another person. In

pursuance to such powers, the Supervisor can take copies or extracts of documents and to obtain

explanations concerning the same. Where such information has not been produced, the

Supervisor can seek for an explanation as to why they were not produced. In principle, these

powers can be used to access and inspect records for AML/CFT purposes.

540. Section 47 requires the Supervisor to obtain a warrant from a Magistrate to enter and

search the premises of an insurance company when it believes that information and

documentation requested by the Supervisor under “Section 45” of the Act has not been produced.

(This is an erroneous reference with the correct section being Section 46 as described in the

preceding paragraph.) The warrant requires the participation of the police. Under such judicial

order, the Supervisor can seize and remove records, etc.

541. Under Section 48 and Section 49 the Supervisor can intervene in the affairs of an

insurance company, and impose requirements, for a number of prudential and safety and

soundness issues but not for AML/CFT purposes either directly or indirectly. Such powers

should extend for AML/CFT purposes.

542. Under Part IV of the Act, the Supervisor has broadly similar powers with respect to

associations of insurance underwriters, under Part V for insurance intermediaries (brokers,

agents and sales representatives), and Part VIII for pension plans. The Act also provides for

penalties for breaches of the law but not for AML/CFT.

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International (offshore) Insurance:

International Insurance Act:

543. There are no provisions under this Act or any other legislation that explicitly empower

the Supervisor of Insurance to monitor, inspect and enforce compliance with the AML/CFT

requirements.

544. Under Section5 of this Act, IFSA shall appoint a Commissioner of International

Insurance (“Commissioner”) and a Deputy and any other persons for the administration of the

Act. The Commissioner has the duty for general supervision of insurance business (includes

reinsurance and all other activities regulated under the Act that would include intermediaries)

and shall include examination of matters connected with international insurance business.

545. Section 7 states that, subject to the “confidentiality Act” (not defined but may refer to the

Confidential Relations Preservation Act which has been repealed), the Commissioner shall have

access to, and make copies of, books, records and documents, etc. of any insurer, insurance

manager or other intermediaries (agents, brokers, adjusters). The Commissioner can also make

inquiries of these parties with respect to the conduct of their business affairs. Any officer or

person in charge of or in possession of such information who refuses to provide such access or to

answer to inquiries, commits an offence.

546. The International Insurance Regulations, under Reg. 11, also require insurers to maintain

at their principal office in SVG such books of accounts and records of its affairs that, inter alia,

will enable the Commissioner to conduct an examination of the insurers’ affairs for purposes of

ascertaining its financial condition and compliance with the insurance legislation. While under

Reg. 12(g) the Commissioner may require a licensee to keep any other register or records as may

be specified by the Commissioner, this is insufficient. It is recommended that the purpose of the

Commissioner’s examination and the types of records should explicitly cover AML/CFT

compliance issues. It does not extend to AML/CFT compliance. It is important to note that for

purposes of keeping books and records, the insurance Regulations (Reg. 11) only require that the

Commissioner has access to such books and records through electronic means. This requirement

presumably is aimed at allowing insurers and their managers to hold original documentation

outside of SVG, as appears to be the general practice. Only a certification from a director or

principal officer of the insurer as to their accuracy may be requested by the Commissioner.

Regulation 12 also provides for the Commissioner to appoint auditors or accountants to conduct

examinations of insurers but only for financial condition purposes.

547. The Act also provides for sanctions and intervention by IFSA for breaches of the Act, but

which may apply for AML/CFT purposes in a very general sense. In particular, under Section 34

where IFSA is of the opinion that a licensee, inter alia, is carrying on business in a manner

detrimental to the public interest or policy holders. Sanctions may involve suspension or

revocation of certifications of authority (evidencing licenses).

161

548. In addition, Section 36 requires insurance managers to report to and provide information

and documentation to the Commissioner, when they have knowledge of or information that an

insurer is, inter alia, is experiencing a serious state of affairs that is or may be prejudicial to the

interests of policyholders and creditors, or is involved as a defendant in any criminal

proceedings. Under these circumstances, IFSA can revoke a license if it considers the

circumstances reported may be detrimental to the public interest or those of policyholders.

Furthermore, Section 43 states that where IFSA is of the opinion that a licensee is or may be

carrying on business in a manner that can be detrimental to the public interest or those of

policyholders, etc., it may require information from such entities and require that they take

remedial measures. These requirements maybe complementary to IFSA’s/Commissioner’s duty

to supervise and may broadly involve AML/CFT issues, but is insufficient for purposes of

Rec. 29.

549. Section 46 provides for offenses and financial and imprisonment penalties for non-

compliance with the Act on summary convictions.

Credit Unions

550. Co-operative Societies Act: There are no provisions in this or any other law for the supervision

and enforcement of compliance by cooperatives with the AML/CFT requirements. Under the Act, the

Registrar of Co-operative Societies shall have staff necessary to assist him to, inter alia, register and

supervise cooperatives. Such powers can be delegated to his staff. Section 19 contains provision for the

Registrar to examine the records of cooperatives but these are limited to those listed under Section 18(2)

which does not include books, records and other documents with respect to its business affairs including

with respect to its depositors and members. The latter would be necessary for AML/CFT purposes.

551. Under Section 180, the Registrar may appoint an examiner to conduct an examination of the

books and affairs of a cooperative. In such cases the officers, members, agents or employees shall provide

the examiner with books, accounts, securities, or other documents the examiner requires to perform the

examination. However, access may be limited by the provisions of Sections 18 and 19 of the Act. Under

Section 181, the Registrar may also apply to the Court for an order to conduct an investigation of the

cooperative and any of its member societies or corporations. The powers of the inspector authorized to

conduct the investigation are broad in terms of access to documents and premises, etc. (Section 182).

None of the underlying reasons for such an investigation are sufficient or related to e.g. criminal activity

involving ML/FT or le

gal violations that could apply to the AML/CFT legislation.

Money Services Business (MSB): Money Remitters

Money Services Business Act (2005):

552. Section 9 of the MSB Act designates the Ministry of Finance as the “Authority”, or its

designee, as responsible for monitoring compliance with the requirements of Section 46 of the

POCA, but not with the POCA Regulations. (This provision is similar to that under Section 23 of

the International Banks Act.) In practice, the SRD of the Ministry of Finance will carry out this

function. In addition, Section 9(2) of the Act states that MSBs shall comply with the

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requirements of Section 46 of the POCA but not with the POCA Regulations. The POCA

Regulations have specific compliance requirements as well as corresponding sanctions for

violations. On the other hand, there are no sanctions for breaches of Section 46 of the POCA,

except for Section 46(4) which is limited to failure to report a suspicious transaction. There are

no sanctions in the POCA for non-compliance with the other obligations under Sections 46 and

47 that deal with the duty to implement compliance programs to ensure and monitor compliance

with the POCA Regulations. Therefore, the compliance, monitoring and administrative

sanctioning provisions in all the financial and regulatory laws should extend to the full range

obligations imposed on FIs by the AML/CFT legislation.

553. In addition to Section 19, the Authority shall exercise general supervision over all matters

relating to MSB practice in SVG. Under such powers, it may examine the affairs or business of

any MSB in SVG for purposes of, inter alia, satisfying itself that business is being conducted in a

satisfactory manner, and MSBs are complying with the MSB Act, which under Section 9 would

include compliance and supervision with Section 46 of the POCA. As discussed above, it would

not extend to the POCA Regulations which is necessary for purposes of enforcement. Section 19

also allows the Authority to assist in the investigation of an offence against the laws of SVG by

the MSB or any of its directors or officers. The powers to examine an MSB can extend to the

supervision of parent, subsidiaries and affiliated companies.

554. In the exercise of its functions under the Act, the Authority may, under Section 19 (3),

have access to the premises, books, records, vouchers, documents, cash and securities of

licensees; remove and make copies of the same; request information, matter or thing from any

person who may be carrying on unauthorized business; and call upon any manager or similar

person or officer for any information or explanation. Any person who fails to comply with any

requirements under Section 19(3) above commits an offence and liable on summer conviction to

a fine of EC$5,000 and/or to six months in prison.

555. Section 20 also provides broad powers of inspection to the Authority when, inter alia, it

believes that a licensee is carrying on business in a manner detrimental to the public interest or

that of its customers, has contravened the Act, imprudent management, failure to cooperate under

Section 19(3) above, or is carrying on business in an unlawful manner. All of these

circumstances could generally apply to AML/CFT issues. The powers of the Authority to act in

these cases include, inter alia, revocation of a license, attachment or varying of conditions,

substitution of directors or officers, appointment of persons to advise the licensee, assume

control of the licensee, or require a licensee to take or cease or desist from certain actions.

556. Section 24 of the Act also allows, for the Authority to apply for a search warrant to enter

premises, vehicles, etc. to obtain evidence of offenses against the Act, or where books, records,

documents, etc. requested under Section 19(3) have not been produced. Any person who

obstructs the Authority or authorized person under this section commits an offence and can be

penalized upon summary conviction to a fine or imprisonment. The provision of false or

misleading information is also sanctionable under Sections 25-27 of the Act.

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557. Under Section 19(4), where the Authority suspects that an offence under the Act has or is

being committed, the Authority with the approval of the Court, take any action it considers

necessary in the interest of customers, etc. and to preserve the assets held by that person.

Building Societies (There is only one systemically important Society by virtue of its asset

size and number of clients.)

Building Societies Act:

558. Societies are registered with the Register of the High Court of SVG. However, other than

registration and the filing of periodic returns, there are no provisions or mechanisms in the Act,

POCA or POCA Regulations for there is no regulatory or supervisory regime that is in place for

purposes of AML/CFT supervision and enforcement.

Money Lenders

559. There are two well-known money lenders operations that are subject to the AML/CFT

laws and regulations, but which are not covered by any legislation with respect to authorization,

regulation, and supervision. Hence, there is no regime for AML/CFT oversight and enforcement.

Authority to conduct AML/CFT Inspections by Supervisors (c. 29.2):

560. See c. 29.1 above.

561. There are supervisory powers to examine or inspect the operations of the books and

records of FIs, but those are primarily for purposes of compliance with the applicable financial

laws and not explicitly for AML/CFT purposes. The International Banks Act does provide for

IFSA to monitor for compliance (c. 29.1) but these should be more explicitly linked to the

authority to conduct onsite inspections and to compel records, and to enforce compliance with

the AML/CFT requirements under c. 29.3 and c. 29.4 below. In addition, Section 19 of this Act

limits access to the Executive Director of IFSA to customer account names and titles (see c. 29.1

above) and to any other confidential information about an offshore bank’s customer. This would

be impractical for reviewing and testing compliance with e.g. the customer identification and

recordkeeping requirements under the AML/CFT legislation, in the absence of an explicit power

to delegate this function to others. In practice but infrequently, IFSA has conducted examinations

of banks and reviewed customer files through a team of examiners and consultants. In the past 3

years, most offshore bank examinations were conducted within a period of 3–5 months the

preceding the mission.

Power for Supervisors to Compel Production of Records (c. 29.3 & 29.3.1):

562. See c. 29.1 and c. 29.2 above. In addition, the ability of certain international financial

entities e.g. mutual funds and insurance, to keep records outside of SVG can limit the authorities’

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ability for the conduct of ongoing AML/CFT supervision and enforcement, particularly the

conduct of onsite inspections.

Powers of Enforcement & Sanction (c. 29.4):

See c. 29.1 and c. 29.2 above and c. 17.1 – 17.4 below):

563. The provisions in the financial and AML/CFT legislation should be strengthened to

enhance the powers of all the relevant regulators to enforce or initiate enforcement, and apply

administrative sanctions for compliance with the AML/CFT legislation per se, including the

application of administrative sanctions available under the financial laws. There should also be

explicit authority to enforce the AML/CFT requirements through the sanctioning powers in the

financial and regulatory laws, particularly the application of administrative measures.

Availability of Effective, Proportionate & Dissuasive Sanctions (c. 17.1):

564. (See also c. 29.4 above.) As shown by the charts below, except with respect to criminal

fines in the International Banking Act, the Banking Act, POCA, UNATMA, and those elements

of POCA that are covered by the POCA Regulations, sanctions are not effective, proportionate

and dissuasive. With respect to POCA and UNATMA, the offenses in Sections 41–43 of POCA

would apply in relation to ML, and Sections 3–6 of UNATMA relating to FT, and the criminal

penalties for those offenses are found in Section 47 of POCA and Section 7 of UNATMA, and in

each case are the same: On summary conviction, a fine of up to EC$500,000 or imprisonment for

five years or both, and on conviction on indictment, an unlimited fine or imprisonment of up to

twenty years or both. However, criminal and administrative sanctions in other Acts, as set forth

in the charts below raise concerns: For example, criminal penalties under the MSB Act are very

low, as are those of the Mutual Funds Act. Other than the Banking and MSB Acts, sanctions are

typically linked to broad concepts, such as carrying on business in a manner detrimental to the

public interest (Section 21(1)(e) of the International Banks Act, Section 34(1)(a) of the

International Insurance Act and Section 8(1)(a) of the RA Act) or “has not conducted the

direction and management of the business in a fit and proper manner” (Section 21(1)(j) of

International Banks Act). Finally, the Registrar of Cooperatives, an independent agency that

regulates credit cooperatives and credit unions, is the only financial regulator that does not have

any AML/CFT-related sanctions available to it, either criminal or administrative.

Designation of Authority to Impose Sanctions (c. 17.2):

565. The regulatory laws specified in the tables below provide for the authorities indicated to

impose the sanctions noted, including IFSA for international banks, mutual funds, insurance

companies and RAs; the Minister of Finance for banks, MSBs and insurance companies.

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Ability to Sanction Directors & Senior Management of FIs (c. 17.3):

566. In general, the regulatory laws have provisions, such as Section27(1) of the MSB Act,

Section27(3) of the International Banking Act and Section 24(3) of the Mutual Funds Act, to

impose sanctions on both the legal person and its directors and senior officers.

Range of Sanctions—Scope and Proportionality (c. 17.4):

567. In general, as shown by the charts below, regulators do not have a wide range of

sanctions available to them.

Table 21: Sanctions Available to IFSA for Regulated Sectors

Type of Sanction International

Banks (all

citations to

International

Banks Act)

Mutual Funds (all

citations to

Mutual Funds

Act)

International

Insurance (all

citations to

International

Insurance Act)

RAs and Trustees

(all citations to

RAs Act)

Issuance of

letters requesting

remedial action

N/A N/A N/A N/A

Orders to comply

with instructions

Impose new or

additional

conditions on the

bank, Section

21(2)(b); require

the bank to take

any action that

IFSA deems

necessary to rectify

certain issues,

Section 21(2)(f).

Impose new or

additional

conditions on

certificate or

license, Section 29;

Issue directives for

purposes of Act or

regulations,

Section 3(3)(d).

Require that the

holder of the

certificate of

authority to take steps

as IFSA deems

necessary to rectify

the matter, Section

34(1).

Require the RA to

take steps deemed

necessary by IFSA,

Section 8(1)(a).

Civil money fines

N/A

Removal of

control parties

N/A N/A N/A N/A

Removal of

directors and

senior executives

Require the

substitution of any

director or officer

of the bank,

Section 21(2)(c)

N/A N/A N/A

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Imposition of

Conservatorship

Appoint a person

to assume control

of the bank’s

affairs with the

powers of a

receiver or

manager under

Companies Act

and any other

power conferred by

IFSA, Section

21(2)(e)

N/A N/A N/A

Criminal

penalties

Knowingly or

willfully supplies

false or

misleading

information to

IFSA, liable on

summary

conviction to a

fine of

EC$100,000 or to

imprisonment for

two years or

both,

Section27(1);

failure to comply

with a request

made by IFSA or

contravenes any

provision of the

Act or

regulations where

no punishment

provided, liable

on summary

conviction to a

fine of

EC$100,000 or to

imprisonment for

two years, or

both, Section

27(4)(a) and (d).

a) willfully makes

misrepresentation

in any document;

b) willfully

makes a false or

misleading

statement c)

knowingly fails

to disclose any

fact or

information; or d)

any person who

being in charge of

books and

records, fails to

comply with a

lawful direction,

is liable on

summary

conviction to a

fine of not less

than EC$5,000

and not more than

EC$50,000 or to

imprisonment for

a period not

exceeding two

years or both

such fine and

imprisonment,

Section 40 (1):

contravenes a

provision of the

Act or its

Regulations for

which no penalty

is provided, liable

on summary

Knowingly makes

any false

representation in

connection with a

right, duty, or

obligation under the

Act, liable on

summary

conviction to a fine

not exceeding

EC$10,000 and to

imprisonment for a

term not exceeding

two years and in the

case of a corporate

body to a fine not

exceeding

EC$10,000, Section

46(1);

contravenes any

requirement of the

Act for which no

specific penalty is

provided, liable on

summary

conviction “to a

fine not exceeding

one year (sic)” and

in the case of a

corporate body to a

fine not exceeding

EC$5,000, Section

46(2).

Knowingly

making a false

representation,

liable on summary

conviction to a

fine not exceeding

EC$25,000 or to

imprisonment for

term not exceeding

one year or both,

Section 24(1)(b);

Contravenes any

provision of the

Act for which no

penalty is

specifically

provided, liable on

summary

conviction to a

fine not exceeding

EC$10,000 or to

imprisonment for a

term not exceeding

one year or both,

Section24(2)(c).

167

conviction for a

fine of up to

EC$50,000 if a

corporation, and

for a fine up to

EC$5,000 and

imprisonment for

up to one month

for a natural

person, Section

40(2).

Additional

powers

Appoint an advisor

to the bank who

reports to IFSA,

Sec. 21(2)(d)

Table 22: Sanctions available to the Ministry of Finance for domestic banks

Type of sanction Related Section of Banking Act

Issuance of letters requesting

remedial action

Memoranda of understanding and commitment letters

(both non-binding) pursuant to Section 22(1)(i)

Orders to comply with

instructions

Cease and desist orders, Section 22(1)(iii) and (4), and

directions to management, Section 22(1)(iv)

Civil money fines

N/A

Removal of control parties

N/A

Removal of directors and

senior executives

Section 27(2)

Revocation of license

Section 22(2)(b); restrict a license, Section 22(2)(a)

Imposition of conservatorship

N/A

Criminal penalties

Failure to comply by licensed financial institution with

any requirement or contravenes any prohibition of

Section 22 (see above) is liable on summary conviction

to a fine of EC$100,000, and, in the case of a continuing

offence, to a fine of EC$10,000 per day, Section

22(5)(a); failure to comply as above by any individual,

including a director, officer, employee or significant

shareholder of a financial institution, to a fine of

EC$50,000 and to daily fine of EC$5,000; any director,

manager, secretary, employee or agent of a financial

institution who makes any false or misleading statement

or omits any statement or entry or obstructs the proper

performance by an auditor of his duties under the Act is

liable on summary conviction to a fine of up to

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EC$15,000 or to imprisonment of up to two years or

both, Section 29; offenses may be compounded by the

acceptance by the Minister in consultation with the

ECCB of a fine of not more than EC$5,000 under

Section 35.

Table 23: Sanctions available to Ministry of Finance for insurance companies and MSBs

Type of Sanction

Insurance Business

(all references to

Insurance Act)

Money Services Business (all

citations related sections of MSB

Act)

Issuance of Letters

Requesting Remedial

Action

N /A N/A

Orders to comply with

instructions/

directions

N/A Require a MSB to take, refrain from,

or discontinue any action, Section

20(2)(f)

Civil Money Fines

N/A N/A

Removal of Control

Parties

N/A N/A

Removal of Directors

and Senior Executives

N/A Require the substitution of a director

or officer, Section 20(2)(c)

Imposition of

conservatorship

N/A Appoint a person to assume control

of the MSB’s affairs with the powers

of a receiver or manager under

Companies Act, Section 20(2)(d)

Revocation of License

N/A Section 20(2)(a); attach conditions to

a license, Section 20(2)(b)

Criminal Penalties

N/A Obstruction of powers to search

under a warrant, liable on summary

conviction to a fine of $5,000 or

imprisonment for six months or

both, Section 24(5); knowingly

supplying false or misleading

information, liable on summary

conviction to a fine of $2,000 or

imprisonment for up to three

169

months, or both, Section 26

Additional powers

N/A Appoint an advisor to the MSB to

report to the Ministry, Section

20(2)(d)

Effectiveness of Implementation

568. With the exception of the Banking and MSB Acts, all regulatory laws have either a weak

linkage or no linkage whatsoever between administrative sanctions powers and violations of

POCA, UNATMA and the POCA Regulations. This legal and regulatory weakness, coupled with

an almost complete absence of the use of sanctions powers by competent authorities in relation

to AML/CFT compliance, results in a lack of effectiveness with respect to sanctions, with one

limited exception: The use by IFSA of directives to international banks in the context of

inspection reports which require that banks take certain actions with respect to AML/CFT

compliance. It should be noted that IFSA has used administrative sanctions in the past, such as

license revocation and imposition of controllership, for non-AML/CFT related violations.

3.10.2. Recommendations and Comments

Recommendations with respect to sanctions powers are as follows:

R.23

 Enhance supervision of ownership and control structures of some offshore institutions to

increase transparency of fit and proper criteria.

 Implement enhanced AML/CFT supervision of the systemically large building society

and credit union.

 Strengthen onsite inspections FIs across all sectors, particularly in the non-domestic

banking sectors.

 Enhance oversight of inherently high risk business areas across all the relevant sectors

esp. correspondent banking, money remittance services, wire transfers and back-to-back

loans.

 Increase supervisory resources and understaffing to conduct effective ongoing

supervision across all sectors including through the use of external auditors/consultants,

particularly in the non-domestic banking sector.

 Prioritize development and implementation of a comprehensive AML/CFT

inspections/supervision program for the international mutual fund and insurance sectors,

including through development of cross-border supervisory cooperation mechanisms.

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 Develop detailed sector-specific AML/CFT inspection procedures for the non-domestic

bank sectors.

 Implement AML/CFT supervision of money services business and review and enforce

licensing laws with respect to possible existence of one unauthorized activity.

 Review and if necessary implement an authorization and AML/CFT supervisory regime

for the existing money lending businesses covered by the AML/CFT laws.

R.29 (See also R.17 below)

 Make explicit provision for regulators to supervise and enforce compliance with the

AML/CFT legislation including the application of administrative sanctioning powers in

the financial laws.

 Develop the legal and regulatory regime for regulators to supervise, inspect and enforce

AML/CFT compliance for building societies and presently unauthorized money lending

operations.

 Introduce explicit legal provisions for other regulators (functionally the ECCB, IFSA,

Ministry of Finance), to supervise, inspect and enforce compliance by FIs broadly similar

to those for international banks and money services business, in the POCA, POCA

Regulations and UNATMA. These should include the power to initiate enforcement

proceedings under these laws.

 Extend the AML/CFT compliance obligations under the International Banks Act and

Money Services Business Act to the POCA Regulations in order to provide broader

regulatory scope for monitoring and enforcing compliance.

 Develop and implement a regulatory and supervisory regime for mutual fund

underwriters that would include AML/CFT, similar to that for fund administrators.

 Remove the technical restrictions under Section 19(9) of the International Banks Act that

limit access to the names, titles and confidential information about customers’ accounts

to the Executive Director.

 Review and as appropriate revise the legal and operational framework for mutual funds,

administrators and managers, and insurance companies and their managers, to ensure that

IFSA has efficient and timely access to books, records and information of such

institutions to enable effective AML/CFT supervision.

 Review and if necessary amend the Mutual Funds Act and Regulations to deal with the

ability of IBC funds to issue bearer shares (not immobilized) as this may limit CDD and

compliance supervision.

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 Review/amend Section 35 of the Mutual Funds Act that can exempt FIs from supervision

and enforcement under the Act with implications for AML/CFT.

 Amend the credit unions law to ensure full access to records by Registrar.

R.17

 Amend regulatory laws to ensure that the full range of administrative sanctions powers

for violations of POCA and the POCA Regulations are available to regulatory bodies;

such sanctions powers should be harmonized across regulatory laws to ensure

consistency. Administrative sanctions should include, at a minimum: written warnings;

orders or directives to comply with specific instructions; removal of controlling

shareholders, directors and senior management officials; ordering regular reports;

administrative fines for non-compliance (possibly on a daily basis); barring individuals

from employment within any regulated sector; replacing or restricting powers of

managers, directors, or controlling owners; imposing conservatorship; and suspension,

revocation or withdrawal of the license;

 Amend POCA and the POCA Regulations to explicitly authorize all regulatory bodies

and agencies, including IFSA with respect to international banks, mutual funds, insurance

companies and RAs; the Ministry of Finance with respect to local banks, MSBs and

insurance companies, and the Comptroller of Cooperatives with respect to credit

cooperatives, to impose administrative sanctions referred to above for violations of

POCA and the POCA Regulations;

 Amend regulatory laws to authorize regulators to recommend to the DPP that a criminal

proceeding be initiated for serious violations of POCA and the POCA Regulations; and

 Amend regulatory laws to ensure that civil fines and criminal penalties are substantially

increased along the lines of those found in the Banking Act (see chart above) or in

Section 47 of POCA.

3.10.3. Compliance with Recommendations 17, 23, 25 & 29

Rating Summary of factors underlying rating

R.17 NC

 Regulatory laws lack the full range of administrative sanctions for

non-compliance with POCA and the POCA Regulations.

 Regulatory laws lack explicit linkages between sanctions and non-

compliance with POCA and the POCA Regulations.

 POCA and the POCA Regulations do not provide legal authority for

regulators to impose sanctions for non-compliance.

 Regulatory laws do not have effective, proportionate and dissuasive

administrative fines and criminal penalties.

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 Regulatory laws lack explicit authority for regulators to recommend

to competent authorities that a potential criminal matter be initiated

with respect to serious violations of POCA and the POCA

Regulations.

 With the exception of IFSA in limited cases, competent authorities,

including the ECCB and the Ministry of Finance, have not imposed

any administrative sanctions against FIs for non-compliance with

AML/CFT measures even when authorized by law to do so.

Rating Summary of factors underlying rating

R.23 NC

 Ownership structures of some offshore institutions reduce

transparency and may limit ability of regular review fit and proper

criteria.

 Systemically large building society not subject to effective

AML/CFT supervision.

 Generally inadequate supervision for AML/CFT across all sectors.

 Infrequent focus on inherently high risk business areas such as e.g.

correspondent banking, money remittance services and back-to-back

loans.

 Insufficient supervisory resources and understaffing to conduct

effective ongoing supervision across all sectors, particularly in the

non-domestic banking sector.

 No AML/CFT inspections/supervision of the international mutual

fund and insurance sectors.

 Lack of detailed AML/CFT inspection procedures for the non-

domestic bank sectors.

 No AML/CFT supervision of money services business and possible

existence of one unauthorized activity.

 Lack of authorization and AML/CFT supervisory regime for money

lending businesses covered by the AML/CFT laws.

R.25 C

R.29 PC

 No explicit link between the application of supervisory and

administrative sanctioning powers in the financial laws and the

AML/CFT legislation.

 There are no powers or mechanisms to supervise, inspect and

enforce AML/CFT compliance with respect building societies and

money lending operations.

 Except for international banks and money services business, no

explicit provisions for other regulators (functionally the ECCB,

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IFSA, Ministry of Finance), to supervise, inspect and enforce

compliance by FIs of the POCA, POCA Regulations and UNATMA,

particularly the power to initiate enforcement proceedings under

these laws.

 AML/CFT compliance obligations under the International Banks Act

and Money Services Business Act do not extend to the POCA

Regulations, limiting the scope of monitoring and enforcement.

 No regulation and supervision of mutual fund underwriters.

 Section 19(9) of the International Banks Act restricts access to the

names, titles and confidential information about customers’ accounts

to the Executive Director of IFSA who does not have the power of

delegation with respect to this function.

 IFSA is constrained in its capacity to effectively supervise mutual

funds, administrators and managers, and insurance companies and

their managers, in cases where the books, records and information

are held outside the SVG.

 No supervisory powers in either the AML/CFT legislation or the

financial and regulatory laws, to enforce, sanction, or initiate

proceedings for, violations of the AML/CFT legislation per se.

 Ability of IBC mutual funds to issue bearer shares (not immobilized)

may limit CDD and compliance supervision.

 Section 35 of the Mutual Funds Act can exempt FIs from

supervision and enforcement under the Act with implications for

AML/CFT.

 Limited access to records by Registrar of credit unions.

3.11. Money or Value Transfer Services (SR.VI)

3.11.1. Description and Analysis (summary)

Legal Framework:

569. Under the Money Services Business Act 2005 (Section 4) any person carrying on money

services business in SVG is required to be licensed by the Finance Ministry. Under the Act

money service business means: (a) the business of providing any or all of the following services;

(i) transmission of money or monetary value in any form; (ii) cheque cashing; (iii) currency

exchange; (iv) the issuance, sale or redemption of money orders or traveler’s cheques; and (v)

any other services the Minister may specify by notice published in the Gazette; or (b) the

business of operating as an agent or franchise holder of a business mentioned in para. (a).

570. Persons licensed to carry on money services business under the Banking Act or the

International Banks Act 2004 are regulated under those acts and are not subject to the MSBA.

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571. License requirements include detailed information on the ownership, control, business

plans, accounting records, establishment and maintenance of systems of internal control and

record keeping, seven year record retention requirements, annual audited accounts, and fit and

proper tests for directors and senior officers. No person convicted of an offence involving

dishonesty shall continue as a director or senior officer.

572. Per Section 9 (4) record keeping requirements under the MSBA are: (a) a record of each

transaction executed and record of each outstanding transaction for at least seven years after the

date the transaction is complete; (b) bank statements for a least seven years after the date the

transaction is complete; and (c) bank reconciliation records for at least seven years after the date

of creation. The record keeping requirements under POCA also apply. Under Section 11, annual

audited statements are required and must be filed with the Authority. Article 19 (1) (b) and

Section 21 impose prudent management requirements on money services businesses that require

them to operate in a safe and sound manner.

Designation of Registration or Licensing Authority (c. VI.1):

573. Under the MSBA the Ministry of Finance is the licensing and supervising “Authority” for

money service businesses. In addition to satisfying the direct requirements of the MSBA, Section

9 (2) provides that licensed money service businesses must comply with Section 46 of POCA.

Also, Section 9 (3) provides that the Authority or the Authority’s designee shall be responsible

for monitoring compliance by a licensee with the requirements of Section 46 of POCA. The Act

gives the Authority a range of powers to carry out its supervisory authority, including:

examination of books, records and activities for compliance with regulation and for safety and

soundness; access to premises and documents; removal and copying of documents and records;

and requiring information to be provided. Sanctioning authority under 20 (2) includes: (a)

revocation of license, (b) attach or revoke or amend conditions attached to a license; (c) require

substitution of a director or officer; (d) require appointment of adviser to remedy deficiencies

and to report to Authority; (e) appoint a controller; and; (f) require a licensee to take, refrain

from or discontinue any action.

Application of FATF Recommendations (applying R.4-11, 13-15 & 21-23, & SRI-IX)(c.

VI.2):

574. Money services businesses are subject to POCA and the POCA Regulations. The POCA

requirements are imposed under Schedule 1 of POCA, which lists money transmission services

relevant business activity subject to the act. In addition, among the FIs subject to the act are (a) a

person licensed to operate an exchange bureau; and (b) a person who carries on cash remitting

services; and (c), a person who carries on postal courier services. Also, as noted above, the

MSBA itself provides that money services businesses are subject to Section 46 of POCA. In

addition, the non-mandatory Prevention of Money Laundering Guidance Notes are applicable to

money services businesses. Consequently the full scope of CDD, record keeping, monitoring,

reporting, internal controls, employee training and screening, audit supervision that apply to FIs

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apply equally to money service businesses. See Section 3 above for the strengths and weaknesses

of the legal framework for these arrangements.

Monitoring of Value Transfer Service Operators (c. VI.3):

575. A Supervisory and Regulatory Unit (SRD) has been established within the Ministry of

Finance to carry out the Ministry’s responsibilities for supervision of FIs, including supervision

of money transmitters. As noted, the MSBA provides the Ministry broad powers to supervise

money transmitters, including for compliance with their POCA obligations. The SRD has

established and applied internal policies and procedures for licensing money transmitters. It also

receives and reviews quarterly and annual financial reports from licensed money transmitters.

The Unit is developing policies and procedures for overseeing MSB’s compliance with their

AML/CFT preventive measures requirements. On-site examination is contemplated but, to date,

no on-site examinations have taken place.

List of Agents (c. VI.4):

576. Under the licensing provisions of the MSBA, Schedule 1, Section 5 (1)(c) provides that

license applicants must provide the name and address of each person who is an agent of the

applicant. The SRD maintains a list of the money transmitters it has licensed. Licensees are

required to notify the SRD of the details of any sub-agents employed (name, location, key

personnel, business plan, controls, etc.) but subagents are the responsibility of the licensee and

are not separately licensed.

Sanctions (applying c. 17.1-17.4 in R.17)(c. VI.5):

577. See Section 3 above for the St. Vincent regime for sanctioning FIs for non-compliance

with AML/CFT preventive measures requirements, which applies equally for money service

providers.

Additional Element—Applying Best Practices Paper for SR.VI (c. VI.6):

578. St. Vincent has elected to adopt a licensing regime for money transmitters that conforms

with the Best Practices recommendations for SR.IV. The authorities are aware of only one

informal money remitter operating in St. Vincent, a small-scale activity associated with a

shipping company. On review, the authorities have concluded that this service, with a limited,

established clientele operating on a single link with New York, is too small scale and low risk to

justify licensing it as a money service provider or suppressing its activities. There also appears to

be an FI that has recently started operations as an agent for an alleged foreign UK based

remittance firm which has not been authorized pursuant to Section 3 of the MSBA.

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Effectiveness of Implementation

579. Four firms have been licensed as money transmitters. In addition to their main offices,

these four firms operate a total of 9 branches. One licensee is a bank, one is savings and loan,

one is a regional travel service and the fourth is a regional money service business. At least two

sub-agents operate in association with banks. There are two large international money remittance

firms operation in SVG one being the largest provider of money transmission services (two

licensees, 5 service points) and the other being the second largest (one licensee, 6 service points).

A regional network with head office based in Jamaica also operates in SVG. A fourth

international network is understood to be considering entering the St. Vincent market but has not

yet applied for a license.

580. Financial flows are dominated by inbound remittances from a large population of

overseas workers. The U.S. (Brooklyn, Atlanta, Miami), followed by Canada (Toronto) are the

origins for most remittances, followed by the UK. Significant flows also are received from

construction workers in Trinidad and Tobago and Turks and Caicos. Outbound transfers, which

are only 10-20 percent as large as inbound, are concentrated more in the Caribbean region and

appear to be related to payments for travel, education, medicine and medical treatment and other

low value purchases.

581. Interviews with two of the four licensees established that the firms had developed AML

compliance programs. Identification based on valid IDs is required and transactions cannot be

processed without input of verified ID data of sender or receiver or appropriate information on

person who money is being sent to. Clients are all individuals. Corporate clients are not

permitted and individuals who appear to be acting for a corporate would be very closely

screened. Additional verification may be required if doubts arise about the client or a proposed

transaction. The firms state that they have systems for controlling and monitoring transactions,

both for financial and for AML purposes, with one system being automated up to corporate

headquarters level and the other involving manual recordkeeping at the local level. Compliance

officers screen transactions for unusual activity based on such factors as names of clients,

frequency and size of transactions, country or even neighborhood of origin or destination, and

behavior of customers. MSBs are the most voluminous reporters of SARs in the jurisdiction.

Reporting is based mainly on patterns of unusual activity. In the nature of their business, MSBs

have limited CDD information (one off transactions mainly) to make a full analysis of suspicion

for STR purposes which may contribute to the large number of reports to the FIU.

582. The SRD of the Ministry of Finance currently has 2 examiner staff but there are plans to

increase as show in R.23 and R.30 of this report. In addition to oversight of MSBs, the SRU has

responsibility for supervision of the insurance sector, and is anticipated that it will soon take over

credit unions and building societies base on a law that was recently passed. Current staff is

inadequate to effectively carry out current assigned responsibilities. Licensing of MSBs is,

including fit and proper testing for key personnel, seems to be well administered. The SRD is

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just beginning to develop policies and procedures for on-site supervision of MSBs for AML/CFT

and has not yet carried out any on-site examinations.

3.11.2. Recommendations and Comments

583. The licensing arrangements for MSBs appear to be sound and well-established. On the

basis of short visits MSB staff appears to be well versed in their AML/CFT obligations and to be

implementing appropriate policies and procedures. Given the cash intensity of the money

transmission business, the high level of SARs filed by MSBs, and the inherent vulnerability to

ML through cash movements:

 The Ministry of Finance should quickly develop policies, procedures and capacity for on-

site compliance examinations and begin such examinations.

 Investigate the existence of unlicensed money remittance operations and take appropriate

action.

3.11.3. Compliance with Special Recommendation VI

Rating Summary of factors underlying rating

SR.VI PC

 Lack of AML/CFT compliance monitoring and supervision of business

conducted outside of banking sector.

4. PREVENTIVE MEASURES—DESIGNATED NON-FINANCIAL

BUSINESSES AND PROFESSIONS

4.1. Customer Due Diligence and Record-keeping (R.12)

4.1.1. Description and Analysis

Legal Framework:

584. DNFBPs subject to preventive measures in St. Vincent are casinos, lottery agents,

lawyers, notaries, accountants, RAs and trustees, real estate agents, and jewelers. Car dealers,

while not DNFBPs under FATF definitions, are included in Schedule 1 of POCA and are

included here in the discussion of DNFBPs. Internet gambling and pool betting are also covered

by Schedule 1 of POCA but neither of these activities is currently authorized. CDD obligations

for DNFBPs are laid out in the POCA and the POCA Regulations. The Prevention of Money

Laundering Guidance Notes are also applicable to all DNFBPs. The CDD requirements of these

laws, regulations and guidance are the same as those for FIs and their application to DNFBPs are

subject to the same strengths and weakness identified in 3.1 and 3.3 above.

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585. It is worth noting that, by applying the general CDD framework applicable to FIs, the

identification obligations for high value dealers (jewelers and car dealers) apply to all

transactions and not just cash transactions above a threshold. For one-off transactions, the

identification threshold is EC$10,000, equivalent to about US$3,745 (slightly above the

US$10,000 FATF threshold for casinos but within the €3,000 limit).

586. While DNFBPs are subject to common CDD obligations, the authority and structure for

AML/CFT compliance supervision varies from sector to sector and is very uneven. RAs and

trustees have been regulated and supervised for business purposes since 1996. IFSA is the

functional supervisor for RAs and trustees, and monitors compliance with AML/CFT obligations

but the authority for this function is implicit, not explicit. Casinos and lottery agents are

generally governed by the Gaming, Lotteries and Betting Act administered by the Gaming

Authority. Within this legal framework, however, there is also explicit authority for the Cabinet

to license and prescribe requirements for gambling and betting activities. For such licensees the

regulatory authority is unclear, although the FIU exercises some AML/CFT outreach. The other

DNFBP sectors (lawyers, notaries, accountants, real estate agents, jewelers and car dealerships)

are not subject to specific business or professional regulation in St Vincent. For these DNFBPs,

oversight for AML/CFT compliance, including compliance with CDD requirements, has been

assigned to the FIU, again with only weak statutory authority.

Casinos and Lottery Agents

587. As noted above, the Gambling, Lotteries and Betting Act is the relevant law governing

law for the activities of casinos and lottery agents. The law is administered by a Gaming

Authority, headed by a five-person board of directors. The Authority has the power to grant or

renew permits to receive or negotiate bets, or conduct pool betting operations. The law and

national policy are restrictive and very little gambling, lottery or betting activity is authorized.

Permits appear to relate to small scale activities in conjunction with one-time events. The

Authority has no on-going regulatory role or enforcement powers, or staff. Under separate

legislation a national lottery is operated under the Ministry of Finance, with all proceeds going to

support athletic and cultural activities. The national lottery is conducted in a transparent manner

with twice weekly public drawings. The authorities believe there is little scope or risk for money

laundering through the national lottery. Given the perceived low risk, although lottery agents are

subject to AML/CFT requirements under Schedule 1, they are not supervised for compliance.

588. Section 47 (1) of the Gambling, Lotteries and Betting Act provides a significant

exception to the restrictive provisions of the Act, and from the authority of the Gaming Authority

to regulate gaming activities. Section 47 (1) states that: “Notwithstanding anything contained in

this Act or in any other law relating to gambling, Cabinet may issue a license to any person,

having regard to the circumstances of the case, for the carrying on of any activity in any premises

which may constitute gambling, betting or other prohibited activity, and impose such conditions,

limitations and restrictions (including the payment of periodical or other fees for the purpose) as

it may deem fit.” Administration and supervision of such Cabinet-issued licenses are unclear.

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Effectiveness of Implementation: Casinos

589. Two casinos are licensed in the jurisdiction. Neither the Gaming Authority, nor the

Ministry of Finance, nor the FIU were able to provide information on the licensing arrangements

for these casinos. While it was generally understood that the casinos had been licensed, it was

unclear whether this might have been done by the Gaming Authority or directly by the Cabinet.

Nor was any information available on the provisions of such licenses or the approval steps that

had been taken in issuing a license. One small casino of long standing operates in St. Vincent. It

appears that the owner of the property is the casino licensee although the facts could not be

established. The current operator has been authorized for approximately four years. Ministry of

Finance understood that the operator had been approved but that no formal background check

had been undertaken.

590. Games offered at the St. Vincent casino include roulette, black jack and Caribbean poker,

as well as electronic slot machines. Nightly visitors range from 10-12 to 30 on a busy night.

Customers sign in at the door and transactions are logged by name at the cage. Clients are almost

all regulars. The few outside visitors are readily identified and monitored. CDD information is

not retained. Given the clientele, credit may be extended to known customers during play with

settlement in cash, or on approval, by check, at check-out. Some credits carry over for later

settlement. Credit cards are not accepted. Purchases of chips in excess of EC$3,000 are

exceptional, occurring approximately once every two months. Record keeping is somewhat

informal but sufficient to recognize transactions by individual.

591. There appear to be no specific casino taxes nor conduct of business regulations. The

casino is not regulated other than for AML/CFT purposes.

592. A second casino is known to operate at a very up-scale resort on Canouan Island. The

details and circumstances of its license and its operations could not be established. By reputation,

it is stated that the casino caters to international clients, particularly clientele on junkets.

RAs and Trustees

593. Under the RA and Trustee Licensing Act any person offering “overseas representation

services” must be licensed under the Act. The St. Vincent definition of offshore services

encompasses the activities of Trust and CSPs as specified in R.12. Offshore representation

covers: (i) acting as agent or representative in the establishment, renewal or continuation of

international business companies, or the continuation or registration of ITRs, or the registration

of international mutual funds; (ii) providing registered office or RA services for international

business companies; (iii) providing or appointing nominee directors, nominee shareholders or

nominee officers for international business companies or international banks, or (iv) acting as a

local trustee or fiduciary for trusts exempt from taxation, whether registered or not.

594. Under schedule 1 of POCA provision of trusts and other fiduciary services and provision

of company formations and management services are relevant businesses subject to the

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AML/CFT provisions of POCA. The applicable CDD obligations for RAs (as well as for all

DNFBPs) are laid out in the POCA and the POCA Regulations. The Prevention of Money

Laundering Guidance Notes are also applicable to RAs (as well as for all DNFBPs.) The CDD

requirements of these laws, regulations and guidance are the same as those for FIs and their

application to DNFBPs are subject to the same strengths and weakness identified in 3.1 and 3.3

above.

595. Under Section 4 (2)(a) of the POCA Regulations the obligation to identify applies to “the

forming of a business relationship.” Under 4 (8) a “‘business relationship’ means an arrangement

between any person and a regulated institution, the purpose of which is to facilitate the carrying

out of financial and other related transactions on a regular basis.” The Guidance Notes provide

illustrations of how this can be done in the case of companies (paras. 74-75) and by trustees

(para. 78). The Guidance Notes provide illustrations of information needed on (a) settler, (b)

beneficiaries, (c) protector, (d) the purpose and nature of the trust, (e) source of funds, and (f)

payment authorization.

596. The RAs and Trustee Licensing Act gives IFSA (as the successor to the Saint Vincent

Offshore Finance Authority) broad authority to monitor and enforce compliance with the Act.

This includes monitoring, examining books and records, requiring information to be supplied or

explained, etc. Section 3 in combination with Section 4 (5)(3) of the Saint Vincent Offshore

Finance Act give authority to oversee compliance with other relevant laws. On this authority

IFSA has responsibility to monitor, and supervise, and enforce RAs and trustees for compliance

with their CDD obligations under POCA and the POCA regulations.

Lawyers

597. The AML/CFT preventive measures requirements of POCA and the POCA Regulations,

including the CDD requirements, apply to all the activities of lawyers except those activities

subject to legal privilege. (See POCA, Part 5, Para. 45 (3)). There are no arrangements to

monitor and supervise the compliance of lawyers with their CDD obligations. The St. Vincent

Bar Association is an informal organization without legal standing and with no authority to

enforce compliance with any code of practice or to supervise the AML/CFT compliance of

members. Membership in the St. Vincent Bar is not required to be called to the bar. As discussed

below, the FIU has an outreach function that is actively used to promote compliance with

AML/CFT obligations, particularly by sectors that are not otherwise regulated. However, in

deference to legal privilege, the FIU has not been involving itself in training lawyers in

compliance with their CDD obligations.

Accountants, Real Estate Agents, Jewelers, and Car Dealers:

598. These four businesses and professions are all subject to the AML/CFT requirements of

POCA and the POCA Regulations, including CDD requirements. However, none is subject to

separate business or professional regulation. In the absence of a functional regulator, the FIU has

taken steps to promote AML/CFT compliance. Under the FIU Act the FIU has responsibility for

181

raising awareness and, under this authority, it engages in outreach and training of DNFBPs to

explain to them their AML/CFT obligations. Individual two hour training sessions have been

conducted for most accountants, real estate agents, jewelers and car dealers. The FIU also uses

its police investigative powers and its prosecutorial powers, to monitor and promote AML/CFT

compliance. Where DNFBPs are unable to provide information they would be expected to have

based on proper CDD, the FIU may, and has, investigated to determine whether proper records

are being maintained.

CDD Measures for DNFBPs in Set Circumstances (Applying c. 5.1-5.18 in R.5 to DNFBP)

(c. 12.1):

599. As noted above, all DNFBPs are subject to the same R.5 CDD obligations as those

applicable to FIs. The strengths and weaknesses of these requirements are analyzed in Section 3

above.

Effectiveness of Implementation

Casinos:

600. CDD procedures at the casino in St. Vincent are relatively casual, even though financial

transactions only occasionally reach US$3,000, the threshold level at which identification by

casinos is required under R.12. No information was available on the CDD practices of the casino

on Canouan Island. There is no oversight of casinos’ CDD compliance.

RAs and licensed trustees:

601. CDD seems to be a core activity of RAs and licensed trustees. Agents and trustees

interviewed had detailed familiarity with their CDD obligations under POCA, the POCA

Regulations and the guidance notes. CDD policies and procedures reviewed by assessors

appeared to cover key elements the St. Vincent requirements, including handling of introduced

business and non-face-to-face business. IFSA exercises on-site and off-site monitoring of CDD

compliance by RAs and licensed trustees but oversight is not sufficiently thorough or frequent to

evaluate how effectively the CDD requirements of RAs and licensed trustees are implemented.

In addition, the absence of client documentation in SVG may pose a challenge to efficient

ongoing supervision.

Lawyers:

602. Lawyers appear to be generally aware of their CDD obligations although not fully

attentive to all of the details and procedures expected under the law, regulation and guidance.

There is no AML/CFT compliance monitoring and supervision so the effectiveness of

implementation of R.5 requirements by lawyers has not been tested.

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Accountants:

603. Accountants appear to be well aware of their CDD obligations. However, FIU

involvement in CDD compliance is too limited to test the effectiveness of implementation of R.5

requirements.

Real Estate Agents:

604. Real estate agents appear to be aware of their CDD obligations. Identification generally is

applied to the vendor but not the buyer. Buyer identification generally is treated as the

responsibility of the lawyer who draws up the contract and attends to the settlement. For sales to

non-residents, extensive due diligence on the buyer is carried out by the authorities under the

provisions of the Alien Land Registration Act. FIU involvement in CDD compliance is too

limited to test the effectiveness of implementation of R.5 requirements by Real Estate Agents.

Jewelers and Car Dealers:

605. For jewelers and car dealers the obligation to identify customers arises primarily under

the provisions of Art 4 (2)(b) of the POCA Regulations which requires identification in case of

one-off transactions involving payment by or to the applicant of ten thousand (EC) dollars or

more.” Jewelry transactions only occasionally reach this threshold and many used car

transactions fall below this threshold. Jewelers and car dealers appear to be familiar with their

R.5 identification obligations. FIU involvement in CDD compliance is too limited to test the

effectiveness of implementation of R.5 requirements by jewelers and car dealers.

CDD Measures for DNFBPs in Set Circumstances (Applying Criteria under R.6 & 8-11 to

DNFBP) (c.12.2):

R.6

606. The non-mandatory Guidance Notes address PEPs, calling for FIs and DNFBPs to apply

enhanced due diligence for both domestic and foreign PEPs. The strengths and weaknesses of

this regime as it is applied to FIs are analyzed in Section 3 above and the comments there apply

equally to DNFBPs. In St. Vincent CDD for PEPs is primarily an issue for casinos, lawyers, and

RAs.

Effectiveness of Implementation of R.6

607. In interviews, some lawyers and RAs indicated they were unfamiliar with their enhanced

due diligence obligation with respect to PEPS notwithstanding that they had established policies

and procedures to implement their AML obligations. Supervisory oversight is limited and the

effectiveness of implementation of PEP requirements has not been systematically evaluated.

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R.8

608. The requirements for DNFBPs with respect to non face-to-face transactions are the same

as those for all FIs. The strengths and weakness of this regime were analyzed in Section 3 above

and the comments there apply equally to DNFBPs. The non-mandatory Guidance Notes call for

non-face- to-face identification procedures to be equally as effective as face to face procedures,

and for risk mitigation steps to be taken. Certification of documents is encouraged, as well as

additional documentations where appropriate.

Effectiveness of Implementation of R.8

609. Lawyers and RAs appeared to require certification of many documents provided by their

offshore clients. Again supervisory oversight is too limited to evaluate the effectiveness of

implementation of identification in the case of non face-to-face-transactions.

R.9

610. The requirements for DNFBPs with respect to intermediaries and introduced business are

the same as those for all FIs. The strengths and weaknesses of this regime were analyzed in

Section 3 above and the comments there apply equally to DNFBPs.

Effectiveness of implementation of R.9 (see issues raised above under Rec. 9 for FIs)

611. Reliance on third parties appears to be an issue primarily for lawyers and RAs and

trustees. c. 9.1 Lawyers and RAs appear to be aware of the requirement to obtain from third

parties necessary CDD information. During interviews some copies of supporting policies and

procedures were made available, along with examples of CDD information being obtained from

third parties. Although some professionals indicated they would not rely on third party CDD,

most indicated that they do rely on them for much of their offshore business. There is no

systematic oversight of the AML/CFT compliance of lawyers so the effectiveness of lawyers’

implementation has not been systematically evaluated. IFSA oversight of AML/CFT compliance

by RAs includes review of their CDD practices, including offsite review of required internal

AML policy and procedures. However, IFSA oversight has not been sufficiently thorough or

frequent to judge the general effectiveness of implementation by RAs of the procedures for

relying on third party CDD.

612. In interviews, lawyers and RAs provided copies of internal procedures for ensuring that

they are able to obtain identification of CDD data and supporting documentation without delay.

Examples of written agreements were reviewed. Supervisory oversight of the effectiveness of

these policies and arrangements is limited.

613. St. Vincent AML/CFT guidance notes allow FIs and DNFBPs to rely on CDD carried out

by parties regulated for AML/CFT compliance in jurisdictions which have regulation equivalent

to that of St. Vincent. Lawyers and RAs appear to follow this guidance and do not appear, as a

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matter of regular practice, to take additional steps to satisfy themselves that the third party is

adequately regulated and supervised.

614. The Guidance Notes include a list of approved countries which St. Vincent deems to have

AML/CFT regulation and supervision equivalent to that of St. Vincent. The list includes major

OECD countries and a number of offshore jurisdictions. The criteria used for inclusion on the list

are not clear but the list does not appear to be based on information about adequate compliance

with the FATF recommendations. Lawyers and RAs give some attention to the list when

deciding how much reliance to place on CDD work supplied by third parties. The practice with

respect to reliance on third parties who are regulated parties in countries not on the list, varied.

Some lawyers and RAs did not appear to probe deeply into the AML/CFT environment of a

country if they were generally satisfied with the third party introducer. Other lawyers and RAs

avoided any reliance on third parties unless they were fully satisfied as to their compliance with

the FATF standard.

615. Fixing the ultimate responsibility for customer identification and verification with the

financial institution relying on the third party is discussed in Section 3 above and the same

provisions apply equally to DNFBPs. Lawyers and RAs interviewed were well aware of this

provision.

R.10 Record Keeping

616. Record keeping requirements applicable to all AML/CFT regulated persons are set out in

POCA (Art 46 (1)), and the POCA Regulations (Section 5), as well as being addressed in the

Guidance Notes (paras. 102-109). Under the Regulations a seven year record keeping

requirement is established. Section 3 above provides an analysis of the St. Vincent record

keeping regime and the analysis there applies equally to DNFBPs.

617. Section 5 (2) of the Regulations specifies that: “A regulated institution shall also keep for

the minimum retention period the records or copies of records containing the details relating to

its business as may be necessary to assist in investigation into suspected money laundering.”

618. Section 5 (3)(a) of the Regulations specifies a seven year retention period after the day on

which the account is closed. Section 5 (4)(c) provides for the holding period to be extended

pending the outcome of an investigation, upon written request by the FIU.

619. Section 5 (3) requires retrieval of records in legible form within a reasonable period of

time.

Effectiveness of Implementation of R.10

620. All DNFBPs interviewed appeared to be generally familiar with their record keeping

requirements. RAs are subject to on-site examination by IFSA, which includes review of record

keeping; compliance appears to be generally acceptable, if uneven. Lawyers are not subject to

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AML/CFT oversight and no information is available on the effectiveness of their implementation

of record keeping requirements. With respect to accountants, real estate agents, jewelers, and car

dealers, the FIU has conducted outreach and training including with respect to record keeping

requirements so awareness of record keeping responsibilities is satisfactory. On an occasional

basis the FIU has made spot checks of the quality of record keeping by these DNFBPs, usually in

the context of following up on some difficulty in getting information in relation to an

investigation. Within the last four years the FIU, drawing on the police powers of its staff and it

DPP powers, charged and got conviction of one car dealer for violations that included non-

compliance with POCA record keeping obligations.

621. R.11 St. Vincent requirements to pay attention to complex, unusual large transactions,

and all unusual patterns of transactions, which have no apparent economic or visible lawful

purpose are the same for all Schedule 1 parties, whether FIs or DNFBPs. The strengths and

weaknesses of that regime are analyzed in Section 3 above and the comments there are equally

applicable to DNFBPs.

Effectiveness of implementation of R.11.

622. Of the DNFBPs, the RAs seem to be the most aware of techniques of money launderers

and the potential abuse of corporate and trust structures. In interviews, some RAs presented

exceptional cases where corporate or trust structures had been requested which had no

reasonable business purpose, and where the business was rejected, and an SAR filed. However, it

is noted that during the past 5 years, trustees filed only 4 SARs with the FIU, all during 2008.

623. Oversight procedures adopted by IFSA include review of internal monitoring procedures

but to date such oversight is limited. For the other DNFBPs, the FIU has provided systematic

AML/CFT training, including training on ML and FT typologies. In addition, the FIU sends out

periodic newsletters highlighting the duty of vigilance with respect to ML and FT risks. Most of

these other DNFBPs are sole proprietors or very small operations. Parties interviewed tended to

see only their one-off transactions and they viewed these as posing very low ML or FT risk. For

these other DNFBPs there is no systematic oversight to their internal procedures for monitoring

complex, and unusual large transactions.

Overall effectiveness of implementation of R.12.

624. Implementation of CDD requirements by casinos is poor. One casino is entirely

unsupervised and no information on its practices was available. The other casino, which is also

not supervised, has informal CDD procedures which provide some identification information but

fall short of national or FATF standards. The authorities believe that the AML/CFT risks of these

casinos are slight given the low levels of business at each.

625. Implementation by other DNFBPs is uneven but compliance generally suffers from a lack

of, or insufficient, compliance monitoring and supervision. RAs are more advanced with respect

to awareness and procedures for insuring CDD compliance, both in general and in set

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circumstances. However, their business also involves the most complex CDD issues and, in the

absence of compliance monitoring it is not possible to draw any firm conclusions about the

general pattern of compliance. With respect to reliance on third parties some RAs and lawyers do

not take adequate steps to satisfy themselves that the counterparty is effectively regulated for

AML/CFT compliance at the standard set by FATF, whether it is on the Guidance Notes

approved list or not. Record keeping standards are adequate but supervisory oversight of

DNFBPs is too limited to gauge the level of compliance with those standards. It is noted that

only 4 SARs were filed by trustees during the past 5 years, all in 2008.

4.1.2. Recommendations and Comments

 Casinos should be regulated and supervised.

 All DNFBPs should be examined more systematically for CDD compliance.

 IFSA on-site examinations should be more frequent and thorough, especially for RAs and

trustees.

 Some arrangement should be introduced for inspection of lawyers for compliance. Other

DNFBPs should be subject to spot checks of files.

 Additional training should be undertaken, particularly for lawyers but also for RAs in

their procedures for relying on third-parties for CDD compliance.

4.1.3. Compliance with Recommendation 12

Rating Summary of factors relevant to s.4.1 underlying overall rating

R.12 NC

 No regulation or supervision of casinos.

 Infrequent and insufficiently detailed monitoring of CDD compliance

of RAs.

 No arrangements for systematically spot checking CDD compliance by

lawyers, real estate agents, accountants, jewelers, and car dealers.

 Insufficient training, particularly of lawyers and of more complex

international business relations.

4.2. Suspicious Transaction Reporting (R.16)

4.2.1. Description and Analysis

Legal Framework:

626. The R.13 obligation of St. Vincent DNFBPs to: file suspicious activities reports; R.14

protections for SAR reports and prohibitions on tipping of; and R.15 requirements for internal

controls, screening, training and audit, all derive from the POCA and the POCA Regulations,

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with guidance provided in the Prevention of Money Laundering Guidance Notes. The same

provisions that apply to FIs apply equally to DNFBPs. See Section 3 above for an analysis of the

strengths and weaknesses of this legal regime. Of the DNFBPs, only RAs and trustees are subject

to a systematic oversight for compliance with suspicious activity reporting and with requirements

for an internal AML compliance program. In the case of the other DNFBPs (casinos, lawyers,

accountants, real estate agents, jewelers and car dealers) the FIU has engaged in a pro-active

outreach and training program to raise awareness among DNFBPs of their AML/CFT

obligations, including with respect to SAR reporting and internal AML compliance programs.

The FIU does not, however, systematically monitor and enforce compliance by DNFBPs with

these preventive measures obligations. The FIU may, however, undertake compliance

examinations if, in the course of its own investigations, it finds that a DNFBP is unable to

provide the sort of information expected to be available it the party has an adequate internal

AML program.

Requirement to Make STRs on ML and TF to FIU (applying c. 13.1 & IV.1 to DNFBPs):

627. The SAR reporting obligations of DNFBPs are the same as those for FIs. See Section 3

above for an analysis of these requirements in St. Vincent.

STRs Related to Terrorism and its Financing (applying c. 13.2 to DNFBPs):

628. The reporting obligations for DNFBPs with respect to FT funds are the same as those for

FIs. See Section 3 above for an analysis of these requirements in St. Vincent.

No Reporting Threshold for STRs (applying c. 13.3 & IV.2 to DNFBPs):

629. All suspicious transactions, including attempted transactions and funds linked to FT, are

to be reported by DNFBPs regardless of the amount of the transactions. See discussion in Section

3 above.

Making of ML and TF STRs Regardless of Possible Involvement of Fiscal Matters

(applying c. 13.4 and c. IV.2 to DNFBPs):

630. The requirement to file a SAR, including SARs for funds related to FT, applies regardless

of whether they are thought to involve tax matters. See discussion in Section 3 above.

Additional Element—Reporting of All Criminal Acts (applying c. 13.5 to DNFBPs):

631. See discussion of c 13.5 in Section 3 above.

Protection for Making STRs (applying c. 14.1 to DNFBPs):

632. The protections for DNFBPs who make SARs are the same as those for FIs. See

discussion in Section 3 above.

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Prohibition Against Tipping-Off (applying c. 14.2 to DNFBPs):

633. Prohibitions on tipping off, applicable to all reporting parties including DNFBPs, are

discussed in Section 3.7 above

Additional Element—Confidentiality of Reporting Staff (applying c. 14.3 to DNFBPs):

634. Provisions requiring the FIU to maintain confidential the names of individuals filing

SARs are the same for all reporting institutions. See the discussion of these provisions in Section

3.7 above.

Establish and Maintain Internal Controls to Prevent ML and TF (applying c. 15.1, 15.1.1 &

15.1.2 to DNFBPs):

635. POCA and the POCA Regulations require Schedule 1 parties to establish and maintain

internal procedures, policies and controls to prevent ML and FT, and to communicate these to

their employees. The guidance notes amplify a little on how these requirements might be

satisfied. The requirements for DNFBPs are the same as those for all FIs. See Section 3 for a

discussion of these requirements. Section 46 (6) of POCA provides that: “Every financial

institution or person engaged in a relevant business activity shall develop and implement a

written compliance program reasonably designed to ensure and monitor compliance with

Regulations made under this Act.” Section 46 (7) of the Act spells out the key elements of such a

compliance program. “(a) a system of internal controls to ensure ongoing compliance; (b)

internal or external independent testing for compliance; (c) training of personnel in the

identification of suspicious transactions; and (d) appointment of a staff member responsible for

continual compliance with this Act and the Regulations.”

636. The single Schedule to the POCA Regulations provides specific procedures for: (a)

verification of individuals; (b) verification of corporate entities; (c) verification of identity of

partnerships or unincorporated businesses; and (d) verification of facilities established by

telephone or Internet.

637. With respect to CDD and the detection of unusual and suspicious transactions, the

Guidance Notes discuss a Duty of Vigilance to properly identify parties and to be alert to

suspicious transactions, and it provides specific guidance as to how this duty can be satisfied.

The Record Keeping Section of the Guidance Notes provides detailed guidance with respect to

required time limits for records and the contents of records, as well as a register of enquires.

(paras. 102-110).

638. Compliance management is mandated under Section 47 (7)(d). The requirement to

appoint an internal AML reporting officer and his functions are spelled out in Section 5 (7) of the

Regulations. The Guidance Notes call for the Reporting Officer to be a senior member of key

staff. Section 5(7)(b) and (c) specify that the reporting officer should have access to any

information necessary to evaluate an internal report of suspicion.

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Independent Audit of Internal Controls to Prevent ML and TF (applying c. 15.2 to

DNFBPs):

639. Internal or external independent testing of compliance is required by Section 47 © of

POCA. Neither adequate resourcing of the audit activity nor sample testing are addressed in

POCA, the Regulations or the Guidance Notes.

Ongoing Employee Training on AML/CFT Matters (applying c. 15.3 to DNFBPs):

640. Training is required under Section 47 (7)(c) of the POCA. Section 8 of the Regulations

sets out requirements that relevant staff be trained from time to time on: (a) St. Vincent

AML/CFT laws and regulations; (b) internal compliance procedures; (c) recognition and

handling of apparent ML transactions; and (d) the new staff be trained as soon as practicable.

Employee Screening Procedures (applying c. 15.4 to DNFBPs):

641. Employee screening is not explicitly addressed in POCA or the POCA Regulations. The

Guidance Notes discuss The Duty of Vigilance of Employees, with para. 25 explicitly calling for

employers to have a “know your employees” policy.

Additional Element—Independence of Compliance Officer (applying c. 15.5 to DNFBPs):

642. The independence of the AML/CFT reporting officer and his reporting lines are not

addressed in POCA or the Regulations. The Guidance Notes (para. 21) state that “the Reporting

Officer should be a senior member of key staff with the necessary authority to ensure compliance

with these notes.”

Special Attention to Countries Not Sufficiently Applying FATF Recommendations (c. 21.1

& 21.1.1):

643. Neither POCA, the POCA Regulations, nor the Guidance Notes specifically require

relevant persons to pay special attention to transactions and relationships with persons from

countries which do not or insufficiently apply the FATF Recommendations. The Guidance Notes

(para. 86) set out a more general standard of enhanced due diligences in cases where “the

authorities or management may determine that because a high incidence of money laundering is

associated with persons from certain countries or regions.” The Guidance Notes also address

vigilance with respect to high risk countries in the context of PEPs, in which case FIs are

instructed to assess which countries are most vulnerable to corruption. The Transparency

Corruption Perceptions Index is cited as a reference.

c. 21.1.1 Examinations of Transactions with no Apparent Economic or Visible Lawful

Purpose from Countries Not Sufficiently Applying FATF Recommendations (c. 21.2):

644. The vigilance procedures for relevant persons in St. Vincent do not differentiate between

transactions with countries that do not sufficiently apply the FATF Recommendations and other

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countries. Under para. 17 of the Guidance Notes: “FIs should pay particular attention to all

complex, unusual or large business transactions, or unusual patterns of transactions, whether

completed or not, and to insignificant but periodic transactions which have no apparent economic

or lawful purpose or any other transaction or financial activity that may constitute or be related to

money laundering.”

645. The Guidance Notes (paras. 88-95) call for staff to report any suspicions to their

Reporting Officer. The Reporting Officer, in turn, is charged with investigating to determine

whether the suspicions warrant filing a SAR. If a SAR is filed, it will contain a written summary

of the Reporting Officer’s findings. Para. 94 states “If in good faith he/she decides that the

information does not substantiate a suspicion, he/she would be well advised to record fully the

reasons for his/her decision not to report to the FIU in the event that his judgment is later found

to be wrong.”

Ability to Apply Counter Measures with Regard to Countries Not Sufficiently Applying

FATF Recommendations (c. 21.3):

646. See discussion in Section 3 above.

Overall effectiveness of R.16

647. With the exception of some RAs, the DNFBPs in St. Vincent tend to be small

organizations, ranging from sole proprietorships to businesses with 12-15 employees.

Compliance functions and training arrangements reflect the size of the businesses. All DNFBPs

interviewed seemed aware of the requirement to report suspicious transactions as well as

requirements to have written AML/CFT policies and procedures and to appoint a reporting

officer. All stated that they had such documents, including appointment of a reporting officer,

with some providing documentation. Details varied greatly, with RAs providing the most formal

and complete documented policies and procedures.

648. The FIU, in executing its awareness raising function, has conducted systematic training

for DNFBPs. Most of this training is conducted firm by firm, with typical programs involving

two hour structured sessions covering key elements of an effective AML/CFT program. Follow-

up training has been conducted where requested or where the FIU has detected weaknesses. FIU

training is supplemented by follow up instructions and periodic newsletters. RAs stated that they

typically undertake in-house staff training.

649. Not surprisingly, given the small scale of most DNFBPs, no parties interviewed indicated

that their internal compliance programs were subject to an independent internal or external audit.

Supervisory oversight of DNFBPs internal polices and controls, and screening, training and audit

is limited. RAs are required to provide IFSA with copies of their internal AML/CFT policies and

procedures but inspection of the adequacy and effectiveness of these arrangements is quite

limited. Some documentation provided to assessors appeared to be out of date. From time to time

the FIU has occasion to investigate other DNFBPs internal control arrangement but the FIU does

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not systematically oversee compliance. Screening of employees did not appear to be

systematically applied.

650. All DNFBPs interviewed were familiar with the requirement to file SARs and had a

general familiarity with money laundering vulnerabilities. Awareness was higher among RAs,

lawyers and accountants. Supervisory oversight of the internal compliance programs of DNFBPs

is limited. IFSA has recently become more active in supervising AML/CFT compliance but its

procedures are still underdevelopment. The FIU, in exercising its police investigative powers,

occasionally examines the adequacy of some DNFBP internal systems and controls. Across all

DNFBPs, in the five year period 2004-2008, a total of 4 SARs were filed, all by a single firm and

all in 2008. This result seems low in relation to the number of RAs/trustees (28) and brings into

question the effectiveness of, inter alia, their CDD, monitoring, control and reporting systems.

4.2.2. Recommendations and Comments

 While the overall volume of business conducted by DNFBPs is low, many transactions,

particularly cross-border transactions, are vulnerable to ML and FT risk. In this context,

SAR reporting by DNFBPs is very low, suggesting a need for additional training and/or

stricter oversight of compliance in this area.

 Need to strengthen internal compliance programs and supervision of the same, especially

with respect to the larger DNFBPs. With the limited exception of some RAs, the

adequacy of internal compliance programs has not been examined by supervisors.

 Need to assign responsibility for oversight of the reporting and internal AML/CFT

compliance programs of lawyers, accountants, real estate agents, jewelers and car dealers.

Compliance with Recommendation 16.

4.2.3. Compliance with Recommendation 16

Rating Summary of factors relevant to s.4.2 underlying overall rating

R.16 NC

 Minimal SAR reporting.

 No compliance supervision of most DNFBPs.

4.3. Regulation, Supervision, and Monitoring (R.24-25)

4.3.1. Description and Analysis

Legal Framework:

Regulation and Supervision of Casinos (c. 24.1, 24.1.1, 24.1.2 & 24.1.3):

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Casinos:

651. As noted above, the Gambling, Lotteries and Betting Act is the relevant law governing

law for the activities of casinos and lottery agents. The law is administered by a Gaming

Authority, headed by a five person board of directors. The Authority has the power to grant or

renew permits to receive or negotiate bets, or conduct pool betting operations. The law and

national policy are restrictive and very little gambling; lottery or betting activity is authorized.

Permits appear to relate to small scale activities in conjunction with one-time events. The

Authority has no on-going regulatory role or enforcement powers, or staff. Under separate

legislation a national lottery is operated under the Ministry of Finance, with all proceeds going to

support athletic and cultural activities. The national lottery is conducted in a highly transparent

manner with twice weekly public drawings. The authorities believe there is very little scope or

risk for money laundering through the national lottery. Given the low risk, although lottery

agents are subject to AML/CFT requirements under Schedule 1, they are not supervised for

compliance.

652. Section 47 (1) of the Gambling, Lotteries and Betting Act provides a significant

exception to the restrictive provisions of the Act, and from the authority of the Gaming Authority

to regulate gaming activities. Section 47 (1) states that: “Notwithstanding anything contained in

this Act or in any other law relating to gambling, Cabinet may issue a license to any person,

having regard to the circumstances of the case, for the carrying on of any activity in any premises

which may constitute gambling, betting or other prohibited activity, and impose such conditions,

limitations and restrictions (including the payment of periodical or other fees for the purpose) as

it may deem fit.” Administration and supervision of such Cabinet-issued licenses are unclear.

653. Casinos are relevant businesses under Schedule 1 of POCA and hence subject to the

AML/CFT provisions of POCA and the POCA Regulations as well as to the guidance in the

Guidance Notes. Other than the licensing requirements under the Gambling, Lotteries and

Betting Act, and AML/CFT regulation under POCA, there are no other regulatory requirements

specifically for casinos.

654. Two casinos are licensed in St. Vincent. At the time of the assessment the authorities

were unable to provide documentation on the details of the licensing arrangements for each of

the two casinos, or clarify which authority available under the Gambling, Lotteries and Betting

Act had been used for to issue the licenses.

655. One small casino of long standing is licensed in St. Vincent and has operated under a

succession of managers. The current operator has been authorized for approximately four years.

The authorities were uncertain whether the current operator had been subject to fit and proper

examination prior to authorization. Games offered include roulette, black jack and Caribbean

poker, as well as electronic slot machines. Nightly visitors range from 10-12 to 30 on a busy

night. Customers sign in at the door and transactions are logged by name at the cage. Clients are

almost all regulars. The few outside visitors are readily identified and monitored. CDD

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information is not retained. Given the clientele, credit may be extended to known customers

during play with settlement in cash, or on approval, by check, at check-out. Some credits carry

over for later settlement. Credit cards are not accepted. Purchases of chips in excess of EC$3,000

are exceptional, occurring approximately once every two months. Record keeping is somewhat

informal but sufficient to recognize transactions by individual.

656. The casino is not regulated other than for AML/CFT purposes. There are no specific

casino taxes assessed on the St. Vincent casino nor is it subject to casino-specific conduct of

business or financial regulations.

657. A second casino is known to operate at a very up-scale resort on Canouan Island. The

details and circumstances of its license and its operations could not be established. The

authorities believed that authorization for the casino may have been included in special

legislation covering resort hotel developments of 100 rooms or more, which, in the St. Vincent

context, would be very large development projects. By reputation, the casino caters to

international clients, including clientele on junkets. The Canouan airport is an international port

of entry with scheduled flights to Barbados and Puerto Rico, in addition to charter and private air

facilities.

658. The Gaming Authority has no specific authority or capacity to supervise and regulate the

on-going operations of casinos. While the FIU does not have authority to supervise casinos for

compliance with their AML/CFT obligations, the FIU, as part of its outreach function (see

below), has sent a letter of obligation to the St. Vincent casino explaining the casinos obligations

under the POCA. The FIU has also visited with the manager of the St. Vincent casino to discuss

compliance. No obligation letter has been sent to the casino at Canouan Island. Neither the FIU

nor other government authorities were familiar with the operations of that casino.

659. Details of licensing requirements were not available and the authorities were not able to

provide information on what steps, if any, had been take to prevent criminals or their associates

from holding or being the beneficial owner of a significant or controlling interest, holding a

management function in, or being an operator of a casino.

Effectiveness of implementation of R.24 with respect to casinos

660. FATF requirements for the licensing, regulation and supervision of casinos are not being

implemented.

Monitoring Systems for Other DNFBPs (c. 24.2 & 24.2.1):

RAs and Licensed Trustees:

661. As outlined above, persons carrying on the business of “offshore representation” are

required to be licensed under the provisions of the RA and Trustee Licensing Act, 1996. The

definition of the business of offshore representation essentially encompasses the activities of

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Trust and CSPs as defined in the Methodology Glossary. Licensing of RAs is only required for

international business, not domestic business. RAs are relevant businesses under Schedule 1 of

POCA and hence subject to the AML/CFT provisions of POCA and the POCA Regulations as

well as to the guidance in the Guidance Notes.

662. Under the Offshore Financing Authority Act, 1996, as amended in 2003, the IFSA has

“primary responsibility for the efficient and responsible administration and supervision of

Offshore Legislation.” Under Section 2 of the Offshore Financing Authority Act, Offshore

Legislation includes “any future laws or regulations of the State relating to the provision of

offshore financial services or to the regulation of entities formed in the State to render such

services.” Since RAs are, under Schedule 1, subject to POCA, this definition of Offshore

Legislation is construed by the authorities as providing the legal authority for IFSA to supervise

and regulate RAs for compliance with their AML/CFT obligations under POCA and the POCA

Regulations.

663. In addition to its responsibility for RAs, IFSA has responsibility for the licensing,

regulation and supervision of International Banks, International Insurance Companies, Mutual

Funds and the registration of IBCs and ITRs. The legal authority, resources, capacity and

policies and procedures of IFSA as the regulator of the international financial sector, including

for AML/CFT compliance, are analyzed in detail in Section 3 above under R.23.

664. The powers of IFSA to sanction for non-compliance with AML/CFT obligations are

reviewed in Section 3.11.1 above in the discussion of R.17.

Effectiveness of Implementation of R.24 with respect to RAs.

665. Until recently IFSA’s oversight of RAs’ compliance with their AML/CFT obligations has

focused almost exclusively on the licensing stage and offsite monitoring for compliance with the

RA legislation. Onsite inspections only began in the second half of 2008 following the

appointment in June 2008 of a new Executive Director of IFSA and an internal review that led to

a refocusing of IFSA priorities and work practices. Inspection policies and procedures are still

under development. Most of the AML/CFT reviews took place within the previous 3-5 months of

the mission.

666. The RA and Trustee Licensing Act, 1996 is the main legislation dealing with RAs and,

not surprisingly, licensing is the primary focus of the Act. Section 4(1) states that: “No person

shall carry on any element of the business of Offshore Representation, directly or indirectly, in,

for, from or within the State unless that person has obtained and holds a valid and subsisting

license to do so under this Act.” Both the authorities and various practitioners maintained that

anyone doing the business that RAs do must be, and is, licensed. This understanding

notwithstanding, the definition of Offshore Representation appears to provide a carve out for

lawyers and accountants. At the end of the definition of Offshore Representation, Section 2 (a)(i)

and (ii) state that the activities of (i) barristers or solicitors and (ii) accountants and auditors “in

connection with the formation or professional representation of any entity referenced in the

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forgoing definition.” “shall not constitute “Offshore Representation.” The authorities were

unable to reconcile the text of the Act with the common understanding that all parties, including

lawyers and accountants, were required to be licensed if they act as CSPs. In practice, almost all

of the 28 RAs firms are headed by lawyers or accountants. The authorities were not aware of any

individual lawyers or accountants who were doing the business of Offshore Representation

without a license. The authorities indicated that the situation with respect to lawyers and

accountants will be clarified in future revisions of the act.

667. License applications include information on character, competence, and financial

resources of applicants and IFSA carries out extensive due diligence on applicants prior to

licensing. Licensees are required to submit annual accounts and to submit a certificate of

Compliance by an Independent auditor that the information set out in the license is current and

correct and gives an accurate summary of the businesses of the licensee. As an AML/CFT

requirement, RAs are required to provide current copies of their written internal AML/CFT

policies and IFSA stated that these documents are reviewed as part of the annual license renewal

process.

668. Section 15(2) and (3) of the RA Act, gives the Executive Director of IFSA substantial

powers to supervise the activities of RAs. These include monitoring, examination, reporting to

the Authority the results of examinations, requiring production of books, records and documents,

requiring the supply of information or explanations. No explicit provisions allow the Executive

Director to delegate his/her duties. To date, however, this does not appear to have acted as an

impediment in practice.

669. Section 15(4) dealing with confidentiality of information is problematic. This section

requires written consent of a company or trustee, or a court order for IFSA to access client

(company and trust) information. The authorities state that this section by virtue of the repeal of

the Confidential Documents Preservation Act of 1996 (see, discussion below, Rec. 4) has been

effectively repealed but it was not possible to satisfactorily demonstrate that this is the case. This

constitutes a significant supervisory lacuna as discussed below.

670. Notwithstanding Sections (2) and (3), subSection (4) states that the Executive Director

“shall not have access to any document or other confidential information of a company managed

by a licensee or of a trust for which the licensee shall serve as trustee or to any information,

matter or thing relating to or concerning the affairs of any such company or trust under the

circumstances described in the Confidential Relationship Preservation (International Finance)

Act, 1996 or without having obtained: (a) the written consent of that company or of the

beneficiaries or of each other trustee of a trust, as the case may be; or (b) an order of the court

made on the grounds that there are no other reasonable means of obtaining such document matter

or thing.” The Confidentiality Act has been repealed but repeal seems to leave in place the

information access restrictions, that is, the need for consent or a court order. The apparent

prohibition on the Executive Director’s access “to any document or other confidential

information…or to any information, matter or thing relating to or concerning the affairs of any

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such company or trust…” would appear to frustrate the supervisor’s ability to verify, for

example, proper CDD in cases of even moderately complex corporate structures or

arrangements. It also introduces an impediment to sharing of information. See the discussion

under R.4 for a more complete analysis of the confidentiality issues raised by Section 15(4).

671. Due diligence and record keeping are core functions of RAs. IFSA records show that in

the period 2006-2009, there have been three on-site inspections of RAs, one in the second half of

2008 and two in 2009. AML/CFT was a significant but not exclusive focus of the inspections.

Based on a review of examination reports the first inspections appear to have been relatively

brief, involving meetings with management while the more recent inspections have done more

file sampling as staff have gained experience with the process. The scope of examinations did

not appear to allow a confident assessment of the degree to which RAs examined were fulfilling

their CDD and record keeping and SAR reporting obligations. IFSA stated that it is in the

process of developing inspection policies and procedures and training staff to carry out more

thorough on-site examinations.

672. Discussion with IFSA and with RAs revealed significant gaps in the administration and

supervision of the requirements to immobilize bearer shares which were introduced in 2002. As

amended in 2002, the International Business Companies Act (Section 30(1)) required that: “Any

share certificate issued in respect of bearer shares shall not be distributed but shall be retained in

the safe custody of the RA for the IBC which issued such certificates or in the safe custody of

any other approved custodian.” Other provisions of the law require RAs and approved custodians

to maintain registers of the bearer share certificates they hold, with the register to provide

information on the shares and their current documented beneficial owners. IBCs that had issued

bearer shares are also required by law to provide RA information as to the beneficial owners of

the shares in such certificates and to give a full and detailed account of ownership changes since

the shares were issued. RAs, in turn, are required, within 12 months, to notify the Registrar or

IFSA if any IBCs could not or would not comply with this requirement. Failure by an IBC to

reply could result in shares being stricken from the Register; refusal or failure of a RA to comply

would be an offence. The requirement for RAs to retrospectively establish the beneficial owners

of outstanding bearer shares is re-emphasized in para. 167 of the Guidance Notes. (For additional

analysis of the bearer share situation see the discussion under R.33 below.)

673. In April 2002, IFSA sent a memorandum to all RAs calling attention to the new

immobilization requirements but it is unclear what additional steps, if any, were taken

subsequently to ensure that RAs complied. Some RAs stated that, as a matter of policy, the

companies they administer do not issue bearer shares so the issues of establishing chains of

beneficial owners did not arise for them. Other RAs indicated that the companies they administer

do issue bearer shares and that, after the 2002 amendment to the Companies Act, they had

contacted their IBCs and had either obtained the required beneficial ownership information or, in

other cases, found that the company ceased activity, in which case it was stricken.

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674. Subsequent amendments to the IBC Act reiterated and tightened the requirement for

retrospectively establishing the identity of holders of bearer share certificates. Amendments

adopted in 2007 in the International Business Companies (Amendment and Consolidation) Act,

2007, require that IBCs that had not already done so were to provide RAs information on

beneficial owners of shares within six months of the date of this Act. Based on discussions with

IFSA it was unclear what supervisory steps, if any, had been taken to verify compliance with this

new timetable.

675. The immobilization procedures adopted in 2002 required that bearer share certificates be

held in the safe custody of the RA or in the safe custody of any other approved custodian. The

2002 Act did not contain a definition of “approved custodian.” According to one RA, its

operating practice had been for it, the RA, to recognize various FIs or other reputable parties as

approved custodians. The approval process between the RA and the custodian included written

assurances that the “approved custodian” would maintain a register and promptly provide

information on beneficial ownership upon request. The formalities were akin to those used with

reliable introducers. IFSA appears to have only belatedly become aware that RAs had been self-

approving “approved custodians.” The amendments to the IBC Act adopted in 2007 introduced,

for the first time, a definition of “approved custodian.” Under the new definition in the IBC Act,

“approved custodian” means “a properly regulated custodian or financial institution approved in

writing by the Authority where the custodian or financial institution is required to hold bearer

shares subject to a mortgage, charge or other form of security interest.” IFSA staff were aware of

only one request for it to approve a custodian, and that request was in 2008. They stated that

policies and procedures for granting approval of “approved custodians” were still being

developed. It was unclear what steps, if any, were to be taken with respect custodian

arrangements RAs had established in the interval between 2002 and the 2007 adoption of a strict

definition of “approved custodian” requiring IFSA to approve the custodian. IFSA acknowledged

that the policies and procedures and administration and supervision of the approved custodian

provisions would need to be revisited.

676. Section 17 of the RA Act sets out a relatively undemanding requirement that a RA

maintain its principle place of business within the SVG. At or through such principal place of

business, the RA is required to maintain (a) books or records that accurately reflect the business

of offshore Representation of the Licensee; and (b) if expressly required by governing law to

maintain them in the State, separate accounts in the books or records in respect of each company

the licensee manages or represents and of each trust or registered trust of which the licensee act

as trustees; and, if the licensee is engaged as a financial fiduciary, one or more separate bank

accounts for each company or trust. The governing laws for IBCs, ITRs, and mutual funds do not

appear to require that such books and records and bank accounts be maintained in SVG.

677. At least one RA maintains multiple offices, one in SVG and another large office in

Europe, as well as additional smaller offices in other countries. The mind and management of the

RA are in the European office, the preponderance of the business of the RA is conducted in that

office, and all the detailed books and records are maintained in that office. This structure makes

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it difficult for IFSA to effectively supervise the RA for AML/CFT compliance since, given its

resources, IFSA does not currently have the capacity to undertake the sort of on-site detailed

examination of files necessary for effective oversight of compliance. No arrangements for

home/host sharing of supervisory responsibilities are currently in place. Agreed arrangements for

comprehensive supervision of this and other similar structured RAs should be put in place and

formalized.

678. With the exception of the bearer share issue, RAs interviewed appeared to be highly alert

to their responsibilities for AML/CFT compliance, particularly CDD. Each provided copies of

internal policies and procedures with addressed key requirements although in some cases the

material was dated. Information available in IFSA files was not sufficient to evaluate the general

effectiveness of RAs’ compliance with AML/CFT preventive measures requirements.

Other DNFBP’s

679. With the exception of RAs, there are no structured arrangements for monitoring and

enforcing the compliance of other DNFBPs with their AML/CFT preventive measures

obligations. While the FIU does not have any specific powers or responsibility for compliance

supervision, it has taken a variety of steps to promote compliance.

680. Sec. 4 (2)(g) of the FIU Act assigns an outreach function to the FIU. It provides that the

FIU “shall inform financial and business institutions of their obligations under measures that

have been or might be taken to detect, prevent and deter the commission of offences under the

Proceeds of Crime and Money Laundering Prevention Act 2001.”

Effectiveness of Implementation of R.24 with respect to other DNFBPs

681. Under its outreach the FIU sends “obligation letters” to Schedule 1 FIs and relevant

businesses. The obligation letters call attention to obligations for CDD, record keeping,

monitoring, internal controls and reporting of suspicious activities. As a follow-on, the FIU

provides training for covered parties, explaining their obligations and giving instruction in

relevant money laundering typologies and techniques for monitoring, detecting and reporting

suspicious activities. Training is provided for groups of firms in specific sectors and on a firm by

firm basis. Typical programs are about two hours long and include organized presentation and

discussion of AML topics. Outreach and training are continuing functions of the FIU. Training

sessions are organized intermittently and the FIU prepares and distributes a periodic news letter

reviewing recent money laundering trends and vigilance procedures. Four FIU staff, including

the director, are engaged in outreach and training.

682. Where, in its investigative work, the FIU detects weaknesses in firms AML/CFT

procedures it may pro-actively arrange additional training. More assertively, if the FIU detects

that a relevant business is not able to comply with the FIUs requests for information, it may,

under its police investigative powers, initiate an inspection of the record keeping and internal

controls of the business. In one case in 2005/06 a car dealer repeatedly ignored requests for

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information as well as a formal production order. The car dealer was charged and convicted with

failure to comply with a production order and failure to maintain adequate records as required by

POCA. A fine of EC$10,000.00 was assessed.

683. The FIU compliance outreach program among DNFBPs has been most active among

accountants, real estate agents, jewelers, car dealers and the casino in St. Vincent. The FIU is

less active among RAs because those parties are regulated for compliance by IFSA. The FIU has

been tentative in its approach to lawyers, in part because of legal-privilege considerations. No

letter of obligation has been sent to the casino in Canouan, nor has there been any training for

that casino.

Guidelines for DNFBPs ( applying c. 25.1):

684. The Prevention of Money Laundering Guidance Notes have been issued by the National

Money Laundering Committee. The Guidelines are applicable to all parties covered by Schedule

1 obligations, including DNFBPs. The Guidelines cover: the duty of vigilance; identification and

verification; recognition of suspicious customers/transactions; reporting of suspicions internally

and to the FIU; keeping of records; and training. The Guidelines include topics applicable to both

financial and non-FIs, including guidance specifically directed to DNFBPs. The Guidance Notes

were last updated in December 2006. See Section 3 above for an analysis of the content,

coverage, applicability, and legal standing of the Guidance Notes.

685. The outreach and training program of the FIU provides both general and specific

feedback on ML and FT developments in the country and abroad, on procedures for satisfying

preventive measures obligations, including any issues related to the proper filing of SARs See

discussion in the section above on compliance supervision.

Effectiveness of implementation of R.24

686. The FIU outreach program provides a useful forum for both individual and group

interaction with DNFBPs and serves as an effective channel for the FIU to provide feedback. The

guidance notes contains some, but only limited, information on issues of specific relevance to

DNFBPs and some of the information should be updated or expanded.

4.3.2. Recommendations and Comments

 Procedures for licensing casinos should be regularized and regulation of casinos should

be introduced.

 A regulator with the adequate skills and capacity should be assigned to oversee and

enforce compliance by casinos with their AML/CFT obligations.

 The apparent exemption in the RAs Act barristers and solicitors and accountants from

being licensed for Overseas Representation services should be eliminated.

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 Section 4 of the RAs Act should be repealed.

 IFSA policies and procedures for on-site examination and supervision of RAs’

compliance with AML/CFT obligations should be enhanced, including additional staff

and additional training.

 Given its responsibilities for regulation of the entire international sector, the number of

IFSA examiners –four--is too few.

 Authority of the IFSA Executive Director to delegate examination responsibility should

be included in the Overseas Finance Authority Act.

 IFSA should adopt written internal policies and procedures for approving approved

custodians.

 Policies and procedures should be put in place by IFSA for retrospectively approving

bearer share custodians who were authorized by RAs between 2002 and 2007, or for

revoking such custodianship and establishing new, approved arrangements.

 Policies and procedures, including if necessary, changes in laws or regulation, should be

adopted to ensure that the extensive overseas business activities of some RAs do not

create structures not subject to effective supervision. A variety of approaches are

possible.

 A supervisory authority (or authorities), with adequate powers and capacity, should be

appointed to monitor and enforce compliance by other DNFBPs with their AML/CFT

obligations.

R.25

 Updated guidance should be issued, with additional material applicable to the operations

of DNFBPs.

4.3.3. Compliance with Recommendations 24 & 25 (criteria 25.1, DNFBP)

Rating Summary of factors relevant to s.4.3 underlying overall rating

R.24 NC

 No regulation or supervision of casinos.

 Gaps/inconsistencies in the RAs and Licensed Trustees Act.

 Confidentiality provisions of RAs Act are a potential impediment to

effective supervision.

 Gaps in the oversight of RAs.

 Inadequate supervision of the immobilization of bearer shares.

 Weak arrangements for supervising large overseas activities of RAs.

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 No effective arrangements for overseeing and enforcing AML/CFT

obligations of other DNFBPs.

R.25 PC

 Need for updated guidance with more attention to sector specific

issues, especially for DNFBPs.

4.4. Other Non-Financial Businesses and Professions—Modern-Secure Transaction

Techniques (R.20)

4.4.1. Description and Analysis

Legal Framework:

687. The following non-financial businesses and professions, which are not DNFBPs under

the FATF definitions, are included in Schedule 1 of POCA as relevant businesses subject to

AML/CFT preventive measures obligations: car dealers, internet gambling, pool betting and

lottery agents. For assessment purposes, car dealers have been treated as if they were DNFBPs.

To the extent relevant, internet gambling, pool betting and lottery agents are reviewed in the

sections above dealing with casinos. The authorities state that there is no internet gambling

organized or operated in the jurisdiction. Although not specifically directed at internet gambling,

para. 161 of the Guidance Notes specify action which should be taken by any financial service

provider offering services over the internet. Pool betting has not been authorized. Lottery agents

are considered a very low risk activity and no compliance oversight arrangements have been

applied to them.

Other Vulnerable DNFBPs (applying R.5, 6, 8-11, 13-15, 17 & 21 c. 20.1):

688. For discussion of car dealers, see DNFBP sections above.

Modernization of Conduct of Financial Transactions (c. 20.2):

689. c. 20.2 The largest denomination issued by the ECCB is $EC100.00, which is equivalent

to US$37.00. The majority of banks in the jurisdiction also offer various automated systems

including the use of ATM and credit cards. St. Vincent has a well established and actively used

network of international money transmission services. Nonetheless, the authorities and FIs are of

the view that SVG has a significant cash-based economy in relation to the rest of the ECCU.

4.4.2. Recommendations and Comments

690. No issues with respect to other DNFBPs. The authorities should keep under review

evolving opportunities for reducing the use of cash in the economy.

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4.4.3. Compliance with Recommendation 20

Rating Summary of factors underlying rating

R.20 C

5. LEGAL PERSONS AND ARRANGEMENTS & NON-PROFIT

ORGANIZATIONS

5.1. Legal Persons—Access to Beneficial Ownership and Control Information (R.33)

5.1.1. Description and Analysis

Legal Framework:

International business companies (IBCs):

691. The IBC Act, and the RA and Trustee Act No. 15 of 1996 as amended by the RA and

Trustee Licensing Amendment Act 2004 (collectively, RA Act).

Local companies:

692. The Companies Act No. 8 of 1994, as amended by Act No. 2 of 1999, Act No. 7 of 2001,

Act No. 28 of 2002, Act No. 10 of 2005, and the Companies (Amendment) Act 2006

(collectively, the Companies Act). Partnerships are covered by the Partnership Act, CAP 109.

Measures to Prevent Unlawful Use of Legal Persons (c. 33.1):

IBCs:

693. Under Section 5(3) of the IBC Act, IFSA is empowered to maintain a system of central

registration of IBCs (IBC Register). In addition, under Section 4(1) of the RA Act, only RAs

may incorporate an IBC and under Section 194(2) of the RA Act, only RAs are authorized to pay

any required fees for incorporation of IBCs to IFSA, and IFSA shall not accept a fee from any

other person (see c. 33.2 and 33.3 below for more information). Under Section 185(1)(a), any

person showing a “proper purpose” may inspect the IBC Register after a first making a written

request.

Local companies:

694. Under the Companies Act, the Registrar is empowered to maintain a system of central

registration of local companies (Companies Registry). While not available in electronic form, the

Companies Registry is indexed by company name and is accessible to the public. The

Companies Registry contains information provided by companies about their directors,

shareholders and articles of incorporation (see c. 33.2 and 33.3 below for more information).

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Access to Information on Beneficial Owners of Legal Persons (c. 33.2):

IBCs:

695. Under Section 183(1)(a), IFSA is required to maintain a register of IBCs, including under

Section 14 of the IBC Act, information on the IBC’s articles of incorporation, which in turn

refers to the name and address of the company, the RA involved in its formation, names of

directors, although not required, and the types of shares issued. However, under Section 184 of

the IBC Act, there is no requirement to provide names of directors or shareholders to the IBC

any method of determining whether such nominees are being used. There is also no restriction on

the use of corporate directors. According to the authorities, IFSA may reach beyond the IBC

names of shareholders through the use of its authority under Section 15 of the RA Act to conduct

onsite inspections, obtain information, and access the books and records of the RA. Hence, IFSA

through its supervisory powers over RAs, should have access to CDD information held in their

files about beneficial ownership of the IBCs registered by such agents. However, given the

questions about IFSA’s legal authority to have access to confidential information based on

Section 15(4) of the RAs Act, the small number of on-site inspections of RAs actually conducted

by IFSA, the fact that the mind and management of some of the largest RAs are not resident in

SVG nor are all records maintained locally, and the fact that bearer shares have been

immobilized by custodians neither resident in SVG nor approved by IFSA, IFSA’s practical

ability to access beneficial ownership information on IBCs may be limited (see discussion of

effectiveness of implementation of R.24, above).

Local companies:

696. Under the Companies Act, there are a number of provisions that require information

about beneficial owners to be provided to the Companies Registrar. These include sections 7

(initial submission of articles of incorporation), 69 (notice of names of directors), 176(1) & (2)

(notice of address & change of address), 178(4)(b) & (c)(b) (notice of appointment of secretary

& notice of change of secretary), and 194 (annual return setting forth any changes in any in the

foregoing and including a list of names and addresses of current and former shareholders). There

is no restriction on companies being shareholders, but, according to the authorities, in such cases

typically local companies have been used. There is also no prohibition on the use of nominee

shareholders or directors or any requirement that the use of such nominees be disclosed to the

Companies Registrar or indicated as such in the Company Registry. However, under Section

184(1) of the Act, companies must keep a register of ‘substantial shareholders’ as defined in

Section 181 of the Act, and, under Section 182, substantial shareholders are required to give

notice to the company, naming the nominee, if any. Under Section 184(2), the Companies

Registrar may require the company to furnish a copy of the register of substantial shareholders to

the Registrar and therefore to the names of nominee shareholders who are substantial

shareholders.

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697. The Companies Registrar does not verify any of the information submitted to it, although

if an omission or obvious misstatement is discovered on any form, the Registrar has the power

under Section 526 to “make inquiries that relate to compliance with the [Companies] Act by any

persons.” In addition, Section 530 of the Act contains a criminal penalty on summary conviction

of a fine of EC$2,000 and imprisonment of six months, or both, for any document filed with the

Companies registrar that “(i) contains an untrue statement of a material fact, or (ii) omits to state

a material fact required in the [document], or necessary to make a statement contained therein

not misleading in the light of the circumstances in which it was made.”

Prevention of Misuse of Bearer Shares (c. 33.3):

IBCs:

698. Section 29 of the IBC Act prohibits an IBC from issuing bearer shares unless expressly

authorized by its articles of incorporation. Once issued, under Section 30 of the IBC Act, bearer

shares must be held in “safe custody” either by a RA or an approved custodian and each must

keep a register of bearer shares. “Approved custodian” is defined in Section 2 as follows:

 in relation to the immobilization of bearer shares under Section 30 means, a properly

regulated custodian or financial institution approved in writing by the Authority where

the custodian or financial institution is required to hold bearer shares subject to a

mortgage, charge or other form of security interest.

699. In addition, under Section 49 of the IBC Act, to the extent that bearer shares are used as

security for a mortgage, the shares may also be immobilized by a mortgagee or chargee who is

not a RA or approved custodian. This appears either to be an exception to or in conflict with

Section 30, which limits the parties who may hold bearer shares to RAs or approved custodians.

According to industry representatives, most bearer shares in SVG IBCs are held by asset-based

lenders who wish to obtain a security interest in the shares of IBCs holding assets financed by

such lenders (see discussion of effectiveness of implementation of R.24, above).

700. Further, international banks are not permitted to issue bearer shares, since in Section 2 of

the International Banks Act, the definition of “eligible company,” para. (a)(iii), only permits

companies that have not issued such shares to be eligible for a banking license. Similarly, RAs,

since they must be local companies under the definition of ‘person’ in Section 2 of the RA Act,

would not be able to issue bearer shares. There are no similar statutory restrictions on mutual

funds or international insurance companies., With respect to mutual funds, regulation 3(2) of the

Mutual Fund Regulations which provides as follows, contemplates the issuance of bearer shares:

“If a fund has issued bearer shares, the holder of such a share must produce the original of the

same to the secretary of the fund in order to inspect the financial statements as provided in

Section 13 (2) © (sic) of the Act.” However, according to the authorities, IFSA would not grant a

mutual funds or insurance license to any company with bearer shares outstanding.

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Local companies:

701. Section 29(2) of the Companies Act explicitly prohibits the issuance of bearer shares.

702. Additional Element—Access to Information on Beneficial Owners of Legal Persons by

FIs)(c. 33.4):

IBCs:

703. Under Section 185(a)(1) of the IBC Act, any person, including a financial institution,

showing a “proper purpose” may have access to the IBC Register, subject to the restrictions on

the nature of the information available under the Register referred to in c. 33.2 above. According

to the authorities, however, no such instance is known to them.

Local companies:

704. Since the Local Company Register is open to the public, it may be used by FIs to obtain

information on beneficial owners, subject to the restrictions on the nature of the information

available under the Register referred to in c. 33.1 above.

Effectiveness of Implementation

705. With respect to IBCs, SVG’s legal framework has a number of provisions to require RAs

to obtain information about beneficial ownership of legal persons, to make that information

available to IFSA, and to immobilize bearer shares. In addition, IFSA has begun the process of

implementing these laws through onsite inspections and developing procedures. However, in

practice, there are a number of significant concerns that diminish IFSA’s ability to ensure

transparency of legal persons and therefore preclude a finding that the SVG legal and

institutional framework is effective in this regard, including:

(i) questions arising under the RAs Act relating to IFSA’s legal authority to access

confidential information held by RAs, including information relating to CDD;

(ii) IFSA’s ability to have timely access to adequate, accurate and current beneficial

ownership information may be limited by the fact that two of the largest RAs have

mind, management and records elsewhere;

(iii) the limited number of onsite inspections of RAs; and

(iii) with respect to bearer shares;

(a) not all such shares are held in “safe custody” by RAs or approved

custodians as required by the IBC Act; the mission was informed by

industry representatives that a number of custodians, including

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mortgagees, who were not approved by IFSA are holding bearer shares,

and

(b) IFSA’s on-site inspection procedures with respect to (x) immobilized

shares held by RAs and approved custodians are not effective to ensure

that actual certificates are held in “safe custody,” and (y) nominee

directors and shareholders are not effective to ensure that beneficial

ownership information is being made available to RAs.

706. With respect to domestic companies, the situation is similar except that there are no

effective mechanisms to: (i) ensure that the beneficial ownership information is adequate,

accurate and complete; (ii) determine whether nominee shareholders or directors are being used

to shield the identity of beneficial owners; or (iii) go behind such nominees to determine the

identity of beneficial owners.

5.1.2. Recommendations and Comments

 With respect to IBCs relevant laws should be amended to provide:

 that only RAs and approved custodians may immobilize bearer shares;

 IFSA with the legal authority to strike off an IBC under Section 172 of the IBC

Act for reasons of public policy along the lines of its authority under Section

34(1)(a) of the Insurance Act;

 measures should be taken by IFSA to verify, at a minimum; that

 information about beneficial ownership of legal persons in the IBC Register is

adequate, accurate and current, and consistent with such information about legal

persons held by RAs;

 AML/CFT procedures of both RAs and approved custodians are effective and

comply with the laws of their home country as well as those of SVG; and

 bearer shares are held in “safe custody” under the IBC Act and therefore have

been properly immobilized by RAs and approved custodians, and that only

approved custodians as defined by the IBC Act are authorized to immobilize

bearer shares.

 Consideration should be given to amending relevant laws administered by IFSA to

require a wide range of effective, dissuasive and proportionate administrative and

criminal sanctions against controlling shareholders, directors, officers and companies for

failure to disclose material information to IFSA or to RAs or for misuse of any company

in respect to ML, FT or any other predicate crime.

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 IFSA’s onsite inspection procedures should ensure that it has access to and is verifying

that adequate, accurate and complete information with respect to beneficial ownership of

IBCs is being collected and maintained by RAs whether such agents maintain mind,

management and records in SFG or elsewhere.

 With respect to local companies, the Companies Act should be amended to:

 provide the Companies Registrar with the requisite legal authority to ascertain the

beneficial ownership of all companies registered in SVG, and to ensure that

information about beneficial ownership of legal persons in the Local Companies

Registry is adequate, accurate and current; and

 consideration should be given to including a wide range of effective, dissuasive

and proportionate administrative and criminal sanctions against controlling

shareholders, directors, officers and companies for failure to disclose material

information to the Companies Registrar and for misuse of any company in respect

to ML, FT or any other predicate crime.

 The use of nominee and non-SVG corporate directors and shareholders should be

prohibited in both the IBC and Companies Acts unless measures are taken to ensure that

adequate, accurate and complete beneficial information is made available to IFSA and the

Companies Registrar respectively and that the IBC and Companies Registers so reflect.

 The Mutual Funds and International Insurance Acts should be amended to prohibit the

use of bearer shares by licensees, and the Mutual Funds Regulations revised to reflect this

change.

5.1.3. Compliance with Recommendation 33

Rating Summary of factors underlying rating

R.33 PC

 Bearer shares in IBCs are not properly immobilized since some are in

hands of custodians that have not been approved by IFSA.

 With respect to IBCs, onsite inspection procedures of IFSA not

sufficient to ensure that adequate, accurate and complete information

about beneficial owners is being collected and maintained by RAs.

 For local companies, the Companies Registrar does not have legal

authority to ensure that adequate, accurate and complete information

about beneficial owners is available to them or to law enforcement

authorities.

 For local companies, there is no restriction on the use of nominee

shareholders and directors in Companies Act nor is it possible for

Companies Registrar to determine if nominees are being used.

208

5.2. Legal Arrangements—Access to Beneficial Ownership and Control Information (R.34)

5.2.1. Description and Analysis

Legal Framework:

707. International Trusts (ITRs):ITR Act and the ITRs (Amendment) Act No. 27 of 2002

(collectively the ITR Act); ITR (Amendment) Regulations, 2002, and the RA Act.

Local Trusts:

Trustees Act (1897), CAP 383:

Measures to Prevent Unlawful Use of Legal Arrangements (c. 34.1):

ITRs:

708. Section 63(1) of the ITR Act requires the names of the settlor, trustee, beneficiaries and

protector to be registered with IFSA and the trust deed to provide names of settlor, trustee,

beneficiaries and protector, if any. The ITR Register is not public, but is accessible to IFSA and

to the FIU. Finally, under Section 62(1) of the ITR Act, trusts receive an exemption from

taxation by SVG if the trust complies with the Act and registration of the trust creates “a

rebuttable presumption and prima facie evidence of such exemption” under Section 62(6).

Hence, there is an incentive for ITRs to be registered with IFSA but such registration is not

mandatory.

Local Trusts:

709. No measures in place to prevent unlawful use of local trusts.

Access to Information on Beneficial Owners of Legal Arrangements (c. 34.2):

ITRs:

710. Under Section 55A of the IT Act, IFSA has the authority to require a registered trustee to

provide IFSA with any information which it may reasonably require to ensure that the ITR

complies with the provisions of the IT Act or any code of practice. Under Section 55B of the

Act, IFSA has the authority to require a Registered Trustee to produce books, records and other

information which IFSA may reasonably require to ensure that the ITR complies with the

provisions of the IT Act or any code of practice. Under Section 63(1)(b) of the ITR Act, a

registered trustee is required to keep and maintain a register for each ITR with the names of the

settler, beneficiary, trustee and protector. In addition, for purpose or charitable trusts, a summary

of the purpose of the ITR and if a purpose or charitable trust, a summary of the purposes of the

trust and “such documents as are necessary to show the true financial position of the trust . . . .”

Under Section 56(3) of the ITR Act, at least one trustee must be a registered trustee under the

209

RA Act. Finally, there is no prohibition in the IT Act on companies acting as a settlor or

beneficiary. Under Sections 9 and 16(3) of the ITR Act, the settlor may also be the beneficiary or

the protector. However, there is no requirement in laws, regulations or other enforceable means

for registered trustees to identify beneficial owners of trusts.

Local trusts:

711. No information on local trusts available to the authorities.

Additional Element—Access to Information on Beneficial Owners of Legal Arrangements

by FIs) (c. 34.3):

ITRs:

712. Under Section 56(4) of the ITR Act, the ITR Registry is not open to the public except to

confirm that an ITR is registered.

Local Trusts:

713. Information on beneficial owners of local trusts is not available to since there is no

comparable registry.

Effectiveness of Implementation

ITRs:

714. There are no laws, regulations or other enforceable means that require registered trustees

to identify the beneficial owners of trusts, including settlors, trustees (other than the registered

trustee itself), beneficiaries and protectors. Although para. 78 of the Guidance Notes covers this

issue, the Guidance Notes do not constitute other enforceable means. Further, since, under

Sections 55A and 55B of the ITR Act, IFSA is only entitled to obtain information, reports and

documents which it “may reasonably require for ensuring that the Trust is complying with the

provisions of [the] Act and any code of practice,” it does not appear that IFSA has the requisite

legal authority to request information about beneficial ownership of ITRs in order to ensure that

registered trustees are properly identifying beneficial owners of ITRs.

Local trusts:

715. There is no information available on effectiveness.

5.2.2. Recommendations and Comments

 With respect to ITRs, relevant laws, regulations or other enforceable means should be

amended to require registered trustees to identify beneficial owners of trusts (e.g. the

settlor, trustee, beneficiaries and protector) and the IT Act should be amended to make

210

clear that IFSA has the authority to request books, records and other information about

beneficial owners of trusts.

 With respect to ITRs, IFSA should conduct sufficient inspections of registered trustees so

as to ensure that beneficial owners of trusts are identified.

 With respect to local trusts, laws, regulations and other enforceable means should be

adopted to: (i) ensure that competent authorities have access to adequate, accurate and

complete information about beneficial owners of trusts; (ii) prevent misuse of local trusts

for purposes of ML and FT; and (iii) prevent use of companies as settlors, trustees or

beneficiaries of trusts unless they can be adequately identified.

 With respect to both ITRs and local trusts, relevant laws should be amended to prohibit

use of companies as settlors, trustees or beneficiaries.

 With respect to both ITRs and local trusts, consideration should be given to amending

relevant laws should be amended to provide competent authorities with effective,

dissuasive and proportionate sanctions to ensure that requisite information on beneficial

owners is being disclosed and that corporate vehicles are not being used for ML or FT.

5.2.3. Compliance with Recommendation 34

Rating Summary of factors underlying rating

R.34 NC

 With respect to ITRs, no laws, regulations or other enforceable means

requiring registered trustees to identify beneficial ownership of trusts

(e.g. the settlor, trustee, beneficiaries and protector of the trust) and

allowing IFSA access to such information.

 With respect to ITRs, IFSA does not conduct sufficient inspections of

registered trustees so as to ensure that beneficial owners of trusts have

been identified.

 With respect to local trusts, no laws, regulations or other enforceable

means are in place to: (i) ensure that beneficial owners are identified;

(ii) provide a mechanism so that competent authorities have access to

adequate, accurate and complete information about beneficial owners

of local trusts; and (iii) prevent misuse of local trusts for purposes of

ML and FT.

 With respect to both ITRs and local trusts, no restrictions on use of

companies as settlers, trustees or beneficiaries.

211

5.3. Non-Profit Organizations (SR.VIII)

5.3.1. Description and Analysis

Legal Framework:

716. Schedule 1 of POCA was amended in May 2005 to include charities as relevant business

activities subject to the AML/CFT preventive measures of the Act.

717. The Companies Act, 1994 provides for the incorporation of NPOs, including those with a

charitable purpose. To be eligible for exemption from taxation a non-profit organization must be

incorporated under the relevant provisions of the Companies Act. The relevant provisions are in

Part III, Other Registered Companies, Division A, Companies without Share Capital (Articles

326-337). To be approved, an NPO must “restrict its business to a patriotic, religious,

philanthropic, charitable, educational, scientific, literary, historical, artistic, social, professional,

fraternal, sporting or athletic nature, or the like, or to the promotion of some other useful object.”

Prior to applying for registration as a non-profit company, organizers must first obtain the

approval of their articles by the AG. The articles must state that the company is to be carried on

without pecuniary gain to its members, and than any profits or other accretions to the company

are to be used in further its business.

718. Requirements for incorporation as an NPO are somewhat more stringent than those for an

ordinary company. An NPO must have three directors and it must state its non-profit purpose. If

the NPO changes its objectives, it must reapply for registration. Other requirements include

submission of bylaws and submission of annual financial statements signed by a person acting as

an auditor. Registration notices are submitted by CIPO to the Inland Revenue and to Customs. At

the end of 2008 there were 120 registered NPOs.

719. Unless they are clearly inconsistent, the general provisions of the Companies Act that

apply to ordinary companies are also generally applicable to Companies without Share Capital.

Thus the analysis of the transparency of domestic companies and arrangements in the

immediately preceding section is equally applicable to NPOs.

720. Compliance monitoring of NPOs by CIPO is relaxed, with reviews taking place if filings

are not made or a change in structure is submitted or when complaints are received. Complaints

are rare. The Registrar of Companies has powers to investigate for violations of the Companies

Act, including violations of bylaws, but, in practice this has not arisen. The Companies Act

provides for various sanctions for non-compliance, including fines, striking from the Register,

and sentences of up to six months in jail.

Review of Adequacy of Laws & Regulations of NPOs (c. VIII.1):

721. The authorities have undertaken most of the reviews called for in VIII.1 (i, ii, and iii).

The FIU has conducted a review of the NPO sector to understand its activities and vulnerability

212

to ML and TF. The review established that the majority of NPOs are relatively small and

received donation mainly from local fundraising activities and through donations made by local

business persons. These donations most of the times include perishable goods and clothing. The

NPOs that received donations from overseas are mainly donations from subsidiaries in other

jurisdictions mainly the United States of America. Furthermore, most of the monies received by

these NPOs are utilized locally. No systematic review appears to have been undertaken of laws

and regulations of SVG as they affect the NPO sector.

Outreach to the NPO Sector to Protect it from Terrorist Financing Abuse (c. VIII.2):

722. The FIU has undertaken an outreach program with the NPO sector to raise awareness of

the risks of terrorist financing and to identify and address any vulnerabilities. Outreach has

included publication of information in all local newspapers as well as articles in FIU information

notices. Special attention has been given to the major NPOs that receive donations from

overseas, including targeted training for these organizations.

Supervision or Monitoring of NPOs that Account for Significant Share of the Sector’s

Resources or International Activities (c. VIII.3):

723. While charities are subject to POCA and the POCA regulations and hence are subject to

the AML/CFT guidance notes, they are not subject to specific monitoring for compliance with

AML/CFT preventive measures. Nevertheless, the FIU has used its general oversight authority to

raise awareness and undertake training for the NPO sector, particularly training of the larger

NPOs. The FIU also continues to monitor developments in the NPO sector for any indications of

ML or FT activity.

724. Section 154 of Division G of Part 1 of the Companies Act requires additional financial

reporting requirements for companies with annual revenues of more than EC4,000,000 or assets

of more than EC 2,000,000. No distinction is made between domestic and international activities.

Information maintained by NPOs and availability to the public thereof (c. VIII.3.1):

(i) The purpose and objectives of an NPO are required to be stated in the Articles submitted

to the CIPO for registration. Any changes must also be submitted to the Registrar.

(ii) Under sections 177 (3) and 178 of the Companies Act, the Registrar is to maintain a

registry of directors and secretaries of companies, including NPOs. Registry information

includes personal details such as name and address. CIPO does not verify the information

but submission of false or misleading information is an offence under the Act. The

registry information is available to the public. Provisions of the Companies Act implicitly

require the NPO to maintain information on senior officers. Officers are required to be

approved by the Directors; minutes of directors’ decisions are to be maintained; and

records of minutes are required to be maintained. Information on officers is available to

members of an NPO and to the authorities but not necessarily to the public. Since NPOs

213

are companies without share capital, the question of trustees as share owners does not

arise.

Measures in place to sanction violations of oversight rules by NPOs (c. VIII.3.2):

725. The sanctions available for NPOs are the same as those for ordinary domestic companies.

See the discussion of legal entities in the section immediately above. Under Article 184 the

Registrar may require an NPO to provide certain information. Failure to comply or failure to

comply with other periodic filing requirements may result in the NPO being struck off from the

directed investigations of companies, including NPOs, with broad powers to compel production

of books and records and to require information and explanations. It also provides sanctions for

providing false or misleading information.

Licensing or registration of NPOs and availability of this information (c. VIII.3.3):

726. As discussed above, NPOs are registered under the Companies Act and registration

information is available from the Commerce and Intellectual Property Office for a small fee.

Maintenance of records by NPOs, and availability to appropriate authorities (c. VIII. 3.4):

727. NPOs are required to keep their records for a period of 7 years in accordance with the

POCA, including to be able to make the records available to investigative authorities. Division G

of Part 1 of the Companies Act sets out the general requirements for financial disclosure for

companies. These requirements include annual financial statements that provide detailed

breakdowns of incomes and expenditures. No distinction is required between domestic and

international income and expenditure. The Registrar should verify that the funds have been

applied in a manner consistent with the purposes and objectives set out in its registration

documents.

728. Countries should implement measures to ensure that they can effectively investigate and

gather information on NPOs. (VIII.4).

729. The arrangements for domestic co-operation, co-ordination and information sharing with

respect to NPOs are the same as those for all domestic companies. See the discussion of legal

entities immediately above and also the discussion in 7.1 below.

730. Division B of Part V of the Companies Act provides broad authority for court-directed

investigations of any company, including NPOs, with provisions compelling production of books

and records, and provision of information and explanations of any matters investigators consider

relevant, with sanctions for non-compliance.

731. The powers and capacity of competent authorities to share information about NPOs, to

investigate NPOs and to take preventive measures to prevent NPOs from being exploited for

214

terrorist purposes or for terrorist financing are the same as those available for all prevention of

terrorism purposes. No special provision applies with respect to NPOs.

732. Points of contact and procedures for responding to international requests regarding any

particular NPOs.

733. Dealing with international requests for information regarding NPOs would follow the

same procedures as those used for other information related to terrorist financing. See discussion

below in 7.1-7.5.

Effectiveness of Implementation of SR.VIII

734. The majority of NPOs in SVG appear to be small, involving raising and disbursing of

local funds for local social, cultural, religious, or charitable purposes. However, a few NPOs

receive significant overseas funding to support various forms of education, training, and welfare

assistance. Although no evidence or suspicion of FT has arisen, some structural vulnerability

exists. The few NPOs interviewed displayed a general appreciation of concerns about possible

ML and FT abuse of NPOs. However, they were not familiar with specific techniques that might

be used. Tax compliance by NPOs is the main focus of attention for the authorities. Little

attention has been directed at monitoring the activities of NPOs for possible terrorist financing or

at raising general awareness of such vulnerabilities.

5.3.2. Recommendations and Comments

 The authorities should undertake a review of its laws and regulations as they relate to

AML/CFT and the NPO sector.

 The Registrar of companies should establish policies and procedures to monitor financial

filings of NPOs to verify that funds are being raised and disbursed in a manner consistent

with the NPOs stated purpose.

 Financial reporting requirements should be broadened to including information on

domestic and international sources of funds and applications of funds.

5.3.3. Compliance with Special Recommendation VIII

Rating Summary of factors underlying rating

SR.VIII LC

 No review of NPO sector laws and regulations.

 Limited monitoring of NPO financial activities.

215

6. NATIONAL AND INTERNATIONAL CO-OPERATION

6.1. National Co-Operation and Coordination (R.31 & R.32)

6.1.1. Description and Analysis

Legal Framework:

735. The principle legal provisions for national cooperation and coordination are in the

Exchange of Information Act 2008 (the “EIA”) and in the FIU Act. The legal framework is not

explicit in setting forth the legal basis for coordination among the FIU, regulatory authorities,

police and customs on operational matters. To the extent that the FIU obtains information from

domestic regulatory authorities, this authority is contained in the sector specific laws. The

International Banks Act, Section 19 authorizes IFSA to share with, inter alia, the FIU and the

RSVGPF, which are specifically listed as receiving authorities, if it is suspected that the licensee

or its directors or officers has committed an offense. The Banking Act authorizes the ECCB to

share information with other FIs regulatory bodies within the jurisdiction as well as foreign

authorities; however this authority is circumscribed to the information required to maintaining

the integrity of the financial system.

736. A specific concern is that access to information by the FIU that is held by the Inland

Revenue Service is not authorized under law. The FIU, AG and DPP assert that the FIU’s

general authority to “obtain” information under Section 4(1) of the FIU Act enables the broadest

possible cooperation and information access. Draft MOUs between the FIU and the Police,

Customs, and Immigration respectively are expected to be finalized that establish the framework

and scope of mutual cooperation and coordination. The DPP has not yet agreed to a request from

the FIU to conclude an MOU to formally delegate functions to the FIU. Finally, pursuant to

POCA Section 48, the establishment of the NAMCL is intended to facilitate both policy

development/strategic planning and operational cooperation among domestic competent

authorities charged with AML/CFT responsibility.

Mechanisms for Domestic Cooperation and Coordination in AML/CFT (c. 31.1):

737. The Exchange of Information Act of 2008 is the primary basis for sharing of information

among domestic regulatory authorities. The domestic regulators along with the ECCB are also in

the process of signing a regional MOU on information sharing and coordinating exchange of

information requests. Only two sector specific acts provide express authority for cooperation –

the Cooperative Societies Act, Section 183(2) – to any public official in SVG or elsewhere who

is authorized to exercise investigatory powers concerning the society. Other sector specific acts

limit cooperation to limited, non-investigatory purposes – i.e., to maintain the integrity of the

financial system which are not co-extensive with the breadth of AML/CFT cooperation that may

be required.

216

738. Presently, the basis upon which the FIU exercises authority with other competent

authorities is not specifically defined in law or regulation. In practice the mechanisms

implemented are direct requests and ongoing dialogue, in particular this is most evident in the

working relationship among the FIU, the Police and the DPP. The separation of the lines of

responsibility are seamless, in fact perhaps overly conflated, in that the FIU by virtue of police

officers assigned to it cooperates and coordinates investigations. The lack of specific legal

authority of the FIU to directly access databases of law enforcement and other governmental

authorities is yet another factor that pushes the FIU’s work to more police-empowered

investigation over financial intelligence gathering and analysis. The FIU is in the process of

formalizing MOUs with Customs, Police and Immigration authorities that will help to alleviate

the ambiguity as to the FIU’s reach. Nevertheless, the generic wording “obtain” relied upon by

the FIU under the FIU Act Section 4(1) does not suffice to provide the required clarity of the

domestic information sharing with the FIU.

739. In addition, while the policy coordination function of the NAMLC has been used for

information sharing for policy formulation and strategic planning among the member authorities,

the legal basis for policy coordination is not explicit; firmer legal language would facilitate

operational cooperation and coordination.

Additional Element - Mechanisms for Consultation Between Competent Authorities and

Regulated Institutions (c. 31.2):

740. Consultation with the financial sector and DNFBPs on AML/CFT laws, regulations and

guidelines falls almost entirely to the FIU. The FIU Act Section 4(2)(g) requires the FIU to

inform financial and business institutions of their obligations under POCA and UNATMA (the

latter through the 2006 amendments to POCA). The NAMLC could take on a more formal role

with respect to financial sector awareness, in support of the FIUs current efforts in this area.

Statistics:

741. The FIU maintains statistics on cooperation with foreign FIUs but not domestically,

except as follows:

Table 24: Search Warrants Conducted by the FIU in collaboration with other Law

Enforcement Units

Year Total

2004 N/A

2005 N/A

2006 1

2007 N/A

2008 14

217

742. Other institutions do not keep regular statistics on cooperation efforts. The FIU reviews

its procedures on its tools for AML and CFT systems on an ongoing basis and reports to the

NAMCL on a quarterly basis. However, there is no periodicity for regular reviews of the

effectiveness of AML/CFT domestic cooperation.

Effectiveness:

743. The FIU Act Section 4(1) reference to “obtain” does not suffice to give full legal and

unfettered access to appropriate law enforcement and other governmental information needed to

develop financial intelligence and analysis. Relying on the authority of the police officers

assigned to the FIU does not close the gap as the police powers relate to investigating offenses

under the CC and specified other offenses. An MOU between the DPP and FIU would help to

formalize the FIU’s function in carrying out POCA and UNATMA prosecutorial functions.

6.1.2. Recommendations and Comments

 FIU Act should be amended to specify the FIU authority to obtain appropriate law

enforcement and other governmental information needed to develop intelligence and

analysis.

NAMCL:

 The NAMCL to have the legal policy and coordination mandate and to take a more

proactive role in policy and operational coordination, e.g. risk assessment and

prioritization and strategy. They seemed to have neglected the offshore sector which is

inherently higher risk.

Regulators:

 Need for closer coordination and cooperation implementation arrangements between the

various regulators especially among the ECCB, IFSA and the Ministry of Finance-SRD

(to include in the future credit unions and building societies being transferred to the

Ministry of Finance). The EIA provides a reasonable basis for regulatory information

sharing, but formal cooperative arrangements beyond pure exchange of information are

warranted.

6.1.3. Compliance with Recommendation 31 & 32 (criterion 32.1 only)

Rating Summary of factors underlying rating

R.31 LC

 The FIU does not have specific FIU authority to obtain appropriate

law enforcement and other governmental information needed to

develop intelligence and analysis.

 The NAMCL does not have a statutory role for policy coordination.

218

 Domestic regulatory authorities do not have uniform bases upon which

to cooperate among each other and with law enforcement.

R. 32 LC

6.2. The Conventions and UN Special Resolutions (R.35 & SR.I)

6.2.1. Description and Analysis

Legal Framework:

744. St. Vincent and the Grenadines has signed, ratified and largely implemented the Vienna

Convention. Both the Palermo Conventions and the UN International Convention for the

Suppression of the Financing of Terrorism (the SFT Convention) have been signed. Neither has

been ratified, and portions of the Palermo Convention have not been implemented in the legal

framework. The principal laws implementing these conventions are the Drugs (Prevention of

Misuse) Act, Cap 219, DTOA 1993, POCA and UNATMA.

Ratification of AML Related UN Conventions (c. 35.1):

745. The Vienna Convention has been ratified. The Palermo Convention has not been ratified

pending full legal implementation of its provisions.

Ratification of CFT Related UN Conventions (c. I.1):

746. The SFT Convention has not been ratified.

Implementation of Vienna Convention (Articles 3-11, 15, 17 & 19, c. 35.1):

747. The Vienna Convention is implemented primarily through the Drugs (Prevention of

Misuse) Act, Cap 219. With the exception of the following specific provisions of the Vienna

Convention, all other articles are incorporated into the SVG legal framework:

 Article 3(1)(a)(iv) criminalizing the manufacture, transport or distribution of equipment,

materials or substances as listed in the convention knowing that they are to be used in or

for the illicit cultivation, production or manufacture of narcotic drugs or psychotropic

substances;

 Article 3(1)(v) criminalizing the organization, management or financing related to the

production, manufacturing, cultivation or possession of purchases of narcotic drugs or

psychotropic substances;

 Article 3(1)(c)(ii) criminalizing possession or equipment or materials or substances listed

in the convention knowing that they are being or are to be used in the illicit cultivation,

production or manufacture of narcotic drugs or psychotropic substances.

219

Implementation of SFT Convention (Articles 2-18, c. 35.1 & c. I.1):

748. The SFT Convention has been given effect in domestic law by UNATMA. A few gaps

exist, specifically, Article 2 of the SFT Convention, which is incorporated in Sections 3–6 of

UNATMA criminalize the offenses for FT but the domestic FT offenses do not cover terrorist

acts defined by conventions in the annex to the SFT Convention. UNATMA excludes the

Convention on the Physical Protection of Nuclear Material, adopted at Vienna on March 3, 1980

and the International Convention for the Suppression of Terrorist Bombings, adopted by the

General Assembly of the UN on December 15, 1997. (Please see, above, discussion of SR.II in

Section 2.2, see also, discussion that the each FT offense does not extend to terrorist acts,

terrorist organizations and individual terrorists.)

Implementation of Palermo Convention (Articles 5-7, 10-16, 18-20, 24-27, 29-31 & 34, c.

35.1):

749. With the exception of Article 5 of the Palermo Convention, Articles 6, 7, 10-16, 18, 19,

20 24-27, 29-31 are implemented. The Palermo Convention will be ratified upon an assessment

by the AG that that all relevant measures required by the convention, including legislative and

administrative, are finalized or near finalization. With respect to Article 5, no offenses have been

enacted within SVG to criminalize the participation in an organized criminal group.

Implementation of UNSCRs relating to Prevention and Suppression of FT (c. I.2):

750. SVG has not implemented legal provisions to allow for the freezing or seizing of

terrorist assets in accordance with UNSCRs 1267 or 1373.

Additional Element—Ratification or Implementation of Other relevant international

conventions (c. 35.2):

751. SVG signed the 2002 Inter-American Convention against Money Laundering on June 3,

2002.

6.2.2. Recommendations and Comments

 UNATMA should be amended to include all conventions that define offenses to which

the SFT Convention applies.

 Legal provisions and other measures should be adopted in order to implement the

requirements in UNSCRs 1267 and 1373. In particular, a mechanism for freezing funds,

assets, and other financial or economic resources of terrorists and terrorist organizations.

220

6.2.3. Compliance with Recommendation 35 and Special Recommendation I

Rating Summary of factors underlying rating

R.35 LC

 The SFT and Palermo Conventions have not been ratified.

 Section 5 of the Palermo Convention has not been implemented and

the SFT Convention has not been fully implemented with regard to the

application of offenses in UNATMA to terrorist acts, terrorist

organizations and individual terrorists.

 UNATMA does not include two of the conventions which define

terrorist offenses under the annex to the SFT Convention.

SR.I NC

 No legal framework implemented to comply with UNSCRs 1267 and

1373.

 The SFT Convention has not been fully implemented and the relevant

law, UNATMA, does not include two of the conventions listed in the

annex to the SFT Convention.

6.3. MLA (R.36-38, SR.V)

6.3.1. Description and Analysis

Legal Framework:

752. MLA provisions are specified in POCA, UNATMA, the MLA in Criminal Matters No.

46 of 1993 (the “MACMA”), specialized treaties on MLA including with the U.S., and through

FIU to FIU information sharing under Sections 4(2)(e) and (f). The FIU has adopted a standard

operating procedure on foreign requests for assistance that provides the framework by which

most requests are processed.

753. The MACMA allows for wide ranging MLA within the Commonwealth. The MACMA

also provides the outlines of a framework for MLA in criminal matters between SVG and non-

Commonwealth countries. The MACMA applies to “serious offenses” which are defined as

indictable offenses subject to a sentence of imprisonment for a term of no less than 3 years, or

where the value of the property derived or obtained from the commission of the offense in not

less than $20,000 (ECD). The concept of a serious offense is somewhat at tension with the SVG

“all crimes” approach to predicate offenses for ML. However, the authorities assert that because

(i) all ML and FT crimes are “hybrid” offenses with elements of both statutory and indictable

offense, and (ii) the maximum sentences for each are above the serious offense threshold (which

should be noted is a minimum threshold for imprisonment), all ML and FT offenses are captured

by the MACMA.

754. While SVG has entered into at least one treaty for MLA with the United States, this

treaty is not yet part of the domestic legal framework, i.e, does not have the full force of law

because it is only applicable at the executive branch level. The authorities recognize that there is

221

a gap in terms of putting MLA treaties into legal effect insofar as regulations called for under the

MACMA have not been adopted to give effect to a treaty for bilateral MLA (Section 30(1) of the

MACMA). Such regulations would give equal standing to requests for MLA through bilateral

treaties with requests to and from Commonwealth countries. To this end, the authorities have

begun to consider whether to enact a separate Act to put into effect bilateral treaties in general or

to issue MLA related regulations as envisaged by the MACMA. Despite this legislative gap, the

authorities believe that the current level of provision of MLA is high and that requests are

handled expeditiously.

755. The AG’s office is the main conduit through which MLA requests from letters rogatory

and MLA requests. In most cases, the requests pertaining to ML and predicate offenses are

executed by the FIU on behalf of the government. The Police and Customs are able to provide

MLA to counterpart agencies through INTERPOL and the Caribbean Customs Law Enforcement

Council (CCLEC), the latter comprising customs administration from the Caribbean and Latin

America, Canada, France, the Netherlands, Spain, the United Kingdom and the United States.

Widest Possible Range of Mutual Assistance (c. 36.1):

756. Assistance provided under the MACMA includes assisting in obtaining production orders

and restraining orders, seizing property, executing search warrants, taking of witness statements,

tracing property, securing transfer of prisoners, locating or identifying persons, and assisting in

serving documents. MLA may be provided for the purpose of pursuing criminal proceedings

which have been or could be instituted in the requesting state in respect to an offense committed

or suspected on reasonable grounds to have been committed against the laws of SVG.

757. More specifically, POCA provides for the enforcement of external confiscation orders in

Section 52. UNATMA Section19 provides for expressly for the provision of the fullest measure

of assistance authorized under MLAMC in connection with criminal investigations or criminal or

extradition proceedings for FT.

Provision of Assistance in Timely, Constructive and Effective Manner (c. 36.1.1):

758. The time for responses to requests for MLA is on average 3 weeks, but depends on the

nature and complexity of the terms of the request. Requests normally come through the AG’s

office and are executed primarily by the FIU. The FIU has applied to the court and magistrates

for production orders, and seizures of property in executing MLA requests.

No Unreasonable or Unduly Restrictive Conditions on Mutual Assistance (c. 36.2):

759. The basis for refusing MLA requests are set out in Section19 of the MACMA. These

include that the offense is:

 of a political character;

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 would cause prejudice to a person on account of the person’s race, sex, religion,

nationality, place of origin, or political opinions;

 would be a military rather than ordinary criminal offense;

 would prejudice national security or international relations of SVG; or

 the steps to implement the request to provide MLA would be contrary to SVG law or

public policy.

760. The authorities submit that the basis for rejecting a request are reasonable and have not

resulted in undue restrictions in the actual provision of MLA.

Efficiency of Processes (c. 36.3):

761. Most requests for MLA are received by the AG’s office, although some may be

channeled through the MFA, which passes on the request to the AG. The AG is responsible for

assessing whether the request conforms to minimum requirements for MLA requests, including

whether the purpose of the request is properly justified. In most cases, ML and predicate offense

requests for MLA are executed by the FIU.

Provision of Assistance Regardless of Possible Involvement of Fiscal Matters (c. 36.4):

762. There is no limitation on the basis of possible involvement of fiscal matters.

Provision of Assistance Regardless of Existence of Secrecy and Confidentiality Laws (c.

36.5):

763. No domestic legislation prohibits the provision of assistance arising from the existence of

secrecy or confidentiality laws. However, as described above in Section 3.4 there continue to be

some limitations and confidentiality of information in the regulatory authority’s access. Further,

there are indications that information that should be available to domestic competent authorities

are not kept within the jurisdiction which would make it inefficient and difficult to access in

order to provide MLA in timely manner. It is also not always clear whether information

maintained abroad with respect to entities licensed or registered in SVG are also subject to the

laws and restrictions of the countries where they are held, e.g. Liechtenstein. To the extent that

there could be such restrictions, there is a need to assess the operational structure and

arrangements of the applicable sectors (e.g. mutual funds, international insurance, IBCs, trusts,

and their service providers, managers, administrators, etc.) to ensure that there are adequate

avenues and safeguards for obtaining such information promptly on request.

Availability of Powers of Competent Authorities (applying R.28, c. 36.6):

764. All powers available to competent authorities are available for use in response to requests

for MLA on ML, FT and predicate offenses.

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Avoiding Conflicts of Jurisdiction (c. 36.7):

765. The authorities inform that SVG has never had to consider devising and applying

mechanisms for determining the best possible venue for prosecution as this has never arisen in

practice. Operationally, the SVG authorities frequently develop and turn over evidence for the

prosecution of offenses outside of SVG.

Additional Element—Availability of Powers of Competent Authorities Required under

R.28 (c. 36.8):

766. Competent authorities in SVG are authorized to exercise the powers available under R.28

in response to requests received directly from foreign judicial and law enforcement authorities to

domestic counterparts. As described above, the FIU Act, Section 4(2)(e) allows the FIU

provide information directly to FIU counterparts. The FIU has developed a standard operating

procedure for the execution of such requests.

International Cooperation under SR.V (applying c. 36.1-36.6 in R.36, c. V.1):

767. As described above, the full measure of assistance contemplated under the MACMA is

made available for FT offenses under Section 9 of UNATMA. To date, no requests have been

received for FT related offenses.

Additional Element under SR.V (applying c. 36.7 & 36.8 in R.36, c. V.6):

768. See 36.1-36.6 application to SR.V, above.

Dual Criminality and Mutual Assistance (c. 37.1 & 37.2):

769. The MLAMC authorizes the AG to provide MLA in the absence of dual criminality.

Specifically, the MLAMC Section 19(3) provides that the AG has the discretion to refuse MLA

in the absence of dual criminality; however, this discretion is rarely exercised. The AG had no

specific recollection of having availed of this discretionary authority.

International Cooperation under SR.V (applying c. 37.1-37.2 in R.37, c. V.2):

770. See International Cooperation under SR.V above.

Timeliness to Requests for Provisional Measures including Confiscation (c. 38.1):

771. The FIU, as the main ML and FT competent authority, responds to requests to apply

provisional measures including confiscation in response to requests from foreign competent

authorities; the FIU executes confiscation requests under POCA for ML and predicate offense-

related seizures/confiscations as it does for domestic cases. The FIU has issued a standard

operating procedure for the timely response to MLA requests, which includes any request for the

application of provisional measures. The main provisional measures available under POCA and

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UNATMA with respect to obtaining production orders, detaining cash, obtaining search warrants

and forfeiting of assets and property are available in response to MLA requests. . See charts on

cash forfeitures and confiscation of property at para. 149. More specifically, Sections 52-53 of

POCA provide for the enforcement and registration of external confiscation orders in St. Vincent

and the Grenadines and Section54 provides for the submission of evidence of corresponding law

of the other country to execute such confiscation orders.

Property of Corresponding Value (c. 38.2):

772. The authorities advise that the requirements of 38.1 are also applicable for the

confiscation of property of corresponding value. No statistics were provided to support that

property of corresponding value has been attached.

Coordination of Seizure and Confiscation Actions (c. 38.3):

773. As described above, coordination of confiscation is contemplated in POCA Sections 52-

53. Joint searches and seizures have been coordinated and undertaken with foreign authorities,

including the United States.

International Cooperation under SR.V (applying c. 38.1-38.3 in R.38, c. V.3):

774. The requirements of Recs. 38.1 -38.3 apply equally to cooperation under SR.V because

of the specific language in Section19 of UNATMA.

Asset Forfeiture Fund (c. 38.4):

775. Under POCA Section 55, a Confiscated Assets Fund has been established. The amounts

collected of EC$897,135.45 are allocated by the Act to law enforcement including, inter alia, the

FIU and in particular the investigation of suspected cases of drug trafficking and money

laundering.

Sharing of Confiscated Assets (c. 38.5):

776. SVG has considered, and has participated in, the sharing of assets with other countries

when confiscation has resulted from coordinated law enforcement actions. One action cited by

the authorities was with the United States under the MLA treaty between the two countries.

Additional Element (R 38) – Recognition of Foreign Orders for: a) Confiscation of assets

from organizations principally criminal in nature; b) Civil forfeiture; and, c) Confiscation

of Property which Reverses Burden of Proof (applying c. 3.7 in R.3, c. 38.6):

777. Not recognized.

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Additional Element under SR.V (applying c. 38.4-38.6 in R.38, c V.7):

778. The answers for 38.4-38.6 do not apply to SR.V.

Effectiveness of Implementation

779. As noted in criterion 36.1.1 and 38.2, the timeliness and content of the provision of

information show a generally effective system. The burden of handling the substance of most

requests appears to fall to the FIU with little participation from other competent authorities. If

MLA requests were to increase substantially, this would place a strain on the FIU’s resources.

780. From 2004 through 2008, 31 MLA requests from 17 countries were received and

processed by the FIU. None were refused.

6.3.2. Recommendations and Comments

 Pursuant to MACMA, SVG should adopt regulations that will allow for bilateral MLA

treaties to have the effect of law.

 The AG should issue a legal opinion that the discretion to reject requests for MLA in the

absence of dual criminality would not be exercised in respect to ML, predicate offense

and FT requests.

6.3.3. Compliance with Recommendations 36 to 38 and Special Recommendation V

Rating Summary of factors relevant to s.6.3 underlying overall rating

R.36 LC

 Bilateral treaties on MLA do not have the force of law.

R.37 C

R.38 C

SR.V LC

 The legal basis for conducting investigations and related prosecutorial

measures for FT on behalf of foreign law enforcement is not specified

in law.

6.4. Extradition (R.37, 39, SR.V)

6.4.1. Description and Analysis

Legal Framework:

781. Extradition is governed by the Fugitive Offenders Act, Cap. 126. Offenses under POCA

and UNATMA are extraditable offenses. Specifically, Section 65 of POCA makes its offenses

extraditable and Section 18 of UNATMA does the same. The Fugitive Offenders Act permits

persons from St. Vincent and the Grenadines for ML and FT offenses to all Commonwealth

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countries, the Republic of Ireland, and the other 58 countries listed in the schedule to the act.

Other countries have been subsequently added to the list. Under the Fugitive Offenders Act, the

Governor-General is the authority to whom extradition requests are made, and who signs the

order granting such request.

Dual Criminality and Mutual Assistance (c. 37.1 & 37.2):

782. Under the Fugitive Offenders Act, dual criminality is based on conduct rather than on

names or categories of offenses. Pursuant to the MAMC, as described above in 6.3., the

competent authority, i.e., the AG has the discretion to reject a request for extradition or other

mutual assistance in the absence of dual criminality. However, as this is discretionary, the AG

has informed that the provision has been rarely invoked.

Money Laundering as Extraditable Offence (c. 39.1):

783. Pursuant to Section 65 of POCA, ML is an extraditable offense. The provisions of the

Fugitive Offenders Act apply. Extradition applies to persons who are accused of or have been

convicted of offenses in other countries.

Extradition of Nationals (c. 39.2):

784. Pursuant to Section 20 of the Fugitive Offenders Act, St. Vincent and the Grenadines

may extradite its own nationals. Specifically, this section provides that “the Governor-General

shall not refuse the return of a person who is a citizen of, or a permanent resident in, SVG solely

on the ground that the person is not also a citizen of the country making the request.”

Cooperation for Prosecution of Nationals (applying c. 39.2(b), c. 39.3):

785. Not applicable.

Efficiency of Extradition Process (c. 39.4):

786. The authorities cite cases of extradition to the United States as evidence of the practice to

handle matters relating to extradition expeditiously. The AG informs that requests for extradition

are passed through the office within one day to the appropriate law enforcement body, in the case

of ML, to the FIU for prompt processing.

Additional Element (R.39)—Existence of Simplified Procedures relating to Extradition (c.

39.5):

787. Section 4(4) of the Fugitive Offenders Act authorizes the Governor-General to, inter alia,

modify, make exception or limit the requirements of the act. This would allow for modifying

orders to expedite extradition.

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Additional Element under SR.V (applying c. 39.5 in R.39, c V.8):

788. The procedures stated in c.39.5 apply to extradition.

6.4.2. Recommendations and Comments

 Specific procedures should be established for expediting extradition requests.

6.4.3. Compliance with Recommendations 37 & 39, and Special Recommendation V

Rating Summary of factors relevant to s.6.4 underlying overall rating

R.39 C

R.37 C

SR.V LC

 The legal basis for conducting investigations and related prosecutorial

measures for FT on behalf of foreign law enforcement is not specified

in law.

6.5. Other Forms of International Co-Operation (R.40 & SR.V)

6.5.1. Description and Analysis

Legal Framework:

789. Specific provisions for international cooperation outside of MLA for ML and FT are

provided for in POCA, UNATMA and the FIU Act. More generally, there is legal authority for

the Police and Customs authorities may provide cooperation with their counterparts. The

domestic regulatory authorities may provide information and assistance to foreign regulatory

counterparts under the EIA, as described above in Sections. 3.4. and 6.1.).

Widest Range of International Cooperation (c. 40.1):

FIU:

790. As described above in 2.5., above, the FIU is the main AML/CFT body, and because of

its structure as hybrid-administrative FIU, serves as the core body for international cooperation.

The FIU is authorized Section 4(2)(e) and (f) to cooperate with foreign counterpart FIUs. The

FIU need not establish formal MOUs with counterparts in order to provide information but may

enter into broad MOUs necessary for the discharge of its functions. The FIU has adopted a

standard operating procedure for responding to requests from foreign FIU and foreign law

enforcement. The FIU has exchanged information with counterparts through the secure Egmont

website.

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ECCB:

791. The provides information on a reciprocal basis with other regulators pursuant to Section

23 of the Banking Act for regulatory purposes] In addition, the advent of the OECS regional

MOU among all domestic regulators would permit exchanges with non-counterparts. This MOU

has been agreed in principle among relevant authorities and is being circulated for signature.

IFSA:

792. IFSA’s primary basis for information exchange is the EIA. In operation, the Executive

Director reviews all requests and substantiates the response.

Police:

793. The Police regularly exchange information through Interpol.

Customs:

794. Customs provides information upon request through CICLEC.

Provision of Assistance in Timely, Constructive and Effective Manner (c. 40.1.1):

795. The FIU standard operating procedure calls for responding to requests within 2 weeks.

Based on the complexity of the request, the average response time is 3 weeks. The AG, DPP and

Police did not provide specific information on the timeliness of the provision of assistance that

are handled directly by their offices.

Table 25: FIU Memoranda of Understanding with Counterparts

Year & Countries

Total MOUs

2004 2005 2006 2007 2008

Italy Netherlands

Antilles

Canada Chile Aruba

Panama Guatemala

Albania Thailand

No. of Countries 3 3 1 1 1 9

Clear and Effective Gateways for Exchange of Information (c. 40.2):

796. The primary gateway for ML and FT information is the FIU’s gateways with other FIUs

through MOUs, and the Egmont’s secure website, the gateways created by the EIA (See Secs.

3.4. and 6.1. above) for regulators, Interpol for the Police and the CICLEC for the Customs

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Commission. There are complementary provisions in some of the financial regulatory laws that

provide for supervisor to supervisor cooperation.

Spontaneous Exchange of Information (c. 40.3):

797. The FIU shares information both spontaneously and upon request in relation to both ML

and the underlying predicate offenses. Information provided by the FIU is for intelligence

purposes only and is restricted to the use of the receiving FIU only unless the SVG FIU

specifically permits otherwise. Of some concern is that the FIU in its own work does not draw a

clear distinction between intelligence gathering/analysis and the development of evidence for

investigative purposes. In this regard, to the extent that the FIU only authorizes the disclosure of

information for intelligence purposes when making spontaneous exchanges, there is no

distinction made to the receiving authority of the character of the information. Other competent

authorities do not have operating practices or policies for spontaneous exchanges of information

but some of the sector specific acts, e.g., the International Banks Act and the Banking Act do

provide for the regulators to share information on a reciprocal basis but only with respect to

issues of preserving the integrity of the financial system.

Making Inquiries on Behalf of Foreign Counterparts (c. 40.4):

798. The EIA, Section 4(c) expressly authorizes the receiving regulatory authority to make

inquiries on behalf of foreign counterparts. In practice, such AML-related inquiries have been

channeled to the FIU to assemble the substantive response; not CFT requests have been received

to date.

FIU Authorized to Make Inquiries on Behalf of Foreign Counterparts (c. 40.4.1):

799. The FIU Act Section 4(2)(f) and the FIU’s standard operating procedures are the basis

upon which the FIU makes inquiries on behalf of foreign counterparts. The FIU searches its own

databases and databases of other governmental authorities, including law enforcement. As was

discussed above in Section 2.5., the authority of the FIU to directly access such other databases

and obtain information from other governmental authorities in making inquiries is not clear in

the law. While the authorities assert that the general provision in the FIU Act Section 4(1)

designating the FIU as the national central authority to “obtain” information suffices, this

provision does not appear to be adequate. Rather, the FIU relies on the access of police officers

that are assigned to the FIU offices as a basis for access to law enforcement intelligence, and

subsequent to the finalization of MOUs with the RSVGPF and Customs authority, the indirect

access of the FIU under their terms. In this regard, while inquiries are made on behalf of foreign

counterparts, in the absence of a legally sound basis for the FIU accessing such information

directly, such inquiries could be subject to judicial challenge.

230

Conducting of Investigations on Behalf of Foreign Counterparts (c. 40.5):

800. For the Police and Customs, the authority is as set out in Rec. 40.1 above. The FIU

exercises administrative, investigative and prosecutorial powers under POCA and UNATMA. In

this respect to further investigations on behalf of foreign law enforcement, the FIU may obtain

restraint orders (POCA Section 26), search warrants (POCA Section 37), and production orders

(POCA Section 35).

No Unreasonable or Unduly Restrictive Conditions on Exchange of Information (c. 40.6):

801. The FIU provides information to counterparts on the basis that the information will be

used only for intelligence purposes unless the specific authorization of the FIU is sought or if it

is to be shared with another agency.

Provision of Assistance Regardless of Existence of Secrecy and Confidentiality Laws (c.

40.8):

802. The EIA has repealed the previous secrecy and financial privacy provisions that applied

arising out of commercial arrangements. In addition, the EIA also liberalized the gateways that

allow for exchange of information but some sector specific laws have some residual

confidentiality provisions the legal effects of which are not fully known. (See. Recs. 4 and 24 on

secrecy provisions.)

Safeguards in Use of Exchanged Information (c. 40.9):

IFSA:

803. Any information provided by IFSA is governed by Section 5 of the Exchange of

Information Act 2008, which restricts the use of the information for regulatory purposes only

unless the information is obtained through an order of the High Court of St. Vincent and the

Grenadines. A typical wording in a transmittal letter is that the information is provided to be

used for the exercise of regulatory functions only. The authorities inform that in some cases it

appears that these restrictions were not mentioned, perhaps inadvertently.

Additional Element—Exchange of Information with Non-Counterparts (c. 40.10 & c.

40.10.1):

804. The FIU’s standard operating procedure contemplates the provision of information to

non-counterparts, however, there is no specific legal basis to so provide. In operation, the FIU

informs that the request will be channeled through the foreign FIU indicating the law

enforcement purpose, which the SVG FIU must consent to prior to exchanging information. The

regional MOU that is circulating for signature in the OECS would permit exchanging of

information with non-counterparts.

231

Additional Element—Provision of Information to FIU by Other Competent Authorities

pursuant to request from Foreign FIU (c. 40.11):

805. See c. 40.10 above, which provisions apply.

International Cooperation under SR.V (applying c. 40.1-40.9 in R.40, c. V.5):

806. The principles outlined in c. 40.1 to 40.9 apply equally under SR.V. However, the legal

basis to apply the POCA investigative and prosecutorial powers (production orders, restraint

orders, and search warrants) to FT offenses is not directly specified.

Additional Element under SR.V (applying c. 40.10-40.11 in R.40, c. V.9):

807. The answers with respect to the additional elements in c. 40.10 and 40.11 apply to SR.V.

6.5.2. Recommendations and Comments

 The legal basis for conducting investigations and related prosecutorial measures for FT

directly on behalf of foreign law enforcement should be specified in law.

 The scope and definition of financial intelligence information that is subject to sharing by

the FIU to foreign counterparts and to foreign law enforcement needs to be clearly

defined.

6.5.3. Compliance with Recommendation 40 and Special Recommendation V

Rating Summary of factors relative to s.6.5 underlying overall rating

R.40 C

SR.V LC

 The legal basis for conducting investigations and related prosecutorial

measures for FT on behalf of foreign law enforcement is not specified

in law.

7. OTHER ISSUES

7.1. Resources and Statistics

R.30 Adequacy of Law Enforcement and other AML/CFT Investigative or Prosecutorial

Agencies (R.30.1):

FIU:

The current staffing composition of the FIU is described above in Section 2.5 above. The FIU

has seen a two-fold increase in the filings of SARs from 2007 to 2008. Numbers of

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investigations and requests for production orders, cash detentions, and requests from other FIUs

has substantially increased as well during the period of 2004 to 2008. Looking forward, if the

government moves forward with an additional threshold cash reporting system, the demands on

the FIU will increase again. The existing complement of FIU staff is inadequate to handle this

volume of work and there are unfilled positions within the existing complement. In response, for

2009 the FIU requested and has been granted 4-5 additional police staff and one additional

customs officer; however, such additional staffing has not yet been made available to the FIU.

Beyond law enforcement skills, the FIU is in critical need of specialized analytical staff such as

forensic accounting, as well as training of existing staff on financial analytical work. The FIU

budget is provided allocation under the Consolidated Fund through the Minister of Finance. The

FIU’s structure and budget would need to be revisited if the FIU is assigned as an AML/CFT

supervisor for certain DNFBPs; resource management would be required to ensure that the core

functions of the FIU are not further marginalized by multiplying its role.

Table 26: FIU Annual Budgets/1

Year

Amount $

Budgetary Allotment

from Police $

Police Officers Positions

2009 941,170.43 114,660.00 1 SSgt, 1 Cons. 1 Cpl.

2008 885,998.67 69,420.00 1 SSgt, 2 Cons.

2007 910,526.57 87,732.00 1 SSgt, 1 Cpl., 1 Cons

2006 605,891.57 90,312.00 1 ASP, 1 Sgt, 1 Cpl.

2005 616,680.93 86,424.00 1 ASP, 1 Sgt, 1 Cpl.

1/ The FIU budget is supplemented by the assigned police and customs officers

assigned that are on their respective budgets.

808. The FIU’s office space and computer facilities are adequate but could be enhanced,

particularly with respect to physical security. In particular, as the FIU moves to receiving SARs

through electronic filings, additional computer capacity is warranted. Further, to the extent that

real-time connectivity to other governmental databases becomes available, the FIU should be

allocated sufficient technological resources to make full use of these databases. Moreover, the

FIU should look to obtain direct access to one or more commercial financial databases to

enhance its analytical capacities. The FIU has submitted proposals to enhance its IT capacity by

increasing the number of computers available, development of new and modern data bases and

enhanced disaster recovery policies.

DPP and AG’s Offices:

809. The office of the DPP is significantly understaffed. Out of a total of six positions, 2-3

professional positions are unfilled or personnel are assigned outside of the DPP office. To

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augment its resources, the DPP frequently hires private counsel on a contractual basis. However,

the frequent turnover and long periods of vacancy in posts increases pressures on the limited

staff and undermines collective institutional knowledge and capacity. The authorities are of the

view that the lack of qualified applicants for DPP and AG posts are due primarily to the salary

levels. However, the resource constraints are minimized somewhat because nearly all ML and

predicate offense related prosecutorial functions are carried out by the specialized lawyers in the

FIU.

810. The office of the AG is also understaffed, including a long-standing vacancy for the

number two position of solicitor. The understaffing of the AG’s office has two main effects with

respect to AML/CFT issues: (i) it limits the ability of the DPP to borrow staff as needed for

criminal cases; and (ii) it limits the ability of the AG to use its own resources for legislative

drafting.

Police:

811. The police have a pressing need to fight increasing criminality in SVG and to participate

in joint operations within the region. To this end, the budget of the RSVGPF was increased by 10

percent from 2007 to 2008. The size of the police force has increased over the last 4 years as

well. Many of the drug offenses, whether from marijuana grown within SVG or transshipment of

cocaine and heroin require related ML investigations. To this end, the Police major crimes

division will conduct related and specialized investigations in order to supplement the work of

the FIU-assigned police officers. The RSVGPF requires more resources in communication and

technological equipment specifically to enhance its role in ML and FT investigations. However,

it is should be noted that the FIU, which has investigative functions, augments the role of the

police in investigations.

Customs:

812. According to the authorities, the staffing is adequate. They claim that the Customs

Department has 184 staff deployed at eight seaports and five airports. In addition to the human

resources, the Department has at its disposal the following resources to strengthen its

enforcement capacity: 2 patrol vessels used to monitor marine activities and to assist in the

interdiction of illegal drugs and firearms; and a mobile trace detector capable of detecting illegal

drugs and explosives. This unit is used at several locations at the main ET Joshua Airport and at

the main seaport at Kingstown to aid in the interception program.

Integrity of Competent Authorities (R.30.2).

FIU:

813. The hiring process for the FIU, including the selection of police and customs officers to

be transferred to the FIU is rigorous. All employees are hired after extensive interview processes

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and character and background checks. The final hiring must be approved by the Minister of

Finance.

Police:

814. The RSVGPF requires all recruits to undergo character investigation and a six-month

training course at the police academy. Weekly training administered to the members includes

ongoing ethics training. The Commissioner of Police is in the process of reinstituting specialized

examinations for promotion.

DPP:

815. The DPP hires pursuant to job specifications, with appointments approved by the

Judiciary and Legal Services Commission.

Customs:

816. According to the authorities, the hiring mechanism in relation to Customs personnel

comes directly under the general civil service and is performed by the Service Commissions

Department. In the case of the hiring of Customs guards, a background check is performed by the

Customs Preventive Branch and the required interview is performed by a panel of senior customs

officials. Candidates are required to submit documents relating to their conduct, including police

records, to the panel.

Training for Competent Authorities (R.30.3):

817. Training of FIU staff is quite adequate; since 2004, FIU staff have attended over 40

specialized training workshops and seminars. FIU staff has attended rigorous training both at

home and abroad as offered by CFATF, Canadian and U.S. agencies and Redtrac in Jamaica.

New police training includes AML/CFT training conducted by the FIU director. The Police are

in need of specialized outside training for non-trainees on both ML and FT. The DPP and AG

have undertaken AML/CFT training but other staff lawyers have not.

Customs:

818. According to the authorities, training of customs officials in the area of AML/CFT has

become a standard feature in the department’s training yearly schedule, as part of three modules:

An Induction Course module – a training course which is given every year to new entrants to the

organization for approximately a half-day; Junior Promotional Course module – a course is

delivered to Junior Customs Officers who are seeking promotion to Senior Customs Officer level

and is conducted for one day every two years; and AML/CFT Seminars – a series of yearly half-

day awareness seminars, targeting customs managers and all other customs officials at all levels.

In addition, according to the authorities, enforcement officers from the Customs Intelligence Unit

and the Preventive Branch have been exposed to training in related areas such as financial

235

investigation at the regional institution in Jamaica, REDTRAC. There are at present two

qualified financial investigators on the staff and the department is seeking to have trained for the

year 2009 five (5) officers who will undergo training in relevant areas at REDTRAC.

Additional Element – Special Training for Judges (R.30.4):

819. Although an AML/CFT training seminar was recently offered by the FIU, turnout among

judges was extremely low.

Supervisors

R.30

ECCB:

820. No statistics were provided for the ECCB’s supervisory resources for oversight of the 39

domestic banks operating in the ECCU region as a proxy of the adequacy of resources for the

supervision of SVG-based domestic banks. The ECCB supervision department has 7 staff at

management level. The last annual report of the ECCB showed operating income of EC $111

million and operating expenditure of $59.7 million. From the review of the ECCB’s annual

report, it seems that its staff are generally well trained and of sufficient professional caliber, and

supervisory staff has received AML/CFT training.

821. IFSA currently has three supervisory staff plus the Executive Director that engage in

AML/CFT and other supervisor activities. There is a vacancy for a Deputy Executive Director,

and a consultant has been contracted to assist/advise with this and other activities of IFSA. In the

past IFSA has also contracted services of an outside consultant to assist with onsite inspections,

mainly through technical assistance from CARTAC (the IMF’s Barbados-based regional

technical assistance center for the Caribbean). See the organization chart below for the main

positions available in IFSA. Given the number of entities subject to its supervision, the mission

is of the view that IFSA is understaffed and requires additional training for AML/CFT and

general supervisory purposes.

822. IFSA is a professionally run supervisory body and its staff are generally of a high

professional caliber. At the time of the mission, IFSA had on staff the following: 2 examiners, 1

senior examiner, 1 compliance officer and the Executive Director. There was also a full time

consultant for IFSA. There are a total of some 120 licensees, excluding trusts and international

business companies, and on current staff levels and business trends (particularly in the mutual

funds, insurance and RA/trustee sectors), IFSA is significantly understaffed. There is a vacancy

for a Deputy Executive Director (filled after the mission), and a consultant has been contracted to

assist/advise with this and other activities of IFSA. In the past IFSA has also used its internal

compliance officer for onsite inspections, and contracted services of an outside consultant to

assist with training and inspections, mainly through technical assistance from CARTAC —the

IMF’s Barbados-based regional technical assistance center for the Caribbean. IFSA’s total

236

operating budget for 2008 was approximately EC$1.8 million, and for 2009 it is projected at

EC$1.9 million. Funding is provided by the government of SVG based on income from licenses

and other fees received from the international business sector, with any shortfall to be covered

from the government’s other resources. (Section 4 of the IFSA Act.)

823. A key issue is the relatively high turnover in the Executive Director/Offshore Inspectors

position of IFSA and its predecessor organization. In the past 8 years, there have been 5 different

chief executives in IFSA which can inhibit continuity and development of an experienced cadre

of supervisors at the top management level.

SRD-Ministry of Finance:

824. There are only two examiners on the staff of the SRD in the Ministry of Finance. Staffing

has only recently commenced and there is a need for focused training on AML/CFT with respect

to the sectors it is/will be charged with supervising. With the planned transfer of supervision of

credit unions and building societies later in 2009 to the Ministry of Finance-SRD, on top of the

current responsibility for insurance companies and intermediaries and money remitters, the need

for staff, training and other supervisory resources will increase. Post mission the SRD provided a

Work Plan and budgetary estimates for 2009 which call for additional staff including: a Director,

2 examiners for insurance and pensions, and 3 examiners for the other institutions. The following

budget estimates have been provided for the SRD for 2009, which vary somewhat from the Work

Plan statistics described above, and which call for a doubling of total staff from 5 to 10: (note

that not all of the 2008 examiner positions were filled as there were only 2 examiners at the time

of the mission.) In spite of the proposed increase, there may still be a need for additional staff,

especially for the insurance sector where there are 39 insurance companies and broker/agents and

124 if sales representatives are included. There is no basis for commenting on the integrity and

background of the proposed new staff but it is anticipated that the SRD will fill the vacancies for

examiners with the adequate background, training and skills, e.g. in accounting, finance and

related fields.

Table 27:

Number of

Positions

Salaries

2008 2009 2008 2009

STAFF POSITION Grade

Management and administrative

2 3

47,796

106,992

Insurance and Pension Plan Unit

Examiners 3 4

88,942

196,728

Credit Union Unit/Building Societies

Examiners - 3

141,300

237

Total (of which 7 are examiner positions)

5 10

136,738

445,020

Provision for salary adjustment

13,351

5 10

136,738

458,371

Less provision late filling of posts

75,000

Total Permanent Staff

5 10 136,738 383,371

Post Registrar of Credit Unions:

825. Very limited staff is available for supervision (less than 5). However, this function will be

transferred to the Ministry of Finance-SRD, expected to take place later in 2009.

Building Societies:

826. There is no supervisory staff or other resources currently available for supervision of the

sole systemically large building and loan society.

DNFBPs:

827. RAs are supervised by IFSA within its available staff and resources. For the other

DNFBPs, however, no agency has been assigned responsibility for supervising and enforcing

AML/CFT compliance and no staff or resources are dedicated to this activity. Although it does

not have formal supervisory authority, the FIU performs a useful role in raising AML/CFT

awareness and compliance by DNFBPs within its available staff and resources.

Judiciary:

828. According to the authorities, many, if not most magistrates are on short-term contracts of

one to two years. This results in both a lack of independence, since magistrates are always

waiting for their next appointment, and a higher than necessary turnover, diminishing the

effectiveness of the judiciary.

R.32

FIU:

829. The FIU maintains most AML/CFT related statistics for the competent authorities in

SVG. These include ongoing statistics on SAR filings, investigations, cash detention/production

orders/seizures, and MLA responses. Where the FIU should enhance its statistical base is the

information on the vulnerabilities, trends and typologies of ML risks both generally and within

particular sectors.

238

Law Enforcement:

830. Neither the DPP, Police nor AG’s office maintain separate statistics on AML/CFT

investigations. The Police maintain statistics on general crimes and trends, including a number of

predicate offenses. These statistics on predicate offense trends and vulnerabilities do not appear

to be regularly analyzed in comparison to or synthesized with ML or FT trends.

Supervisors:

831. The statistics gathering and generation is underdeveloped and/or untimely received in the

non-bank financial sectors, especially the insurance sectors with respect to statistics on life and

investment linked policies both in the domestic and international sectors. Supervisors should

consider obtaining or developing, as part of their AML/CFT supervisory procedures, statistics

with respect to the number of clients refused and accounts closed due to ML/FT concerns. These

could be analyzed in conjunction with statistics on the number of SARs filed with the FIU and

would help with planning and conducting onsite inspections.

7.1.1. Recommendations

R.30

Supervisors:

 There is a need to strengthen the supervisory staff of IFSA’s and the Ministry of Finance-

SRD supervisory staff, including enhanced training on supervision and AML/CFT in

particular.

 The planned transfer of supervision for credit unions and building societies to the SRD

will require enhanced resources and training for supervisors in these new sectors.

 Supervisory authorities with adequate staff and resources should be assigned

responsibility for monitoring and enforcing AML/CFT compliance by those DNFBPs that

are not now subject to supervision by IFSA.

FIU:

 FIU needs additional training and resources to conduct core analytical functions,

including accounting and forensic skills.

Police

 Police officers should receive regular and comprehensive training on ML and FT offenses

and their linkages to predicate offenses.

239

 RSVGPF should have additional resources for technological and communication to

improve the predicate crimes, ML and FT investigations.

Customs:

 Additional AML/CFT training focusing on red flags and typologies should be provided to

all Customs Department employees amounting to a total of at least two full days of

training per year. The Department should consider coordinating with the FIU in

researching, designing, and providing such additional training.

 Consideration should be given to adding airport scanners and permanent trace detector, as

well as mobile canine squads for ET Joshua Airport and the main seaport.

Law Judiciary:

 Consider longer term contracts for magistrates of at least five and up to ten years be used.

R.32

Supervisors:

 Inadequate and untimely statistics obtained by insurance supervisors with respect to e.g.

life and investment linked insurance policies.

 Insufficient financial statistics received and generated by financial sector supervisor to

assist them in risk-profiling FIs for ML/FT risks, including with respect to their money

remittance business, back-to-back loans, etc.

FIU/Police:

 The FIU and Police should maintain statistics on trends, vulnerabilities and typologies of

ML and FT offenses, and predicate offenses that analyze and synthesize the information

obtained separately by each agency.

7.1.2. Compliance with Recommendation 30 & 32

Rating Summary of factors underlying rating

R.30 PC

Supervisors: NC

 Understaffed and need for additional AML/CFT training for IFSA’s

and the Ministry of Finance-SRD supervisory staff.

 Registrar of credit unions generally understaffed and under-resourced.

 No supervisory regime and resources for the systemically important

building and loan society.

240

DNFBPs: NC

 No supervisory regime or resources for DNFBPs other than for RAs

and Trustees.

FIU: LC

 FIU does not have a full complement of analytical and investigative

staff to assess the SARs and other financial intelligence collected.

DPP: NC

DPP does not have sufficient staff to handle prosecutions of ML cases.

Police: LC

 Police do not require regular, specialized training in AML/CFT;

training on AML/CFT is only provided regularly to new recruits during

their police academy sessions.



Customs: LC

 Insufficient AML/CFT training for customs officers.

Judiciary: PC

 Consider use of longer-term contracts for magistrates compromises

independence and results in turnover that diminishes effectiveness of

judiciary.

 Insufficient AML/CFT training for judges and magistrates.

R.32 LC Supervisors: LC

 Inadequate and untimely statistics obtained by insurance supervisors

with respect to e.g. life and investment linked insurance policies.

 Insufficient financial statistics received and generated by financial

sector supervisor to assist them in risk-profiling FIs for ML/FT risks,

including with respect to their money remittance business, back-to-

back loans, etc.

FIU: LC

 Statistics on ML and FT vulnerabilities and trends are lacking.

Law Enforcement: PC

 Most AML/CFT statistics are maintained by the FIU and the crime

trend statistics on predicate offenses are not analyzed alongside or

synthesized with AML/CFT-specific trends.

241

7.2. Other relevant AML/CFT Measures or Issues

832. SVG should review the operations of money lenders currently subject to the POCA and

POCA. Regulations but which are not subject to any form of authorization, registration or

oversight for compliance with their AML/CFT obligations.

7.3. General Framework for AML/CFT System (see also Section 1.1)

833. In addition, IFSA and other competent authorities should review the structure of the

business and management of the international (offshore) business sectors, particularly mutual

funds, insurance and trust and company services, to ensure that there are no legal or practical

impediments to their supervision and/or to timely access to information by the authorities on a

routine or special basis. For instance, in the mutual funds and insurance sectors, even the

administration and management of these companies may be subcontracted to other entities

outside of SVG which would make it more difficult to supervise and access information, without

the requisite controls. In this regard, consideration should be given to developing reasonable

arrangements to achieve these two broad objectives where they are deemed to be lacking.

834. The mission also recommends that the authorities review the business operations of the

money remittance sector with respect to ML/FT risks, particularly given the relatively large

number of STRs. In particular, they may wish to take into account in conducting this sectoral risk

review, inter alia, the following issues and indicators: the size of the sector and any correlation

with the number of SVG nationals living abroad and foreigners living in SVG, volume of cross-

border business with countries that are origins and destinations of remittances, sectors or regions

where clients of remitters reside in SVG, etc. The results of such analysis may provide indicators

of potential risks and help formulate policies, strategies and priorities for the AML/CFT regime.

242

Table 1. Ratings of Compliance with FATF Recommendations

Forty Recommendations Rating Summary of factors underlying rating

Legal systems

1. ML offense



Certain offenses in Section 41 of and the

definition of ‘property’ in POCA are not

consistent with the relevant articles of the

Vienna and Palermo Conventions;

 Self-laundering by way of simple possession

of proceeds is not criminalized;

 Racketeering, human trafficking and migrant

smuggling are not predicate offenses; and

 Effective implementation is weak in light of

low number of criminal prosecutions and

convictions for ML and related predicate

crimes.

2. ML offense—mental

element and corporate

liability

3. Confiscation and

provisional measures



There is no explicit provision of law

empowering competent authorities to take

steps to void contractual or other actions that

would prejudice their ability to recover

assets;

 Effectiveness is weak in light of low number

of cases and amounts with respect to

forfeitures of cash and confiscations of

property relating to ML and related predicate

crimes.

Preventive measures

4. Secrecy laws consistent

with the Recommendations

 Sectoral acts continue to have

confidentiality and other limitations on

access to information for regulators;

 It is unclear that the repeal of the 1996

Confidentiality Law also repealed common

law definitions of bank secrecy and

confidentiality or whether these were

These factors are only required to be set out when the rating is less than Compliant.

243

restored by virtue of the repeal. If the latter,

the common law secrecy laws would need to

be assessed in light of the gateways

provided.

5. Customer due diligence



No implementation of CDD and other

AML/CFT requirements for non-regulated

lending operations;

 The POCA and the Regulations issued

thereunder do not cover FT;

 No prohibition against keeping anonymous

or fictitious name accounts particularly those

that were in existence before the POCA

Regulations were issued;

 Full range of CDD (only identification

verification) is not required for business

relationships and one-off transactions;

 Threshold for one-off wire transfers

significantly in excess of SRVII;

 Identification requirement when there is

suspicion limited to ML and to one-off

transactions;

 No CDD requirement when there are doubts

as to the veracity or adequacy of previously

obtained customer identification data;

 Exemptions from CDD in the GNs, to the

extent implemented, go beyond the risk

sensitive measures allowed under c. 5.3 and

c. 5.9, and in some cases beyond the POCA

POCA Regulations;

 No explicit requirement to verify the identity

of the ultimate natural persons who control

an entity, and of persons authorized to act on

behalf of a corporate entity, partnership or

other legal arrangement, and provisions of

power to bind entity limited to the power to

open and operate accounts;

 Insufficient requirements for identification

of legal arrangements such as trusts/trustees,

including measures to determine settlors,

beneficiaries and other parties to a trust;

 Narrow requirement to obtain information on

the purpose and intended nature; limited to

244

accounts and does not extent to the broader

business relationship;

 Ongoing CDD requirements do not include

update of CDD records particularly with

respect to higher risk business relationships;

 No requirements for enhanced CDD for

higher risk clients and exemptions from

identification verification go beyond the

criteria for simplified CDD;

 No requirement to terminate an existing

business relationship in the circumstances

covered by c. 5.16;

 The identification exemptions in the POCA

Regulations should not apply when there is

suspicion ML or FT;

 No requirement to apply CDD requirements

to customers existing at the date the POCA

Regulations came into effect, on the basis of

materiality and risk;

 Requirement to perform CDD on existing

customers is limited to the beneficial owners

of anonymous of fictitious name accounts,

and no requirement to close such accounts

existing at the time the POCA Regulations

came into effect;

 The GNs only require the suspension, and

not prohibition, of a new or existing business

relationship or transaction when verification

of identity cannot be completed;

 General weaknesses in implementation of

CDD, especially for beneficial owners and

bearer share companies.

6. PEPs



No requirement to conduct additional and

enhanced CDD measures, or to obtain senior

management approval, for new and/or

existing PEPs relationships.

7. Correspondent banking



No specific requirements for perform, inter

alia, additional and enhanced CDD on

correspondent banking relationships;

 No requirements to assess the AML/CFT

controls of respondent institutions;

245



No requirements to obtain senior

management approval before establishing

correspondent account relationships;

 No requirements with respect to the

provisions of correspondent payable-through

accounts;

 Domestic banking sector provides

correspondent/nested correspondent banking

facilities to offshore banks in breach of the

ECCB’s prudential guidelines.

8. New technologies & non

face-to-face business



No regulatory requirements to have policies

or measures in place specifically to prevent

misuse of technological developments for

ML or FT, including non-face to face

business relationships and transactions.

9. Third parties and

introducers



No mandatory requirement to immediately

obtain CDD information from introducers;

 No requirement to ensure that documentation

can and will be available promptly on

request, without limitation;

 The list of eligible introducers listed in the

Regulations and the POCA Schedule 1 goes

beyond the FATF list of FIs and DNFBPs,

and should be limited as is intended in the

Guidance Notes;

 Insufficient provisions that ultimate

responsibility for customer identification

and verification lies with the SVG FI.

10. Record-keeping



Need for explicit provisions in the POCA

Regulations to retain business

correspondence;

 Recordkeeping by some FIs (non-banks)

outside of SVG may limit capacity for

compliance supervision on an ongoing basis.

11. Unusual transactions

 No requirement to examine as far as

possible the background and purpose of

complex, unusual or unusual patterns of

transactions and to establish such findings in

writing;

 No requirement to keep records of findings

of the examination of the background and

purpose of complex, unusual, or unusual

patterns of transactions, to be available to

246

help competent authorities and auditors;

 In implementing unusual transaction

detection and analysis, the reporting entities

focus almost exclusively on cash

transactions.

12. DNFBP–R.5, 6, 8–11



No regulation or supervision of casinos;

 Infrequent and insufficiently detailed

monitoring of CDD compliance of RAs;

 No arrangements for systematically spot

checking CDD compliance by lawyers, real

estate agents, accountants, jewelers, and car

dealers;

 Insufficient training, particularly of lawyers

and of more complex international business

relations.

13. Suspicious transaction

reporting

 The two-part threshold for filing of SARs

does not meet the requirement of R.13;

 Offshore insurance and banks are reporting

at a very low level;

 SAR filing guidance is outdated, the last

update was in 2004, contributing to low

quality SARs.

14. Protection & no tipping-off

 UNATMA and/or POCA do not prohibit

tipping off of the filing of SARs related to

terrorist financing;

 POCA Section 45 does not explicitly

prohibit tipping off of the fact of filing of the

SAR itself.

15. Internal controls,

compliance & audit



Insufficient provisions for comprehensive

policies;

 No requirements to train staff on current ML

and FT trends, typologies, techniques, etc;

 No requirements to screen FI employees to

ensure high standards;

 Insufficient time and seniority of compliance

officers devoted to AML/CFT functions by

some FIs, including inherent conflicts in

multi-task responsibilities;

 Lack of specific training in on AML/CFT for

high risk areas e.g. money remittance

business, correspondent accounts, wire

transfers, back-to-back loans, and credit card

operations.

247

16. DNFBP–R.13–15 & 21



Minimal SAR reporting;

 No compliance supervision of most

DNFBPs.

17. Sanctions



Regulatory laws lack the full range of

administrative sanctions for non-compliance

with POCA and the POCA Regulations;

 Regulatory laws lack explicit linkages

between sanctions and non-compliance with

POCA and the POCA Regulations;

 POCA and the POCA Regulations lack legal

authority to regulators to impose sanctions

for non-compliance;

 Regulatory laws do not have effective,

proportionate and dissuasive administrative

fines and criminal penalties;

 Regulatory laws lack authority for regulator

to initiate a referral to the DPP for serious

violations of POCA, UNATMA and the

POCA Regulations; and

 Regulators, including IFSA and the Ministry

of Finance, have imposed few, if any,

administrative sanctions for non-compliance

with AML/CFT measures even when

authorized by law to do so.

18. Shell banks



Two offshore banks were identified as not

having meaningful mind and

management/significant physical presence in

SVG;

 No prohibitions against entering into, or

continuing correspondent banking

relationships with shell banks;

 No requirements for FIs to satisfy

themselves that respondents in other

countries are not used by shell banks;

 Offshore shell banks maintain correspondent

accounts locally, contrary to Rec.18, the

GNs, and ECCB’s prudential regulations.

19. Other forms of reporting

20. Other NFBP & secure

transaction techniques

21. Special attention for higher

risk countries



No requirement to pay special attention to

transactions and relationships with persons

248

from countries that do not or insufficiently

apply the FATF Recommendations;

 No formal mechanism to advise FIs of

AML/CFT concerns with other countries

and no such advisories have been issued to

date;

 No provisions to apply counter-measures

against countries that do not or insufficiently

apply the FATF Recommendations and no

such measures have been applied.

22. Foreign branches &

subsidiaries



No requirements for FIs to apply AML/CFT

measures to their foreign branches and

subsidiaries;

 No requirements for FIs to inform their

supervisors when their foreign branches and

subsidiaries cannot observe appropriate

AML/CFT laws or measures.

23. Regulation, supervision and

monitoring



Ownership structures of some offshore

institutions reduce transparency and may

limit ability of regular review fit and proper

criteria;

 Systemically large building society not

subject to effective AML/CFT supervision;

 Generally inadequate supervision for

AML/CFT across all sectors;

 Infrequent focus on inherently high risk

business areas such as e.g. correspondent

banking, money remittance services and

back-to-back loans;

 Insufficient supervisory resources and

understaffing to conduct effective ongoing

supervision across all sectors, particularly in

the non-domestic banking sector;

 No AML/CFT inspections/supervision of the

international mutual fund and insurance

sectors;

 Lack of detailed AML/CFT inspection

procedures for the non-domestic bank

sectors;

 No AML/CFT supervision of money

services business and possible existence of

one unauthorized activity;

249

 Lack of authorization and AML/CFT

supervisory regime for money lending

businesses covered by the AML/CFT laws.

24. DNFBP - regulation,

supervision and monitoring

 No regulation or supervision of casinos;

 Gaps/inconsistencies in the RAs and

Licensed Trustees Act;

 Confidentiality provisions of RAs Act are a

potential impediment to effective

supervision;

 Gaps in the oversight of RAs;

 Inadequate supervision of the

immobilization of bearer shares;

 Weak arrangements for supervising large

overseas activities of RAs;

 No effective arrangements for overseeing

and enforcing AML/CFT obligations of

other DNFBPs.

25. Guidelines & Feedback

 Need for updated guidance with more

attention to sector specific issues, especially

for DNFBPs.

Institutional and other

measures

26. The FIU

 Implementation of its analytical function is

under pressure;

 The FIU has not directly developed a single

case for prosecution of an ML or predicate

offense originating from a SAR filed;

 Insufficient legal authority in the FIU Act

for general access to law enforcement

information.

to obtain information from other

governmental bodies to support its

intelligence analysis;

 The FIU does not issue additional and

comprehensive guidance to reporting parties

on SAR completions and filings;

 The ability of the FIU to obtain additional

information from reporting parties is subject

to a threshold requirement that allows for

reporting entities to reject additional

requests on the basis that the information

sought is not sufficiently correlated to a

particular stated offense;

 The FIU does not publish an annual report

250

on trends and typologies.

27. Law enforcement

authorities

 Authority for applying POCA investigative

and prosecutorial measures for FT is not

explicitly included in law;

 Law enforcement authorities’ integration

into the AML/CFT framework needs to be

detailed and formalized.

 Inadequate resources for the DPP’s office

affects implementation.

28. Powers of competent

authorities

29. Supervisors



No explicit link between the application of

supervisory and administrative sanctioning

powers in the financial laws and the

AML/CFT legislation;

 There are no powers or mechanisms to

supervise, inspect and enforce AML/CFT

compliance with respect building societies

and money lending operations;

 Except for international banks and money

services business, no explicit provisions for

other regulators (functionally the ECCB,

IFSA, Ministry of Finance), to supervise,

inspect and enforce compliance by FIs of the

POCA, POCA Regulations and anti-

terrorism legislation, particularly the power

to initiate enforcement proceedings under

these laws;

 AML/CFT compliance obligations under the

International Banks Act and Money Services

Business Act do not extend to the POCA

POCA Regulations, limiting the scope of

monitoring and enforcement;

 No regulation and supervision of mutual

fund underwriters;

 Limitations under Section 8 of the IFSA Act

could limit the scope of IFSA’s supervisory

and enforcement powers;

 Section 19(9) of the International Banks Act

restricts access to the names, titles and

confidential information about customers’

accounts to the Executive Director of IFSA

who does not have the power of delegation

251

with respect to this function;

 IFSA is constrained in its capacity to

effectively supervise mutual funds,

administrators and managers, and insurance

companies and their managers, in cases

where the books, records and information

are held outside the SVG;

 No supervisory powers in either the

AML/CFT legislation or the financial and

regulatory laws, to enforce, sanction, or

initiate proceedings for, violations of the

AML/CFT legislation per se;

 Ability of IBC mutual funds to issue bearer

shares (not immobilized) may limit CDD

and exercise of powers of supervision;

 Section 35 of the Mutual Funds Act can

exempt FIs from supervision and

enforcement under the Act with implications

for AML/CFT;

 Limited access to records by Registrar of

credit unions.

30. Resources, integrity, and

training

PC Supervisors: NC

 Understaffed and need for additional

AML/CFT training for IFSA’s and the

Ministry of Finance-SRD supervisory staff;

 Registrar of credit unions generally

understaffed and under-resourced;

 No supervisory regime and resources as yet

for the systemically important building and

loan society.

DNFBPs: NC

 No supervisory regime or resources for

oversight of DNFBPs other than RAs.

FIU: LC

 The FIU does not have a full complement of

analytical and investigative staff to assess

the SARs and other financial intelligence

collected.

DPP: NC

252



DPP does not have sufficient staff to handle

prosecutions of ML cases.

Police: LC

 Police do not require regular, specialized

training in AML/CFT; training on AML/CFT

is only provided regularly to new recruits

during their Police academy sessions.

Customs: LC

 Need for additional AML/CFT training.

Judiciary: PC

 Use of short-term contracts compromises

independence and results in turnover that

diminishes effectiveness of judiciary;

 Need for additional AML/CFT training for

judges and magistrates.

31. National co-operation

 The FIU does not have specific FIU authority

to obtain appropriate law enforcement and

other governmental information needed to

develop intelligence and analysis;

 The NAMCL does not have a statutory role

for policy coordination;

 Domestic regulatory authorities do not have

uniform bases upon which to cooperate

among each other and with law enforcement.

32. Statistics

LC Supervisors: LC

 Inadequate and untimely statistics obtained

by insurance supervisors with respect to e.g.

life and investment linked insurance policies;

 Insufficient financial statistics received and

generated by financial sector supervisor to

assist them in risk-profiling FIs for ML/FT

risks, including with respect to their money

remittance business, back-to-back loans, etc.

FIU: LC

 Statistics on ML and FT vulnerabilities and

trends are lacking.

Law Enforcement: PC

 Most AML/CFT statistics are maintained by

253

the FIU and the crime trend statistics on

predicate offenses are not analyzed alongside

or synthesized with AML/CFT-specific

trends.

33. Legal persons–beneficial

owners

 Bearer shares in IBCs are not properly

immobilized since some are in hands of

custodians that have not been approved by

IFSA;

 With respect to IBCs, onsite inspection

procedures of IFSA not sufficient to ensure

that adequate, accurate and complete

information about beneficial owners is being

collected and maintained by RAs;

 For local companies, the Companies

Registrar does not have legal authority to

ensure that adequate, accurate and complete

information about beneficial owners is

available to them or to law enforcement

authorities;

 For local companies, there is no restriction

on the use of nominee shareholders and

directors in Companies Act nor is it possible

for Companies Registrar to determine if

nominees are being used.

34. Legal arrangements –

beneficial owners



With respect to ITRs, no laws, regulations or

other enforceable means requiring registered

trustees to identify beneficial ownership of

trusts (e.g. the settlor, trustee, beneficiaries

and protector of the trust) and allowing IFSA

access to such information;

 With respect to ITRs, IFSA does not conduct

sufficient inspections of registered trustees

so as to ensure that beneficial owners of

trusts have been identified;

 With respect to local trusts, no laws,

regulations or other enforceable means are in

place to: (i) ensure that beneficial owners are

identified; (ii) provide a mechanism so that

competent authorities have access to

adequate, accurate and complete information

about beneficial owners of local trusts; and

(iii) prevent misuse of local trusts for

254

purposes of ML and FT;

 With respect to both ITRs and local trusts,

no restrictions on use of companies as

settlors, trustees or beneficiaries.

International Cooperation

35. Conventions



The SFT and Palermo Conventions have not

been ratified.

 Section 5 of the Palermo Convention has not

been implemented and the SFT Convention

has not been fully implemented with regard

to the application of offenses in UNATMA

to terrorist acts, terrorist organizations and

individual terrorists.

 UNATMA does not include two of the

conventions which define terrorist offenses

that are listed in the annex to the SFT

convention.

36. MLA

 Bilateral treaties on MLA do not have the

force of law.

37. Dual criminality

38. MLA on confiscation and

freezing

39. Extradition

40. Other forms of co-operation

Nine Special

Recommendations

SR.I Implement UN

instruments

 No legal framework implemented to comply

with UNSCRs 1267, 1373 and 1455.

 The SFT Convention has not been fully

implemented and the relevant law,

UNATMA, does not include two of the

conventions listed in the annex to the SFT

Convention.

SR.II Criminalize terrorist

financing



The Convention on the Physical Protection

of Nuclear Material (1980) and the

International Convention for the

Suppression of Terrorist Bombings (1997)

are not included in the list of Conventions

that define one aspect of the definition of

terrorist act in UNATMA;

 Under Section 3(4) of UNATMA, the

offenses under Secs. 3(1) and 3(3) do not

255

apply to individual terrorists;

 POCA Regulations do not sufficiently cover

identification of FT offenses.

SR.III Freeze and confiscate

terrorist assets

 Statutory provisions implementing relevant

UNSCRs are largely absent.

SR.IV Suspicious transaction

reporting

 There is no requirement in UNATMA or

POCA to file SARs for transactions or

financial activities that could constitute or be

related to financing of individual terrorists

or terrorist organizations.

SR.V International

cooperation

 The legal basis for conducting investigations

and related prosecutorial measures for FT on

behalf of foreign law enforcement is not

specified in law.

SR.VI AML/CFT requirements

for money/value transfer

services

 Lack of AML/CFT compliance monitoring

and supervision of business conducted

outside of banking sector.

SR.VII Wire transfer rules



No wire transfer requirements;

 Partial implementation of SR.VII standards

by banks and money transmitters.

SR.VIII NPOs



No review of NPO sector laws and

regulations;

 Limited monitoring of NPO financial

activities.

SR.IX Cross-Border

Declaration &

Disclosure



The administrative process by which the

Customs Department imposes a fine, accepts

an admission of wrongdoing, and discharges

the liability of the suspect does not allow the

DPP, with the assistance of the FIU, to

investigate, develop and prosecute criminal

cases against suspects caught with

undisclosed, suspicious or concealed

currency;

 Administrative fines are not effective,

dissuasive or proportionate; and

 A long-pending proposed MOU between the

Customs Department and the FIU has not

been signed.

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Table 2. Recommended Action Plan to Improve the AML/CFT System

FATF 40+9 Recommendations Recommended Action (in order of priority within each

section)

1. General

2. Legal System and Related

Institutional Measures

2.1 Criminalization of

Money Laundering (R.1 & 2)

 Relevant laws should be strengthened to provide that:

 The offenses set forth in Section 41 are consistent with

the Vienna and Palermo Conventions;

 Self-laundering by way of simple possession of

proceeds should be criminalized; and

 Racketeering, human trafficking and migrant

smuggling should be enacted into law as criminal

offenses and covered by POCA as predicate offenses.

 Efforts should be made by competent authorities to

increase the number of prosecutions and convictions for

ML and related predicate crimes.

2.2 Criminalization of

Terrorist Financing (SR.II)

 The laws of SVG should be strengthened as follows:

 Schedule II to UNATMA should be amended to add

two conventions that are listed in the annex to the SFT

Convention, as follows: The Convention on the

Physical Protection of Nuclear Material (1980); and

the International Convention for the Suppression of

Terrorist Bombings (1997);

 Section 3(4) of UNATMA should be amended to apply

to individual terrorists, and not just terrorist acts and

terrorist groups; and

 The POCA Regulations should be amended to cover

FT offenses.

2.3 Confiscation, freezing,

and seizing of proceeds of

crime (R.3)

 The relevant laws should be strengthened:

 To provide for an explicit provision subjecting to

confiscation indirect proceeds of crime, including

income, profits or other benefits;

 To provide for an explicit provision to allow

competent authorities to take steps to prevent or void

actions, whether contractual or otherwise, where, as a

result of the actions of third parties, the authorities

would be prejudiced in their ability to recover property

subject to confiscation; and

 To provide in Section 3(4) of POCA for gifts that

257

represent a value that is less than the value of the

property, rather than “significantly less” under current

law, to be subject to confiscation;

 In addition, efforts should be made by competent

authorities to increase the number and value of both cash

forfeitures and confiscations of property;

 The authorities should consider timely enactment of the

bill currently under review by parliament that would

provide for civil forfeiture of all property, not just

currency, as well as the subsequent implementation of

such forfeiture provisions.

2.4 Freezing of funds used

for terrorist financing

(SR.III)

 The authorities in SVG should take immediate action to

implement the relevant UNSCRs, including, but not

limited to UNSCRs 1267, 1373 and 1455, and any such

provision of law should be flexible enough to apply as

well to similar designations by other states as well as any

future UNSCRs that require UN member states to freeze,

seize and confiscate the assets of designated terrorists and

terrorist organizations, as well as such designations by

other member states in the future.

2.5 The Financial

Intelligence Unit and its

functions (R.26)

 The FIU should strengthen its analytical function

including through enhanced staff capacity;

 The FIU Act should provide broad based authority to

obtain information from other governmental authorities to

conduct analysis for financial intelligence purposes;

 The FIU should issue additional and comprehensive

guidance to reporting parties on SAR filings to increase

the quality and consistency of reports;

 The FIU should publish an annual report on it operations.

In this regard, sanitized information on trends and

typologies should be regularly included in a public

document. The FIU should consider creating a website

with information on its operations, SAR forms and

instructions for reporting entities, and information for

requesting authorities on the FIUs exchange of

information procedures;

 The FIU should consider entering into MOUs with

counterparts in other countries, especially where SVG

registered institutions and entities operate.

2.6 Law enforcement,

prosecution and other

competent authorities (R.27

 Specific FT-related authority should be incorporated either

in UNATMA or by amending POCA to directly include

any FT offense;

258

& 28)

 Law enforcement authorities’ designation and integration

into the AML/CFT framework, including relative to the

FIU, should be detailed and formalized;

 Resources for the DPP’s office should be enhanced and

consideration should be given to formally deputizing FIU

lawyers as assistant DPPs.

2.7 Cross-Border

Declaration & Disclosure

(SR.IX)

 The administrative process should be changed to allow the

DPP, with the assistance of the FIU, to investigate,

develop and prosecute criminal cases against suspects

caught with undisclosed, suspicious or concealed

currency;

 CCMA should be amended to increase administrative

fines so that they are effective, dissuasive and

proportionate;

 MOU between the Customs Department and the FIU

should be signed.

3. Preventive Measures–FIs

3.1 Risk of money

laundering or terrorist

financing

 Review the Schedule to the POCA to explicitly cover (i)

mutual fund administrators, managers and underwriters;

and (ii) insurance intermediaries i.e. agents and brokers;

 Implement an oversight and AML/CFT compliance

regime for non-regulated lending operations;

 Extend the Regulations to explicitly cover FT consistent

with the requirements of Section 46 of POCA.

3.2 Customer due diligence,

including enhanced or

reduced measures (R.5–8)

R.5

 Consider explicitly covering of mutual fund

administrators and managers, and of insurance agents and

brokers in the POCA;

 Extend the POCA and the Regulations to explicitly cover

FT;

 Explicitly prohibit anonymous or fictitious name accounts

particularly those that were in existence before the POCA

Regulations were issued;

 Extend the full range of CDD (only identification

verification) for business relationships and one-off

transactions;

 Reduce the threshold for one-off wire transfers to comply

with SRVII;

 Extend the identification requirement when there is

suspicion beyond one-off transactions and cover FT;

 Introduce a CDD requirement for cases when there are

doubts as to the veracity or adequacy of previously

259

obtained customer identification data;

 Remove/amend the provisions in the POCA Regulations

that allow exemptions from for customer identification,

and review similar exemptions contained in the GNs;

 Introduce: (i) an explicit requirement to verify the identity

of the person authorized to act on behalf of a corporate

entity, partnership or other legal arrangement; and (ii)

expand the verification requirement of provisions

regarding the power to bind entity, beyond the power to

open and operate accounts;

 Enhance requirements for identification of legal

arrangements such as trusts/trustees, including measures

to identify settlors, beneficiaries and other parties to a

trust;

 Extend the scope of the requirement to obtain information

on the purpose and intended nature beyond accounts to

include business relationships;

 Extend the ongoing CDD requirements to include update

of CDD records particularly with respect to higher risk

business relationships;

 Introduce enhanced CDD requirements for higher risk

clients and review/delete exemptions from identification

verification as they go beyond the criteria for simplified

CDD;

 Require termination of existing business relationships in

the circumstances covered by c. 5.16, subject to any

directions from the FIU/competent authorities in case of

suspicion or other reason;

 Remove the identification exemptions in the POCA

Regulations especially for cases when there is suspicion

ML or FT;

 Introduce a requirement to apply CDD requirements to

customers existing at the date the POCA Regulations

came into effect, on the basis of materiality and risk. This

may be also be relevant for any future changes to the

POCA Regulations and other applicable laws;

 Extend the requirement to perform CDD on existing

customers beyond the beneficial owners of anonymous of

fictitious name accounts, and require termination of such

accounts immediately to the extent that they may exist;

 Review the provisions of the GNs that only require the

suspension, and not prohibition, of a new or existing

260

business relationship or transaction when verification of

identity cannot be completed;

 Enhance supervision and enforcement of compliance to

address weaknesses across most sectors in implementation

of CDD, including with regards to beneficial owners and

bearer/nominee share companies.

R.6

 Require FIs to conduct additional and enhanced CDD

measures, or to obtain senior management approval, for on

new and/or existing PEPs relationships.

R.7

 Require FIs to for perform, inter alia, additional and

enhanced CDD on correspondent banking relationships,

assess the AML/CFT controls of respondent institutions,

and obtain senior management approval before

establishing correspondent account relationships;

 Introduce requirements with respect to the provisions of

correspondent payable-through accounts;

 Enhance supervision of risk management practices and

compliance with R.7 by domestic banks that provide

correspondent/nested correspondent banking facilities to

international (offshore) banks in breach of R.7 and the

ECCB’s prudential guidelines on correspondent banking

(March 2001).

R.8

 Require FIs to have policies or measures in place to

prevent misuse of technological developments for ML or

FT, including non-face to face business relationships and

transactions, and review the exemptions provided in the

GNs for this type of business.

3.3 Third parties and

introduced business (R.9)

FIs should be required to:

 immediately obtain CDD information from introducers;

 ensure that documentation can and will be available

promptly on request;

 limit the eligibility of introducing institutions to those FIs

and DNFBPs covered by the FATF standard, consistent

with the provisions given in the GNs;

 Explicitly state that ultimate responsibility for customer

identification and verification lies with the SVG FI and

not the introducer. The exemptions allowed for by the

POCA Regulations and GNs are not consistent with this

requirement.

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3.4 Financial institution

secrecy or confidentiality

(R.4)

 Each provision of confidentiality and limitation of access

to information in sector specific acts, in particular Section

15(4) of the RAs and Trustees Act, should be removed

from law;

 The AG should provide a legal opinion on the meaning of

“confidential” information in light of the repeal of the

Confidentiality Act 1996, in particular the extent to which

such repeal restored the common law definitions of bank

secrecy and confidentiality.

3.5 Record keeping and wire

transfer rules (R.10 &

SR.VII)

R.10

 Clarify in the regulations the provisions to keep records

longer than the minimum period when required by the

FIU, consistent with the GNs;

 Explicitly require FIs to retain business correspondence;

 Review for and remove potentially conflicting

recordkeeping requirements between the POCA/POCA

Regulations and the DTOA and with some of the

provisions in GNs 102-110;

 Review recordkeeping arrangements by some FIs that operate

and keep records outside of SVG to e

nsure adequate

compliance supervision and efficient access by competent

authorities.

SR.VII

 Binding regulations should be adopted requiring all wire

transfer service providers, including banks, money

transmitters, and other FIs, to adhere to the wire transfer

recommendations of FATF SR.VII;

 All FIs subject to wire transfer requirements should be

monitored for compliance by a supervisor with the

authority and capacity to enforce compliance.

3.6 Monitoring of

transactions and

relationships (R.11 & 21)

R.11

 The POCA Regulations should be amended to require

explicitly that reporting entities be required to examine as

far as possible the background and purpose of such

transactions and to set forth their findings in writing;

 The POCA Regulations should be amended to require that

the written findings of reporting entities on their

examination be subject to the POCA record keeping

requirements;

 POCA should be amended to provide for direct

administrative sanctions for reporting parties that fail to

adhere to the requirements for monitoring transactions,

262

including failure to implement procedures to monitor,

prepare written findings and maintaining records on such

monitoring.

R.21

 Require FIs to pay special attention to transactions and

relationships with persons from countries that do not or

insufficiently apply the FATF Recommendations;

 Implement a formal mechanism to advise FIs of

AML/CFT concerns with other countries and where

necessary advise FIs of such concerns;

 Introduce provisions and procedures that would require

SVG to apply counter-measures against countries that do

not or insufficiently apply the FATF Recommendations.

3.7 STRs and other

reporting (R.13, 14, 19, 25, &

SR.IV)

 Amend POCA (Section 46(3)) to require FIs to report all

suspicion with respect to funds that are the proceeds of

criminal conduct, not only those described under Section

46(2).

 Either POCA or UNATMA should be amended to require

the filing of SARs for transactions or financial activities

that are suspected to constitute or be related to the

financing of individual terrorists or terrorist organizations;

 POCA Section 45 should be amended to prohibit tipping

off of the fact of the filing of the SAR itself;

 The defense in POCA Section 45(4) should be removed;

 UNATMA and/or POCA should be amended to prohibit

the tipping of the filing of SARs and any related

disclosure of information to a police officer of suspected

terrorist financing activities or transactions.

3.8 Internal controls,

compliance, audit and

foreign branches (R.15 & 22)

 Enhance the requirements for FIs to have comprehensive

policies, and consider revising the compliance and

independent audit requirements under POCA Regulations

8 (narrower) to make them consistent with those under

Section 46 of the POCA (broader);

 Require FIs to train staff on current ML and FT trends,

typologies, techniques, etc.;

 Clarify the scope of the training requirement to ensure that

the term “relevant” employees, i.e., to those that have/may

have access to information that can be relevant to

determine the existence of ML, does not restrict the

training requirement;

 Require FIs to properly screen employees for fit and

proper criteria to ensure high standards;

263

 Supervise and require FIs to ensure that compliance

officers devote sufficient time and seniority to AML/CFT,

and avoid inherent conflicts when multi-tasking such

officers;

 FIs, especially banks, should emphasize AML/CFT

training for high risk areas e.g. money remittance

business, correspondent accounts, wire transfers, back-to-

back loans, and credit card operations.

3.9 Shell banks (R.18)

 Review the physical presence of all offshore banks against

the meaningful mind and management criteria of FATF

Rec. 18 above and prohibit the continuation of any shell

banks;

 Introduce explicit prohibitions against entering into, or

continuing correspondent banking relationships with shell

banks, consistent with the ECCB’s prudential guidelines;

 Require FIs to satisfy themselves that respondents in other

countries are not used by shell banks;

 Require domestic banks to comply with Rec. 18, the

ECCB’s prudential guidelines and the GNs with respect to

correspondent banking facilities;

3.10 The supervisory and

oversight system–

competentauthorities and

SROs Role, functions, duties

and powers (including

sanctions) (R.23, 29, 17 & 25)

R.23

 Enhance supervision of ownership and control structures

of some offshore institutions to increase transparency of

fit and proper criteria;

 Implement enhanced AML/CFT supervision of the

systemically large building society and credit union;

 Strengthen onsite inspections FIs across all sectors,

particularly in the non-domestic banking sectors;

 Enhance oversight of inherently high risk business areas

across all the relevant sectors esp. correspondent banking,

money remittance services, wire transfers and back-to-

back loans;

 Increase supervisory resources and understaffing to

conduct effective ongoing supervision across all sectors

including through the use of external auditors/consultants,

particularly in the non-domestic banking sector;

 Prioritize development and implementation of a

comprehensive AML/CFT inspections/supervision

program for the international mutual fund and insurance

sectors, including through development of cross-border

supervisory cooperation mechanisms;

264

 Develop detailed sector-specific AML/CFT inspection

procedures for the non-domestic bank sectors;

 Implement AML/CFT supervision of money services

business and review and enforce licensing laws with

respect to possible existence of one unauthorized activity;

 Review and if necessary implement an authorization and

AML/CFT supervisory regime for the existing money

lending businesses covered by the AML/CFT laws.

R.29 (See also R.17 below)

 Make explicit provision for regulators to supervise and

enforce compliance with the AML/CFT legislation

including the application of administrative sanctioning

powers in the financial laws;

 Develop the legal and regulatory regime for regulators to

supervise, inspect and enforce AML/CFT compliance for

building societies and presently unauthorized money

lending operations;

 Introduce explicit legal provisions for other regulators

(functionally the ECCB, IFSA, Ministry of Finance), to

supervise, inspect and enforce compliance by FIs broadly

similar to those for international banks and money

services business, in the POCA, POCA Regulations and

UNATMA. These should include the power to initiate

enforcement proceedings under these laws;

 Extend the AML/CFT compliance obligations under the

International Banks Act and Money Services Business Act

to the POCA Regulations in order to provide broader

regulatory scope for monitoring and enforcing

compliance;

 Develop and implement a regulatory and supervisory

regime for mutual fund underwriters that would include

AML/CFT, similar to that for fund administrators;

 Review the possible limitation under Section 8 of the

IFSA Act with respect to scope of IFSA’s supervisory and

enforcement powers;

 Remove the technical restrictions under Section 19(9) of

the International Banks Act that limit access to the names,

titles and confidential information about customers’

accounts to the Executive Director;

 Review and as appropriate revise the legal and operational

framework for mutual funds, administrators and managers,

265

and insurance companies and their managers, to ensure

that IFSA has efficient and timely access to books, records

and information of such institutions to enable effective

AML/CFT supervision;

 Review and if necessary amend the Mutual Funds Act and

Regulations to deal with the ability of IBC funds to issue

bearer shares (not immobilized) as this may limit CDD

and compliance supervision;

 Review/amend Section 35 of the Mutual Funds Act that

can exempt FIs from supervision and enforcement under

the Act with implications for AML/CFT;

 Amend the credit unions law to ensure full access to

records by Registrar.

R.17

 Amend regulatory laws to ensure that the full range of

administrative sanctions powers for violations of POCA

and the POCA Regulations are available to regulatory

bodies; such sanctions powers should be harmonized

across regulatory laws to ensure consistency.

Administrative sanctions should include, at a minimum:

written warnings; orders or directives to comply with

specific instructions; removal of controlling shareholders,

directors and senior management officials; ordering

regular reports; administrative fines for non-compliance

(possibly on a daily basis); barring individuals from

employment within any regulated sector; replacing or

restricting powers of managers, directors, or controlling

owners; imposing conservatorship; and suspension,

revocation or withdrawal of the license;

 Amend POCA and the POCA Regulations to explicitly

authorize all regulatory bodies and agencies, including

IFSA with respect to international banks, mutual funds,

insurance companies and RAs; the Ministry of Finance

with respect to local banks, MSBs and insurance

companies, and the Comptroller of Cooperatives with

respect to credit cooperatives, to impose administrative

sanctions referred to above for violations of POCA and

the POCA Regulations;

 Amend regulatory laws to authorize regulators to

recommend to the DPP that a criminal proceeding be

initiated for serious violations of POCA and the POCA

266

Regulations; and

 Amend regulatory laws to ensure that civil fines and

criminal penalties are substantially increased along the

lines of those found in the Banking Act (see chart above)

or in Section 47 of POCA.

3.11 Money value transfer

services (SR.VI)

 The Ministry of Finance should quickly develop policies,

procedures and capacity for on-site compliance

examinations and begin such examinations;

 Investigate the existence of unlicensed money remittance

operations and take appropriate action.

4. Preventive Measures–

Nonfinancial Businesses

and Professions

4.1 Customer due diligence

and record-keeping (R.12)

 Casinos should be regulated and supervised;

 All DNFBPs should be examined more systematically for

CDD compliance;

 IFSA on-site examinations should be more frequent and

thorough, especially for RAs and trustees;

 Some arrangement should be introduced for inspection of

lawyers for compliance. Other DNFBPs should be subject

to spot checks of files;

 Additional training should be undertaken, particularly for

lawyers but also for RAs in their procedures for relying on

third-parties for CDD compliance

4.2 Suspicious transaction

reporting (R.16)

 While the overall volume of business conducted by

DNFBPs is low, many transactions, particularly cross-

border transactions, are vulnerable to ML and FT risk. In

this context, SAR reporting by DNFBPs is very low,

suggesting a need for additional training and/or stricter

oversight of compliance in this area;

 Need to strengthen internal compliance programs and

supervision of the same, especially with respect to the

larger DNFBPs. With the limited exception of some RAs,

the adequacy of internal compliance programs has not

been examined by supervisors;

 Need to assign responsibility for oversight of the reporting

and internal AML/CFT compliance programs of lawyers,

accountants, real estate agents, jewelers and car dealers.

4.3 Regulation, supervision,

monitoring, and sanctions

 Procedures for licensing casinos should be regularized and

regulation of casinos should be introduced;

267

(R.17, 24, & 25)

 A regulator with the adequate skills and capacity should

be assigned to oversee and enforce compliance by casinos

with their AML/CFT obligations;

 The apparent exemption in the RAs Act barristers and

solicitors and accountants from being licensed for

Overseas Representation services should be eliminated;

 Section 4 of the RAs Act should be repealed;

 IFSA policies and procedures for on-site examination and

supervision of RAs’ compliance with AML/CFT

obligations should be enhanced, including additional staff

and additional training;

 Given its responsibilities for regulation of the entire

international sector, the number of IFSA examiners –four–

is too few;

 Authority of the IFSA Executive Director to delegate

examination responsibility should be included in the

Overseas Finance Authority Act;

 IFSA should adopt written internal policies and

procedures for approving approved custodians;

 Policies and procedures should be put in place by IFSA

for retrospectively approving bearer share custodians who

were authorized by RAs between 2002 and 2007, or for

revoking such custodianship and establishing new,

approved arrangements;

 Policies and procedures, including if necessary, changes in

laws or regulation, should be adopted to ensure that the

extensive overseas business activities of some RAs do not

create structures not subject to effective supervision. A

variety of approaches are possible;

 A supervisory authority (or authorities), with adequate

powers and capacity, should be appointed to monitor and

enforce compliance by other DNFBPs with their

AML/CFT obligations;

 Updated guidance should be issued, with additional

material applicable to the operations of DNFBPs.

4.4 Other designated non-

financial businesses and

professions (R.20)

 The authorities should keep under review evolving

opportunities for reducing the use of cash in the economy.

5. Legal Persons and

Arrangements & NPOs

5.1 Legal Persons–Access to

 With respect to IBCs: (i) relevant laws should be amended

268

beneficial ownership and

control information (R.33)

to provide (a) that only RAs and approved custodians may

immobilize bearer shares, (b) IFSA with the authority to

strike off an IBC under Section 172 of the IBC Act for

reasons of public policy along the lines of its authority

under Section 34(1)(a) of the Insurance Act; (ii) measures

should be taken by IFSA to verify, at a minimum, that (a)

information about beneficial ownership of legal persons in

the IBC Register is adequate, accurate and current, and

consistent with such information about legal persons held

by RAs, (b) AML/CFT procedures of both RAs and

approved custodians are effective and comply with the

laws of their home country as well as those of SVG, and

Act and therefore have been properly immobilized by RAs

and approved custodians, and that only approved

custodians as defined by the IBC Act are authorized to

immobilize bearer shares;

 Consideration should be given to amending relevant laws

administered by IFSA to require a wide range of effective,

dissuasive and proportionate administrative and criminal

sanctions against controlling shareholders, directors,

officers and companies for failure to disclose material

information to IFSA or to RAs or for misuse of any

company in respect to ML, FT or any other predicate

crime;

 IFSA’s onsite inspection procedures should be revised to

ensure that it has access to and is verifying that adequate,

accurate and complete information with respect to

beneficial ownership of IBCs is being collected and

maintained by RAs;

 IFSA should develop policies and procedures for

approving custodians to hold immobilized bearer shares;

 With respect to local companies, the Companies Act

should be amended to (i) provide the Companies Registrar

with the requisite legal authority to ascertain the beneficial

ownership of all companies registered in SVG, and to

ensure that information about beneficial ownership of

legal persons in the Local Companies Registry is

adequate, accurate and current, and (ii) consideration

should be given to including a wide range of effective,

dissuasive and proportionate administrative and criminal

sanctions against controlling shareholders, directors,

269

officers and companies for failure to disclose material

information to the Companies Registrar and for misuse of

any company in respect to ML, FT or any other predicate

crime;

 The use of nominee and non-SVG corporate directors and

shareholders should be prohibited in the IBC and

Companies Acts unless measures are taken to ensure that

adequate, accurate and complete beneficial information is

made available to IFSA and the Companies Registrar

respectively and that the IBC and Companies Registers so

reflect; and

 The Mutual Funds and International Insurance Acts

should be amended to prohibit the use of bearer shares by

licensees, and the Mutual Funds Regulations revised to

reflect this change.

5.2 Legal Arrangements–

Access to beneficial

ownership and control

information (R.34)

 With respect to ITRs, relevant laws, regulations or other

enforceable means should be amended to require

registered trustees to identify beneficial owners of trusts

(e.g. the settlor, trustee, beneficiaries and protector) and

the IT Act should be amended to make clear that IFSA has

the authority to request books, records and other

information about beneficial owners of trusts;

 With respect to ITRs, IFSA should conduct sufficient

inspections of registered trustees so as to ensure that

beneficial owners of trusts are identified;

 With respect to local trusts, measures, including laws,

regulations and other enforceable means, should be

adopted to: (i) ensure that competent authorities have

access to adequate, accurate and complete information

about beneficial owners of trusts; (ii) prevent misuse of

local trusts for purposes of ML and FT; and (iii) prevent

use of companies as settlors, trustees or beneficiaries of

trusts unless they can be adequately identified;

 With respect to both ITRs and local trusts, relevant laws

should be amended to prohibit use of companies as

settlors, trustees or beneficiaries; and

 With respect to both ITRs and local trusts, consideration

should be given to amending relevant laws to provide

competent authorities with effective, dissuasive and

proportionate sanctions to ensure that requisite

information on beneficial owners is being disclosed and

that corporate vehicles are not being used for ML or FT.

270

5.3 NPOs (SR.VIII)

 The authorities should undertake a review of its laws and

regulations as they relate to AML/CFT and the NPO

sector;

 The Registrar of companies should establish policies and

procedures to monitor financial filings of NPOs to verify

that funds are being raised and disbursed in a manner

consistent with the NPOs stated purpose;

 Financial reporting requirements should be broadened to

including information on domestic and international

sources of funds and applications of funds.

6. National and International

Cooperation

6.1 National cooperation

and coordination (R.31)

 FIU Act should be amended to specify the FIU authority

to obtain appropriate law enforcement and other

governmental information needed to develop intelligence

and analysis.

6.2 The Conventions and

UN Special Resolutions (R.35

& SR.I)

 SFT and Palermo Conventions should be ratified and fully

implemented;

 UNATMA should be amended to include all conventions

that define offenses to which the SFT Convention applies;

 Legal provisions and other measures should be adopted in

order to implement the requirements in UNSCRs 1267

and 1373. In particular, a mechanism for freezing funds,

assets, and other financial or economic resources of

terrorists and terrorist organizations.

6.3 MLA (R.36, 37, 38 &

SR.V)

 Pursuant to MACMA, SVG should adopt regulations that

will allow for bilateral MLA treaties to have the effect of

law; the AG should issue a legal opinion that the

discretion to reject requests for MLA in the absence of

dual criminality would not be exercised in respect to ML,

predicate offense and FT requests.

6.4 Extradition (R.39, 37 &

SR.V)

 Specific procedures should be established for expediting

extradition requests.

6.5 Other Forms of

Cooperation (R.40 & SR.V)

 The legal basis for conducting investigations and related

prosecutorial measures for FT directly on behalf of foreign

law enforcement should be specified in law;

 The scope and definition of financial intelligence

information that is subject to sharing by the FIU to foreign

counterparts and to foreign law enforcement needs to be

clearly defined.

271

7. Other Issues

7.1 Resources and statistics

(R.30 & 32)

R.30

Supervisors:

 There is a need to strengthen the supervisory staff of

IFSA’s and the Ministry of Finance-SRD supervisory

staff, including enhanced training on supervision and

AML/CFT in particular;

 The planned transfer of supervision for credit unions and

building societies to the SRD will require enhanced

resources and training for supervisors in these new

sectors;

 Supervisory authorities with adequate staff and resources

should be assigned responsibility for monitoring and

enforcing AML/CFT compliance by those DNFBPs that

are not now subject to supervision by IFSA.

FIU:

 FIU needs additional training and resources to conduct

core analytical functions, including accounting and

forensic skills.

DPP:

 Additional resources and training needed.

Police:

 Police officers should receive regular and comprehensive

training on ML and FT offenses and their linkages to

predicate offenses;

 RSVGPF should have additional resources for

technological and communication to improve the predicate

crimes, ML and FT investigations.

Customs:

 Additional AML/CFT training focusing on red flags and

typologies should be provided to all Customs Department

employees amounting to a total of at least two full days of

training per year. The Department should consider

coordinating with the FIU in researching, designing, and

providing such additional training;

 Consideration should be given to adding airport scanners

and permanent trace detector, as well as mobile canine

272

squads for ET Joshua Airport and the main seaport.

Law Judiciary:

 Consider longer term contracts for magistrates of at least

five and up to ten years be used.

R.32

Supervisors:

 Inadequate and untimely statistics obtained by insurance

supervisors with respect to e.g. life and investment linked

insurance policies;

 Insufficient financial statistics received and generated by

financial sector supervisor to assist them in risk-profiling

FIs for ML/FT risks, including with respect to their money

remittance business, back-to-back loans, etc.

FIU/Police:

 The FIU and Police should maintain statistics on trends,

vulnerabilities and typologies of ML and FT offenses, and

predicate offenses that analyze and synthesize the

information obtained separately by each agency.

7.2 Other relevant

AML/CFT measures or

issues

7.3 General framework –

structural issues

- 273 - ANNEX I

Authorities’ Response to the Assessment

The Government and people of St. Vincent and the Grenadines (SVG) extend its sincerest

gratitude to the team of evaluators of the IMF for their untiring efforts in the Mutual

Evaluation process of SVG. The process was a rigorous undertaking for both the team and

the country but one which we recognize as a necessity.

We, the Government and people of this country remain committed and ready to do all within

our powers and resources to build and sustain a strong anti money laundering (AML)/

counter financing of terrorism (CFT), and financial regulatory regime. To this end, we

remain ever cognizant that this Mutual Evaluation process is designed as an objective

measure of our efficacy in implementing an AML/CFT regime, and as an indicator to the

international community of the status of enforcement initiatives to money laundering and

terrorist financing.

Given the significance and potential international and domestic implications, it is imperative

that the report of our IMF Assessors, as far as possible, is an accurate and objective

representation of the state of affairs of our country in respect to our AML/CFT regime. In

this regard, we were given assurances that the country situation would be given adequate

consideration. However, at times it remained unclear whether such assurances were

sufficiently reflected in the Assessors’ work.

We intend to consider the recommendations provided in the report to enhance our efforts

while at the same time collaborating with the IMF and other stakeholders to progress the

execution of such plans. Plans are already in motion to implement some of the

recommendations while others require further consultations with the various stakeholders.

We wish to emphasize a few of the important areas to which we intend to give utmost

priority in 2010 and the near future:

 Amend the two primary pieces of legislation: POCA and UNATMA to achieve full

compliance with the FATF 40 plus Nine Special Recommendations. Other pieces of

legislation speaking to the operations of the FIU, IFSA and other regulatory bodies

are being reviewed and shall be amended where appropriate.

 Issue a legally enforceable and comprehensive set of guidance notes to cover both

AML and CFT as an aid in providing clear direction to all FIs and Regulated entities.

 Continue to build greater human resources capacity at key governmental

organizations, particularly at regulatory agencies, as this has already commenced

since the evaluation.

 Implement the most effective regulatory oversight systems in keeping with the

recommendations of the Detailed Assessment Report (DAR).

One of our overarching goals is to enhance and accelerate current measures in St. Vincent

and the Grenadines targeted towards strengthening the existing financial regulatory regime.

- 274 - ANNEX I

We intend to achieve this goal through a strategy of prioritization within the context of our

available resources. The key manifestation of this would be the discernible improvements in

legislation, guidance and regulatory oversight for all sectors governed under the AML/CFT

regime.

Not surprisingly, contained within the IMF’s DAR are a number of points of differences

between the Assessors and the examined country. Above all, St. Vincent and the Grenadines

considers that it has managed to achieve, maintain and implement an effective AML/CFT

regime, commenced since December 2001, whereby significant human, financial and

technical efforts have been expended to obtain this result. Considerable progress has been

made in establishing an AML/CFT regime that actually works and produces desired results.

This is especially relevant in our historical and country context of such legislative and

administrative practices being wholly unfamiliar prior to 2001/2002. Bearing in mind the

overarching objectives of the FATF 40 plus Nine Special Recommendations, there can be

little doubt that SVG has indeed curtailed the activities of the money launderers, as

evidenced by the fact that the years following the setting up and operation of its FIU, the

biggest drug dealers and money launderers have been and are being brought to justice – due

to the implementation of an effective, working AML/CFT regime.

St. Vincent and the Grenadines is however fully cognizant of the need to make further and

greater progress and to enhance both our laws and systems so that they accord fully with the

requirements of the FATF 40 plus Nine Special Recommendations. Though it is understood

that the objective of the Report is to highlight deficiencies and weaknesses, it is respectfully

submitted that in the country’s view, the Assessors have not effectively reflected in the

Report the very positive achievements of the country over the past several . In addition, in

our view there remain in the DAR a number of subjective judgments, which we believe do

not accord with the known facts, particularly in respect of what is believed to be actions that

demonstrate effective implementation.

Notwithstanding, St. Vincent and the Grenadines will henceforth focus on improving its

AML/CFT regimes in a manner guided by the recommendations of this Report.

We reiterate our commitment to the mutual evaluation process and to ensuring that our

AML/CFTAML regime is in compliance with the FATF 40 plus Nine Special

Recommendations.

- 275 - ANNEX II

Details of Key Bodies and Persons Met During the On-Site Visit

Government and Public Sector Authorities

Hon. Prime Minister, Minister of Finance, Legal Affairs and National Security

Attorney General

Ministry of Legal Affairs

Ministry of Foreign Affairs

DPP

Commissioner and Deputy Commissioner of Police

Supreme Court Judges

Chief Magistrates

Financial Intelligence Unit

Permanent Secretary of National Security

Director General, Ministry of Finance & Planning

Budget Director, Ministry of Finance & Planning

Comptroller, Customs & Excise Dept.

Comptroller, Inland Revenue Dept.

International Financial Services Authority (IFSA)

Registrar, International Business Companies (IBCs)

Supervisory and Regulatory Unit (Ministry of Finance)

Co-operatives Department/Registrar of Cooperatives

Eastern Caribbean Central Bank: Banking Supervision Dept.

Gaming Commission

Commerce and Intellectual Property Office

Private Sector Organizations and Entities

Financial Institutions

9 Banks: Domestic 4; Offshore 5

5 Insurance Companies & Intermediaries

3 Investment Companies, Intermediaries and Mutual Fund Administrators

1 Credit Union

1 Building Society

- 276 - ANNEX II

4 Money Remitter (some were part of other FIs)

1 Bureau de Change

Designated Non-Financial Businesses and Professions

Bar Association

1 Law Firm

Accountants Association

1 Accounting Firm

2 NGOs

1 Jeweler

1 Real Estate Broker

1 Casino

3 Trust and Company Services Providers

1 Car Dealer

- 277 - ANNEX III

Annex 3. List of All Laws, Regulations, and Other Material Received

The International Business Companies (Amendment and Consolidation) Act, 2007

Offshore Finance Authority (Reenacting Act)/International Finance Authority Act

Uniform Banking Act

Eastern Caribbean Central Bank Act

Insurance Act

Money Services Business Act

Co-operative Societies Act

Co-operative Societies Regulations

Building Societies Act

The International Banks Act 2004

International Banks (Amendment Act)

Mutual Funds Act, 1997

Mutual Funds (Amendment) Act

Mutual Funds Regulation

The International Insurance (Amendment and Consolidation) Act, 1998

The International Trust Act

The International Trust (Amendment) Act, 2002

The International Trust (Amendment) Regulations, 2002

The International Trust Regulations, 1996

The Exchange of Information Act, 2008

Registered Agent & Trustee Licensing (Amendment) Act

Chapter 382 – Public Trustee Act

Proceeds of Crime and Money Laundering (Prevention) Act 2001

To amend the Proceeds of Crime and Money Laundering (Prevention) Act 202

Prevention of Money Laundering, Guidance Notes

UN Anti-Terrorism Measures Act, 2002

UN Anti-Terrorism Measures Amendment Act of 2006

Statutory Rules and Orders, Proceeds of Crime Regulations

- 278 - ANNEX III

Financial Intelligence Unit Act 2001

Acts to amend the Financial Intelligence Unit Act 2001

Gaming, Lotteries and Betting Act Cap 276

Companies Act No. 8 of 1994

Registration of Business Names Act Cap 111

Partnership Act Cap 109

Environmental Services Act No.14 of 1991

Convention on Oil Pollution Damage No. 6 of 2002

Management of Ship- Generated Solid Waste Act No: 15 of 2002

Dumping at Sea Act No: 53 of 2002

Mutual Legal Assistance in Criminal Matters No: 46 of 1993.

Exchange of Information Bill 2008

Customs (Control and Management) Act No: 14 of 1999

Customs and (Control and Management) Amendment order, 2001

Police Act Cap 280

Drugs (Prevention of Misuse) Act Cap 219

Immigration (Restriction Act) Cap 78

Firearms Act No. 12 of 1995

Drug Trafficking Offences Act No: 45 of 1993

CC Cap 124

- 279 - ANNEX IV

Copies of Key Laws, Regulations, and Other Measures

SAINT VINCENT & THE GRENADINES

ANNEX IV: Key Laws, Regulations, and Other Measures

DETAILED ASSESSMENT REPORT ON ANTI-MONEY

LAUNDERING AND COMBATING THE FINANCING OF

TERRORISM

JUNE, 2010

INTERNATIONAL MONETARY FUND

LEGAL DEPARTMENT

- 280 - ANNEX IV

ANNEX IV

Key Laws, Regulations, and Other Measures

8. PROCEEDS OF CRIME AND MONEY LAUNDERING (PREVENTION) ACT 2001

(Amended in 2002 and 2005, see below.)

PART V

MONEY LAUNDERING

Offences

Concealing or

transferring

proceeds of

criminal conduct

41. (1) A person commits an offence if he

(a) conceals or disguises any property which is, or in whole or in part directly

or indirectly represents, his proceeds of criminal conduct, or

(b) converts or transfers that property, brings it into or removes it from Saint

Vincent and the Grenadines;

for the purpose of avoiding prosecution for a drug trafficking or relevant offence or the

making or enforcement in his case of a confiscation order.

(2) A person commits an offence if, knowing or having reasonable grounds to suspect

that any property is, or in whole or in part directly or indirectly represents, another person's

proceeds of criminal conduct, he

(a) conceals or disguises that property, or

(b) converts or transfers that property, brings it into or removes it from Saint

Vincent and the Grenadines;

for the purpose of assisting any person to avoid prosecution for a drug trafficking or relevant

offence or the making or enforcement of a confiscation order.

(4) [note: original text of law omitted (3)] In this section the references to concealing

or disguising any property include references to concealing or disguising its nature, source,

location, disposition, movement or ownership or any rights with respect to it.

Arranging with

another to retain

- 281 - ANNEX IV

the proceeds of

criminal conduct

42. (1) Subject to subsection (3), a person commits an offence if he enters into or is otherwise

concerned in an arrangement whereby

(a) the retention or control by or on behalf of another person ("A") of A's proceeds

of criminal conduct is facilitated (whether by concealment, removal from

the jurisdiction, transfer to nominees or otherwise); or

(b) A's proceeds of criminal conduct

(i) are used to secure that funds are placed at A's disposal; or

(ii) are used for A's benefit to acquire property.

and he knows or suspects that A is a person who is or has been engaged in or has benefited

from criminal conduct.

(2) In this section, references to any person's proceeds of criminal conduct include a

reference to any property which in whole or in part directly or indirectly represented in his

hands his proceeds of criminal conduct.

(3) Where a person discloses in good faith to a police officer a suspicion or belief that

any funds or investments are derived from or used in connection with criminal conduct, or

any matter on which such a suspicion or belief is based

(a) the disclosure shall not be treated as a breach of any restriction upon the

disclosure of information imposed by statute or otherwise and shall not give

rise to any civil liability; and

(b) if he does any act in contravention of subsection (1) and the disclosure relates

to the arrangement concerned, he does not commit an offence under this section if

(i) the disclosure is made before he does the act concerned and the

act is done with the consent of a police officer; or

(ii) the disclosure is made after he does the act, but is made on his

initiative and as soon as it is reasonable for him to make it.

(4) In proceedings against a person for an offence under this section, it is a defence to

prove

(a) that he did not know or suspect that the arrangement related to any person's

proceeds of criminal conduct;

(b) that he did not know or suspect that by the arrangement the retention or control

by or on behalf of A of any property was facilitated or, as the case may be,

- 282 - ANNEX IV

that by the arrangement any property was used as mentioned in subsection (1)(b); or

(i) he intended to disclose to a police officer such a suspicion, belief or matter as is

mentioned in subsection (3) in relation to the arrangement, but

(ii) there is reasonable excuse for his failure to make any such

disclosure in the manner mentioned in subsection (3)(b).

(5) In the case of a person who was in employment at the time in question,

subsections (3) and (4) shall have effect in relation to disclosures and intended disclosures to

the appropriate person in accordance with any procedure established by his employer

for the making of such disclosures as they have effect in relation to disclosures, and intended

disclosures, to a police officer.

Acquisition,

possession or use of

proceeds of criminal

conduct

43. (1) A person commits an offence if, knowing that any property is, or in whole or in part

directly or indirectly represents, another person's proceeds of criminal conduct, he acquires or

uses that property or has possession of it.

(2) Subject to subsection (4) it is a defence to a charge of committing an offence

under this section that the person charged acquired or used the property or had possession of

it for adequate consideration.

(3) For the purposes of subsection (2) –

(a) a person does not acquire property for adequate consideration if the value of

the consideration is significantly less than the value of the property; and

(b) a person does not use or have possession of property for adequate

consideration if the value of the consideration is significantly less than

the value of his use or possession of the property.

(4) The provision for any person of services or goods which are of assistance to him

in criminal conduct shall not be treated as consideration for the purposes of subsection (2).

(5) Where a person discloses in good faith to a police officer a belief that any

property is, or in whole or in part directly or indirectly represents, another person's proceeds

of criminal conduct, or any matter on which such a belief is based

(a) the disclosure shall not be treated as a breach of any restriction upon the

disclosure of information imposed by statute or otherwise and shall not give

rise to any criminal, civil or administrative liability; and

- 283 - ANNEX IV

(b) if he does any act in relation to the property in contravention of subsection (1), he

does not commit an offence under this section if

(i) the disclosure is made before he does the act in question and the

act is done with the consent of the police officer; or

(ii) the disclosure is made after he does the act, but is made on his

initiative and as soon as it is reasonable for him to make it.

(6) For the purposes of this section, having possession of any property shall be taken

to be doing an act in relation to it.

(7) In proceedings against a person for an offence under this section, it is a defence to

prove that

(a) he intended to disclose to a police officer such a belief or matter as is

mentioned in subsection (5), but

(b) there is reasonable excuse for his failure to make any such disclosure in

the manner mentioned in subsection (5)(b).

(8) In the case of a person who was in employment at the time in question,

subsections (5) and (7) shall have effect in relation to disclosures, and intended disclosures,

to the appropriate person in accordance with any procedure established by his employer

as they have effect in relation to disclosures, and intended disclosures, to a police officer.

(9) No police officer or other person commits an offence under this section in respect

of anything done by him in the course of acting in connection with the enforcement, or

intended enforcement, of any provision of this Act or of any other statutory

provision relating to drug trafficking or relevant offences or the proceeds of criminal

conduct.

Disclosure of

knowledge or

suspicion of money

laundering

44. (1) Where a person in good faith discloses to a police officer-

(a) his suspicion or belief that another person is engaged in money laundering, or

(b) any information or other matter on which that suspicion or belief is based,

the disclosure shall not be treated as a breach of any restriction upon the disclosure of

information imposed by statute or otherwise and shall not give rise to any criminal, civil or

administrative liability.

(2) A person commits an offence if

- 284 - ANNEX IV

(a) he knows or suspects that another person is engaged in money laundering which

relates to any proceeds of drug trafficking;

(b) the information, or other matter, on which that knowledge or suspicion is

based came to his attention in the course of his trade, profession, business or

employment; and

as is reasonably practicable after it comes to his attention.

(3) Subsection (2) does not make it an offence for a professional legal adviser to fail

to disclose any information or other matter which has come to him in privileged

circumstances.

(4) It is a defence to a charge of committing an offence under this section that the

person charged had a reasonable excuse for not disclosing the information or other matter in

question.

(5) Any disclosure made by a person who was in employment at the time in question

to the appropriate person in accordance with any procedure established by his employer shall

be treated, for the purposes of this section, as a disclosure to a police officer.

(6) For the purposes of this section, any information or other matter comes to a

professional legal adviser in privileged circumstances if it is communicated or given to him

(a) by, or by a representative of, a client of his in connection with the giving by the

adviser of legal advice to the client;

(b) by, or by a representative of, a person seeking legal advice from the adviser;

(b) by any person-

(i) in contemplation of, or in connection with, legal

proceedings; and

(ii) for the purpose of those proceedings;

but no information or other matter shall be treated as coming to a professional legal adviser

in privileged circumstances if it is communicated or given with a view to furthering any

criminal purpose.

Tipping-off

45. (1) A person commits an offence if

- 285 - ANNEX IV

(a) he knows or suspects that a police officer is acting, or is proposing to act, in

connection with an investigation which is being, or is about to be, conducted into

money laundering or the proceeds of criminal conduct; and

(b) he discloses to any other person information or any other matter which

is likely to prejudice that investigation or proposed investigation.

(2) A person commits an offence if

(a) he knows or suspects that a disclosure has been made to a police officer or to

an appropriate person under section 41, 42 or 43; and

(b) he discloses to any other person information or any other matter which is likely to

prejudice any investigation which might be conducted following such a disclosure.

(3) Nothing in subsection (1) or (2) makes it an offence for a professional legal

adviser to disclose any information or other matter

(a) to, or to a representative of, a client of his in connection with the giving by the

adviser of legal advice to the client; or

(i) in contemplation of, or in connection with, legal proceedings; and

(ii) for the purpose of those proceedings;

but this subsection does not apply in relation to any information or other matter which is

disclosed with a view to furthering any criminal purpose.

(4) In proceedings against a person for an offence under subsection (1) or (2), it is a

defence to prove that he did not know or suspect that the disclosure was likely to be

prejudicial in the way there mentioned.

(5) No police officer or other person commits an offence under this section in respect

of anything done by him in the course of acting in accordance with the enforcement, or

intended enforcement, of any provision of this Act or of any other statutory provision relating

to criminal conduct or the proceeds of criminal conduct.

Record keeping

and reporting

suspicious

transactions

46. (1) Every financial institution or person engaged in a relevant business activity shall

keep and retain records relating to financial activities in accordance with the Regulations

made under section 67 of this Act.

- 286 - ANNEX IV

(2) Every financial institution or person engaged in relevant business activity shall

pay special attention to all complex, unusual or large transactions, whether completed or not,

and to all unusual patterns of transactions, and to insignificant but periodic patterns of

transactions, which have no apparent economic or lawful purpose.

(3) Upon suspicion that the transactions described in subsection(2) could constitute or

be related to money laundering or the proceeds of criminal conduct, a financial institution or

person engaged in a relevant business activity shall report the suspicious transactions to the

Financial Intelligence Unit in a form specified in the Regulations, as soon as reasonably

practicable, and in any event, within fourteen days of the date the transaction was deemed to

be suspicious as relating to money laundering or the proceeds of criminal conduct.

(4) Failure to report a suspicious transaction as required by subsection (3) is an

offence.

(5) When the report referred to in subsection (3) is made in good faith, the financial

institutions or persons engaged in relevant business activities and their employees, staff,

directors, owners or other representatives as authorised by law, shall be exempted from

criminal, civil or administrative liability as the case may be, for complying with this section

or for breach of any restriction on disclosure of information imposed by contract or by any

legislative, regulatory or administrative provision, regardless of the result of the

communication.

(6) Every financial institution or person engaged in a relevant business activity shall

develop and implement a written compliance programme reasonably designed to ensure and

monitor compliance with Regulations made under this Act.

(7) A compliance programme referred to in subsection(4) shall include

(a) a system of internal controls to ensure ongoing compliance;

(b) internal or external independent testing for compliance

(d) appointment of a staff member responsible for continual compliance with this Act

and the Regulations.

Penalties for money

Laundering

47. (1) A person commits an offence under section 41,42 or 43 (money laundering) and is

liable

(a) on summary conviction, to imprisonment for five years or a fine of

$500,000 or both; and

- 287 - ANNEX IV

(b) on conviction on indictment, to imprisonment for twenty years or an

unlimited fine or both.

(2) A person commits an offence under section 44, 45 or 46 (4) (failure to disclose

knowledge or suspicion, tipping off failure to report a suspicious transaction and is liable

(a) on summary conviction, to imprisonment for three years or a fine of $500,000 or

both; or

(b) on conviction on indictment, to imprisonment for ten years or an unlimited fine or

both.

9. PROCEEDS OF CRIME AND MONEY LAUNDERING (PREVENTION) (AMENDMENT)

ACT 2005

(Sections 41–47 only to coincide with the above)

Section 41

(a) In subsection (1) -

(i) delete the semi-colon after the word “Grenadines” and insert a fullstop.

(ii) delete the words “for the purpose of avoiding prosecution for a drug trafficking or

relevant

offence or the making or enforcement in his case of a confiscation order”

(b) in subsection (2)

(i) insert after the word “knowing” the word “suspecting”;

(ii) delete the semi-colon after the word “Grenadines” and insert a fullstop; and

(iii) delete the words “for the purpose of assisting any person to avoid prosecution for

a drug trafficking or relevant offence or the making or enforcement

of a confiscation order”.

Section 42

(a) In subsection (1) paragraph (b) delete the words “or suspect” and insert the words

“,suspects or has reasonable grounds to suspect”.

(b) In subsection (4)(a) and (b) delete the words “or suspect” and insert the words

“,suspect or have reasonable grounds to suspect”.

Section 43

In subsection (1), insert after the word “knowing” the words “,suspecting or having

reasonable grounds to suspect”.

Section 44

In subsection (2) paragraph (a) -

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(a) delete the words “or suspects” and insert the words “,suspects or has reasonable

grounds to suspect”.

(b) delete the words “drug trafficking” and insert the words “criminal conduct”.

Section 45

In subsection (1)(a) and (2)(a) insert the words “or has reasonable grounds to suspect” after

the word “suspect”.

Section 46

In subsection (7) -

(i) delete “(4)” and insert “(6)”;

(ii) delete paragraph (d) and insert the following:

“(d) appointment of a senior staff member or a staff member at management level to

be responsible for continual compliance with this Act and the regulations made

hereunder.”

10. PROCEEDS OF CRIME AND MONEY LAUNDERING (PREVENTION) (AMENDMENT) ACT 2002.

Amendment of

section 46 of No. 39

of 2001

Subsection (3) of section 46 of the Proceeds of Crime and Money Laundering (Prevention)

Act 2002 is amended by inserting immediately after the word “described in subsection (2)”

the following:

“or any other transaction or financial activity”.

11. PROCEEDS OF CRIME (MONEY LAUNDERING) REGULATIONS, 2002

(Regulations 4-10)

Identification procedures

4. (1) A regulated institution must establish and maintain identification procedures that

require

(a) an applicant for business of a type mentioned in sub-regulation (2) to produce

satisfactory evidence of his identity, in accordance with the particulars in the

Schedule, as soon as practicable after first making contact with the regulated

institution; and

(b) if satisfactory evidence is not obtained, that the business in question must not

proceed any further or, in relation to a business mentioned in sub-regulation (2)(d),

shall only proceed in accordance with any direction, by the Financial Intelligence

Unit.

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(2) This regulation applies to the following types of business:

(a) the forming of a business relationship;

(b) a one-off transaction where payment is to be made by or to the applicant of ten

thousand dollars or more;

(i) appear to a person handling the transaction on behalf of the regulated institution to

be linked, and

(ii) in respect of which, the total amount payable by or to the applicant is ten thousand

dollars or more;

behalf of the regulated institution knows or suspects

(i) that the applicant is engaged in money laundering, or

(ii) that the transaction is carried out on behalf of another person engaged in money

laundering.

(3) If an applicant for business is introduced to a regulated institution by another

regulated institution or foreign regulated institution, a written assurance from the

introducing institution to the effect that evidence of the identity of the applicant has been

obtained and recorded under procedures maintained by the introducing institution shall be

satisfactory evidence of identity for the purposes of sub-regulation (1).

(4) Where an applicant for business is introduced to a regulated institution by another

regulated institution a written assurance must be given that information as to identity will

be exchanged in the event that either the Offshore Finance Authority or the Financial

Intelligence Unit requests that information to assist in a criminal investigation.

(5) A regulated institution shall establish and maintain identification procedures

which require that, in a case where an applicant for business appears to be acting

otherwise than as principal, reasonable measures shall be taken for the purpose of

establishing the identity of the person on whose behalf the applicant for business is

acting.

(6) If the applicant for business in a case mentioned in sub-regulation (4) is another

regulated institution or a foreign regulated institution, it shall be reasonable for the

regulated institution to accept a written assurance from the applicant for business to the

effect that evidence of the identity of the principal has been obtained and recorded under

procedures maintained by the applicant for business.

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(7) The requirements in this regulation for an applicant for business to produce

satisfactory evidence of his identity does not apply in the case of an established business

relationship.

(8) In this regulation

“ten thousand dollars” means ten thousand dollars Eastern Caribbean

Currency or any foreign currency equivalent;

“applicant for business” means a person, seeking to form a business

relationship, or carry out a one-off transaction, with a regulated institution;

“business relationship” means an arrangement between any person and

a regulated institution, the purpose of which is to facilitate the carrying out

of financial and other related transactions on a regular basis;

“established business relationship” means a business relationship in relation to

which the regulated institution has obtained satisfactory evidence of identity

of the applicant for business as required by this regulation;

“one-off transaction” means a transaction carried out other than in the course

of an established business relationship.

(9) For the purposes of this regulation, the question as to what constitutes

(a) satisfactory evidence of identity, or

(b) reasonable measures for establishing the identity of a principal,

may be determined in accordance with the guidance notes appended to these Regulations.

Record-keeping

Procedures

1. (1) If a regulated institution obtains evidence of a person’s identity as required by

regulation 4 it shall keep for the minimum retention period

(a) a copy of that evidence; or

(b) a record indicating the nature of that evidence and providing any

information that would enable a copy of it to be obtained.

(2) A regulated institution shall also keep for the minimum retention period the

records or copies of records containing the details relating to its business as may be

necessary to assist an investigation into suspected money laundering.

(3) A regulated institution shall keep all its records or copies in a form to allow for

their retrieval in legible form within a reasonable period of time.

(4) For the purposes of this regulation, the minimum retention period in relation to a

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record held by a regulated institution is

(a) if the record relates to the opening of an account with the institution,

the period of seven years after the day on which the account is closed;

(b) if the record relates to the renting by a person of a deposit box held by

the institution, the period of seven years after the day on which the

deposit box ceases to be used by the person; or

the transaction recorded takes place,

but in any case where the Financial Intelligence Unit has notified a regulated institution in

writing that particular records are ormay be relevant to an investigation that is being carried

out, records shall be retained pending the outcome of the investigation.

(5) For the purposes of this regulation, the question as to what records may be necessary

to assist an investigation into suspected money laundering may be determined in

accordance with the guidance notes appended to these Regulations.

Continued

verification of

accounts

2. (1) Once a regulated institution has verified the identity of an applicant for business no

further verification of identity is necessary as long as the applicant for business

maintains a business relationship on a regular basis.

(2) A regulated institution shall at all times monitor a business relationship for

consistency with the stated account purposes and business and the identified potential

account activity.

(3) Where there has been no recent contact with the person and the regulated

institution or no transaction within a period of five years, the regulated institution shall

confirm the identity of the account holder.

Internal reporting

procedures

3. (1) A regulated institution shall institute and maintain internal reporting procedures that

include provisions

(a) identifying a person, in this regulation referred to as “the reporting officer”, to

whom a report is to be made of any information or other matter that comes to the

attention of a person handling relevant financial business and that in the opinion of

that person handling relevant financial business gives rise to a knowledge or

suspicion that another person is engaged in money laundering;

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(b) requiring that a report in paragraph (a) be considered by the reporting officer in

the light of all other relevant information for the purpose of determining whether or

not the information or other matter contained in the report does give rise to a

knowledge or suspicion;

of assistance to him considering the report; and

(d) requiring the reporting officer to disclose to the Financial Intelligence Unit the

information or other matter contained in a report, if the reporting officer knows or

suspects that a person is engaged in money laundering.

Training procedures

No. 39 of 2001

4. (1) A regulated institution shall take appropriate measures from time to time for the

purpose of making all relevant employees aware

(a) of the Proceeds of Crime and Money Laundering (Prevention) Act 2001, these

Regulations and any other statutory provision relating to money laundering; and

(b) of the procedures maintained by the institution in compliance with the duties

imposed under these Regulations.

(2) A regulated institution shall provide all relevant employees from time to time with

appropriate training in the recognition and handling of transactions carried out by or on

behalf of any person who is, or appears to be, engaged in money laundering.

(3) Training under this regulation shall in addition be given to all new relevant

employees as soon as practicable after their appointment.

(4) For the purposes of this regulation, an employee is a relevant employee if, at any

time in the course of his duties, he has, or may have, access to any information that may

be relevant in determining whether a person is engaged in money laundering.

Offences

No. 39 of 2001

5. (1) A person who carries on business without complying with the requirements of these

Regulations commits an offence and is liable

(a) on summary conviction to a fine of ten thousand dollars;

(b) on conviction on indictment

(i) for a first offence, to a fine of five hundred thousand dollars or to a term of one

year imprisonment or both;

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(ii) for a second or subsequent offence, to a fine of one million dollars or to a term

of three years imprisonment or both.

(2) In determining whether a person has complied with the requirements of these

Regulations, the trial court may take account of the guidance notes appended to these

Regulations.

(3) In proceedings for an offence under these Regulations it shall be a defence to prove

that a person took all reasonable steps and exercised due diligence to comply with the

requirements of these Regulations.

(4) Section 57 of the Proceeds of Crime and Money Laundering (Prevention) Act, 2001

shall apply in relation to offences under these Regulations as it applies to offences under

that Act.

Transitional

Provisions

10. (1) The beneficial ownership of all existing anonymous accounts and account in

obviously fictitious names shall be established by all regulated institutions as soon as

reasonably practicable and in any event within one year of the coming into force of these

Regulations.

(2) An account where the beneficial owner is not established within one year of the

coming into a force of these Regulations shall be reported to the Financial Intelligence

Unit by the regulated institution.

12. PROCEEDS OF CRIME (MONEY LAUNDERING) (AMENDMENT)

REGULATIONS, 2002

Amendment of Regulation 6 of No. 39 of 2001

Sub-paragraph (1) of paragraph 6 of the Proceeds of Crime (Money Laundering)

Regulations is amended by deleting the full stop after the word “basis” and adding

immediately thereafter the following:

“except where there are concerns regarding the identity of the client or the beneficial

owner during the course of the business relationship”.

13. UNITED NATIONS (ANTI-TERRORISM MEASURES) ACT, 2002

Interpretation

2. In this Act unless the context otherwise requires –

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“Commissioner” means the Commissioner of Police;

“Convention” means the International Convention for the Suppression of the

Financing of Terrorism, adopted in New York on 9 December, 1999 the text of

which is set out in the First Schedule;

“funds” means assets of every kind as defined in Article 1 of the Convention;

“Minister” means the Minister responsible for National Security;

“proceeds” means any funds derived from or obtained, directly or indirectly,

through the commission of anoffence under this Act;

“terrorist” means any person who-

(a) commits, or attempts to commit, any terrorist act; or

(b) participates in or facilitates the commission of any terrorist act;

“ terrorist act” means the use or threat of action which constitutes –

(a) an offence within the scope of and as

defined in one of the treaties listed in the

Second Schedule; or

(b) any other act intended to cause death or serious bodily injury to a civilian, or

to any

other person not taking an active part in the hostilities in a situation of armed

conflict,

when the purpose of such act, by its nature or context, is to intimidate a

population, or

to compel a government or an international organization to do or to abstain from

doing any act;

“terrorist property” means money or other property however acquired which is

likely to be

used for the purposes of committing a terrorist act and includes proceeds of acts carried

out for the purposes of a terroristact.

Other terms used but not specifically defined in this Act, which have been defined in the

Convention, have the same meaning as in the Convention.

Prohibition against provision or collection of funds for terrorist acts

3. (1) Any person in Saint Vincent and the Grenadines or any citizen of Saint Vincent

and the Grenadines outside Saint Vincent and the Grenadines who by any means,

directly or indirectly, unlawfully and wilfully, provides or collects funds with the

intention that they should be used or in the knowledge that they are to be used, in full or

in part, in order to carry out a terrorist act or to facilitate the commission of any terrorist

act commits an offence.

(2) For an act to constitute an offence under subsection (1), it shall not be necessary

that the funds were actually used to carry out a terrorist act.

(3) Any person in Saint Vincent and the Grenadines or any citizen of Saint Vincent

and the Grenadines outside Saint Vincent and the Grenadines who

(a) attempts to commit an offence as set

forth in subsection (1); or

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(b) participates as an accomplice of anyone

who commits or attempts to commit

an offence as set forth in

subsection (1); or

attempt to commit an offence as set forth

in subsection (1);

shall likewise be guilty of an offence.

(4) Any person in Saint Vincent and the Grenadines or any citizen of Saint Vincent

and the Grenadines outside Saint Vincent and the Grenadines who intentionally

contributes to the commission of one or more offences set forth in subsection (1) or (3)

by a group of persons acting with a common purpose either:

(a) with the aim of furthering the criminal activity or criminal purpose of the group;

(b) in the knowledge of the intention of the group to commit an offence as set forth in

subsection (1) or (3);

shall likewise be guilty of an offence.

Prohibition against provision of resources and services for benefit ofterrorists

4. Any person in Saint Vincent and the Grenadines or any citizen of Saint Vincent and

the Grenadines outside Saint Vincent and the Grenadines who makes any funds,

financial assets, economic resources or financial or other related services available,

directly or indirectly, for the benefit of-

(a) any terrorist;

(b) any entity owned or controlled by any terrorist;

entity owned or controlled by any terrorist commits an offence

Prohibition against dealing with property of terrorists

5. Any person in Saint Vincent and the Grenadines or any citizen of Saint Vincent and

the Grenadines outside Saint Vincent and the Grenadines who-

(a) deals, directly or indirectly, in any property that is owned or controlled by or on

behalf of any terrorist or any entity owned or controlled by any terrorist, including

funds derived or generated from

property owned or controlled, directly or indirectly, by any terrorist or any entity

owned or controlled by any terrorist;

(b) enters into or facilitates, directly or indirectly, any financial transaction related to

a dealing in property referred to in paragraph (a); or

property referred to in paragraph (a), to or for the benefit of, or on the direction or

order of, any terrorist or any entity owned or controlled by any terrorist

commits an offence.

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Prohibition against supporting terrorists in other ways

6. Any person in Saint Vincent and the Grenadines or any citizen of Saint Vincent and

the Grenadines outside Saint Vincent and the Grenadines who provides any form of

support, active or passive, to

any terrorist or any entity owned or controlled by any terrorist or to any entity acting on

behalf of or at the direction of any terrorist-

(a) by recruiting or assisting in the recruitment of persons; or

(b) by supplying or assisting in the supply ofweapons

commits an offence.

Penalties

7. A person guilty of an offence under sections 3, 4, 5 or 6 of this Act shall be liable-

(a) on conviction on indictment, to imprisonment for a term not exceeding

twenty years, to an unlimited fine or both; or

(b) on summary conviction, to

imprisonment for a term not exceeding five years, to a fine not exceeding $500,000 or

both.

Forfeiture of terrorist property

8. (1) The court by or before which a person is convicted of an offence under sections 3,

4, 5 or 6 of this Act may order the forfeiture of any money or other property-

(a) which at the time of the offence, the convicted person had in his possession or

under his control, and

(b) which, at that time, such person intended should be used, or knew or had

reasonable cause to suspect would or might be used, for the purposes of a terrorist act.

(2) Where a person other than a convicted person claims to be the owner of or

otherwise interested in any money or property which can be forfeited by an order under

this section, the court shall give him an opportunity to be heard before making an order.

Jurisdiction

9. Notwithstanding anything in this or in any other Act, offences listed in sections 3, 4,

5 and 6 of this Act shall be deemed to have been committed in Saint Vincent and the

Grenadines when

(a) the offence is committed in the territory of Saint Vincent and the Grenadines,

including on board ships and aircraft registered, licensed, or otherwise subject to the

jurisdiction of Saint Vincent and the Grenadines;

(b) regardless of where the offence was committed, the person who committed the

offence is

(i) a citizen of Saint Vincent and the Grenadines; or

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(ii) a stateless person having his habitual or ordinary residence in Saint Vincent and

the Grenadines;

or resulted in the carrying out of a terrorist act –

(i) in the territory of or against a national of Saint Vincent and the Grenadines; or

(ii) against a State or government facility of Saint Vincent and the Grenadines abroad,

including its

diplomatic or consular premises; or

(iii) in an attempt to compel Saint Vincent and the Grenadines to do or abstain from

doing any act;

(d) regardless of where the offence was committed, the person who committed the

offence is, after the commission thereof, present in the territory of Saint Vincent

and the Grenadines.

Duty to provide Information

10. Every person in Saint Vincent and the Grenadines and any citizen of Saint Vincent

and the Grenadines outside Saint Vincent and the Grenadines who-

(a) has possession, custody or control of any property belonging to any terrorist or

any entity owned or controlled by any terrorist; or

(b) has information about any transaction or proposed transaction in respect of any

property belonging to any terrorist or any entity owned or controlled by any terrorist,

shall immediately inform the Commissioner or such other person as the Minister may

designate of the fact or information and provide such further information relating to the

property, or transaction or proposed

transaction, as the Commissioner or designated person may require.

Duty to investigate and rights of the alleged offender

11. (1) Upon receiving information that a person who has committed or who is alleged to

have committed any offence under this Act may be present in Saint Vincent and the

Grenadines, the Commissioner shall take all measures necessary under the laws of Saint

Vincent and the Grenadines to investigate the facts contained in the information and

upon being satisfied that the circumstances so warrant the Commissioner shall take all

appropriate measures to ensure the presence of such person in Saint Vincent and the

Grenadines for the purpose of prosecution or extradition.

(2) Every alleged offender in respect of whom measures referred to in subsection (1) are

being taken shall be entitled

(a) to communicate without delay with his nearest appropriate diplomatic

representative; and

(b) to be visited by that representative.

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(3) Nothing in subsection (2) shall prejudice the right of the alleged offender to

communicate with, and be visited by the International Committee of the Red Cross,

when it has been invited to do so by his national State, or State of habitual residence

when he is a stateless person.

(4) Nothing in this Act shall impair the alleged offender’s enjoyment of all other rights

and guarantees available.

Notification Requirements

12. (1) The result of all prosecutions under this Act shall be communicated to the

Secretary General of the United Nations.

(2) If any person has been taken into custody or subjected to similar measures in

contemplation of prosecution or extradition for any of the offences set out in this Act,

the following parties shall be notified, either directly or through the Secretary General of

the United Nations, of the fact that such person is in custody and of the circumstances

which warrant that person’s detention:

(a) the State in the territory of which the offence was committed;

(b) the State of registration of the vessel or aircraft on board which the offence was

committed;

case of a stateless person;

(d) the State against which the offence was directed or on whose territory or against

whose national the terrorist act was carried out;

(e) the State against whose State or government facility abroad, including diplomatic

or consular premises of that State, the offence was directed or the terrorist act was

carried out;

(f) the State against which compulsion had been directed or attempted by the

commission of the offence or the carrying out of the terrorist act, to get that State to

do or abstain from doing any act;

(g) the State whose Government was operating any aircraft on board which the

offence was committed.

Upon the completion of the investigation for any of the offences set out in this Act, the

above-mentioned State Parties shall also be notified about the findings of the

investigation and the intention of the

Government of Saint Vincent and the Grenadines to exercise its jurisdiction.

Seizure and detention of terrorist cash

13. (1) In this section “cash” means-

(a) coins and notes in any currency,

(b) postal orders,

(d) bankers’ drafts, and

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(e) such other kinds of monetary instruments as the Attorney General General may

specify by order.

(2) Any member of the Royal Saint Vincent and the Grenadines Police Force, any

customs officer, or any immigration officer may seize and detain any cash to which this

section applies if he has reasonable grounds for suspecting that-

(a) it is intended to be used for the purposes of a terrorist act,

(b) it is terrorist property within the meaning given in section 2 of this Act.

(3) This section applies to cash which-

(a) is being imported into or exported from the Saint Vincent and the Grenadines,

(b) is being brought to any place in the Saint Vincent and the Grenadines for the

purpose of being exported from the Saint Vincent and the Grenadines,

(4) Subject to subsection (5), cash seized under this section shall be released not later

than the end of the period of 48 hours beginning with the time when it is seized.

(5) Where an order is made under section 14 in relation to cash seized, it may be

detained during the period specified in the order.

Continued Detention

14. (1) The Commissioner, Chief Immigration Officer or the Comptroller of Customs

may apply to a magistrates’ court for an order under this section in relation to cash

seized under section 13.

(2) An order under this section

(a) shall authorise the further detention under section 13 of the cash to which it relates

for a period specified in the order,

(b) shall specify a period which ends not later than the end of the period of three

months beginning with the date of the order, and

to any other person who is affected by and specified in the order.

(3) An application for an order under this section may be granted only if the court is

satisfied-

(a) that there are reasonable grounds to suspect that the cash is cash of a kind

mentioned in section 13 (2) (a) or (b), and

(b) that the continued detention of the cash is justified pending completion of an

investigation of its origin or derivation or pending a determination whether to institute

criminal proceedings (whether in

Saint Vincent and the Grenadines or elsewhere) which relate to the cash.

(4) More than one order may be made under this section in relation to particular cash;

but cash shall not be detained by virtue of an order under this section after the end of the

period of two years beginning with the date when the first order under this section was

made in relation to it.

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Detained cash

15. (1) Cash detained under section 13 by virtue of an order under section 14 shall,

unless required as evidence of an offence, be held in an interest bearing account; and the

interest accruing on the cash shall be added to it on its release or forfeiture.

(2) Any person may apply to a magistrate’s court, for a direction that cash detained

under section 14 be released.

(3) A magistrate’s court shall grant an application under subsection (2) if satisfied-

(a) that section 14 (3) (a) or (b) no longer applies, or

(b) that the detention of the cash is for any other reason no longer justified.

(4) Cash detained under section 14 shall not be released under this section-

(a) while proceedings on an application for its forfeiture under section 16 have not

been concluded, or

(b) while proceedings, whether in the Saint Vincent and the Grenadines or elsewhere,

which relate to the cash have not been concluded.

Forfeiture of detained cash

16. (1) The Director of Public Prosecutions may apply to a Judge in chambers of the

High Court for an order forfeiting cash being detained under section 13 by virtue of an

order under section 14.

(2) The Judge in chambers may grant an application only if he is reasonably satisfied

that the cash is of a kind mentioned in section 13 (2) (a) or (b).

(3) Before making an order under this section, the Judge in cambers must give an

opportunity to be heard by any person-

(a) who is not a party to the proceedings, and

(b) who claims to be the owner of or otherwise interested in any of the cash which

can be forfeited under this section.

Restraint orders

17. (1) The High Court may make a restraint order to prohibit persons from dealing with

funds and other financial assets or economic resources of:

(a) persons who commit, or attempt to commit, a terrorist act or participate in or

facilitate the commission of a terrorist act;

(b) entities owned or controlled directly or indirectly by persons referred to at (a)

above;

(a) above or entities referred to at (b) above.

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(2) The High Court may also make a restraint order to prohibit persons from dealing

with funds derived or generated from property owned or controlled directly or indirectly

by persons referred to in subsection (1) (a) above or their associated persons and entities.

(3) A restraint order-

(a) may be made only on an application by the Director of Public Prosecutions;

(b) may be made on an ex parte application to a Judge in chambers; and

(4) A restraint order-

(a) may, on the application of any person affected by the order, be discharged or

varied in relation to any funds or financial assets; and

(b) shall be discharged when proceedings for offences under this Act are concluded.

(5) For the purposes of this section, dealing with funds or financial assets held by any

person or entity includes (without prejudice to the generality of the expression):

(a) making any payment to any person from such funds or assets; and

(b) removing such funds or assets from Saint Vincent and the Grenadines.

Extradition

18. (1) Offences under this Act shall be deemed to be included in the description of

relevant offences set out in the First Schedule to the Fugitive Offenders Act.

(2) Notwithstanding anything contained in sections 3 and 4 of the Fugitive Offenders

Act, the Fugitive Offenders Act shall apply to all countries State Parties to the

Convention in respect of offences to which the Convention relates.

(3) For the purposes of the Fugitive Offenders Act any offence described in this Act,

wherever committed, which is an offence against the law of any State Party to the

Convention shall be deemed to be an offence committed within the jurisdiction of that

country.

Mutual Legal Assistance

19. (1) In connection with criminal investigations or criminal or extradition proceedings

in respect of offences under this Act, fullest measure of assistance shall be provided to

other State Parties to the Convention in accordance with the Mutual Assistance in

Criminal Matters Act, 1993 (No. 46 of 1993).

(2) A request for mutual legal assistance under subsection (1) shall not be refused on

the ground of bank secrecy or on the sole ground that it concerns a political offence.

FIRST SCHEDULE

[section 2]

INTERNATIONAL CONVENTION FOR THE SUPPRESSION OF THE

FINANCING OF TERRORISM, 1999

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(Full Text)

SECOND SCHEDULE

[section 2]

1. Convention for the Suppression of Unlawful Seizure of Aircraft, done at The

Hague on 16 December 1970.

2. Convention for the Suppression of Unlawful Acts against the Safety of Civil

Aviation, done at Montreal on 23 September 1971.

3. Convention on the Prevention and Punishment of Crimes against Internationally

Protected Persons, including Diplomatic Agents, adopted by the General Assembly of

the United Nations on 14 December 1973.

4. International Convention against the Taking of Hostages, adopted by the General

Assembly of the United Nations on 17 December 1979.

5. Protocol for the Suppression of Unlawful Acts of Violence at Airports Serving

International Civil Aviation, supplementary to the Convention for the Suppression of

Unlawful Acts against the Safety of Civil Aviation, done at Montreal on 24 February

1988.

6. Convention for the Suppression of Unlawful Acts against the Safety of Maritime

Navigation, done at Rome on 10 March 1988.

7. Protocol for the Suppression of Unlawful Acts against the Safety of Fixed

Platforms located on the Continental Shelf, done at Rome on 10 March 1988.

14. UNITED NATIONS (ANTI-TERRORISM MEASURES) (AMENDMENT) ACT 2006.

Section 2 of the United Nations (Anti-Terrorism Measures) Act 2002, referred to

in this Act as the principal Act, is amended -

(a) by inserting after the section designation ‘2’, the subsection designation ‘(1)’; and

(b) by adding the following as subsection (2) –

‘(2) The terms “fi nancial institution” and “relevant business activities” shall have the

meaning given to them under Schedule 1 to the Proceeds of Crime and Money

Laundering (Prevention) Act 2001.’.

3. The principal Act is amended by inserting after section 10 following new sections as

sections 10A, 10B and 10C-

10A (1) If, in keeping and retaining records relating to financial activities in

accordance with the Proceeds of Crime and Money Laundering (Prevention) Act

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2001, a financial institution or person engaged in relevant business activities suspects

that a transaction as described in section 46 of that Act or any other transaction or

financial activity could constitute or be related to the commission of a terrorist act or

the financing of a terrorist act, the financial institution or person engaged in relevant

business activities shall report the suspicious transaction to the Financial Intelligence

Unit in a form specified in the Regulations made under the Proceeds of Crime and

Money Laundering (Prevention) Act

2001 as soon as reasonably practicable, and in any event, within fourteen days of the

date the transaction was considered to be suspicious as relating to the commission of

a terrorist act or the financing of a terrorist act.

(2) When the report referred to in subsection (1) is made in good faith, the financial

institution or person engaged in relevant business activities and their employees, staff,

directors, owners or other representatives as authorised by law, shall be exempted

from criminal, civil or administrative liability as the case may be, for complying with

this section or for breach of any restriction on disclosure of information imposed by

contract or by any legislative, regulatory or administrative provision, regardless of the

result of the communication.

10B. A person who fails to report a suspicious transaction under section 10A commits

an offence and is liable-

(a) o n s u m m a r y c o n v i c t i o n t o imprisonment for three years or a fine of five

hundred thousand dollars or to both; or

(b) on conviction on indictment, to imprisonment for ten years or an unlimited fine or

to both.

10C. Where a body corporate commits an offence under this Act and that offence is

proved

to have been committed with the consent or connivance of any director, manager,

secretary or other similar officer of the body corporate or a person who was

purporting to act in any such capacity, the director, manager, secretary or other

similar officer, or person purporting to act in such capacity as well as the body

corporate commits that offence and is liable to be proceeded against and punished

accordingly.”.

- 304 - ANNEX IV

15. FINANCIAL INTELLIGENCE UNIT ACT 2001

Establishment of the Financial Intelligence Unit

3. (1) There is hereby established a body to be known as the Financial Intelligence Unit.

(2) The Financial Intelligence Unit shall consist of

(a) a director appointed in writing by the Minister who shall be the chief executive officer of the

Financial Intelligence Unit;

(b) an attorney appointed in writing by the Minister;

(d) the assignment of such number of police officers appointed by the Minister on the

recommendation of the Commissioner of Police and Customs Officers appointed by the Minister

on the recommendation of the Comptroller of Customs;

(e) such consultants having suitable qualifications and experience to provide services to the

Financial Intelligence Unit, appointed in writing by the Minister; and

(f) such other personnel as the Minister considers necessary.

Functions of the Financial Intelligence Unit

4. (1) In the exercise of its functions under subsection (2), the Financial Intelligence Unit

shall act as the agency responsible for receiving, analysing, obtaining and disseminating

information which relates to or may relate to the proceeds of the offences created by the

Proceeds of Crime and Money Laundering Prevention Act 2001 to competent authorities

including the Royal Saint Vincent and the Grenadines Police Force and the Director of Public

Prosecutions.

(2) Without limiting the foregoing and notwithstanding any other law to the contrary the

Financial Intelligence Unit

(a) shall receive all suspicious transaction reports as are required to be made pursuant to the

provisions of the Proceeds of Crime and Money Laundering Prevention Act 2001, which

are relevant to its functions, including information from any Foreign Financial

Intelligence Unit;

(b) where it appears to the Director that there are reasonable grounds to suspect that a

relevant offence has been committed, the Director may require the production of such

information (excluding information subjected to legal professional privilege) from

financial institutions or a person engaged in a relevant business activity that the Financial

Intelligence Unit considers necessary for the purpose of investigating the relevant

offence;

a minimum of five years after the information is received;

(d) shall provide information, subject to such conditions as may be determined by the

Minister to the Commissioner of Police where the information may relate to the

commission of an offence;

- 305 - ANNEX IV

(e) may provide information relating to the commission of an offence to any Foreign

Financial Intelligence Unit, subject to any conditions as may be considered appropriate

by the Director on the advice of the Minister;

(f) may enter into any agreement or arrangement, in writing, with a Foreign Financial

Intelligence Unit which the Director on the advice of the Minister considers necessary for

the discharge of the functions of the Financial Intelligence Unit;

(g) shall inform financial and business institutions of their obligations under measures that

have been or might be taken to detect, prevent and deter the commission of offences

under the Proceeds of Crime and Money Laundering Prevention Act 2001.

(3) Any person failing or refusing to provide such information as is required by paragraph (b) of

subsection (2) is guilty of an offence and shall be liable on summary conviction to a fine not

exceeding fifty thousand dollars or to imprisonment for a term not exceeding two years or to both

such fine and imprisonment.

No liability or order

5. (1) No action shall lie against the Minister, Director, officers or personnel of the Financial

Intelligence Unit or any person acting under the direction of the Director for anything done

or omitted to be done in good faith and in the administration or discharge of any functions,

duties or powers under this Act.

(2) Notwithstanding the provisions of any other Act, no order for the provision of information,

documents, or evidence may be issued in respect of the Financial Intelligence Unit or against the

Minister, Director, officers or personnel of the Financial Intelligence Unit or any person engaged

pursuant to this Act.

No criminal or civil liability for information

6. (1) No proceedings for breach of banking or professional confidentiality may be instituted

against any person or against directors or employees of a financial institution who in good faith

submit suspicious transaction or suspicious activity reports to the Financial Intelligence Unit in

accordance with the Proceeds of Crime and Money Laundering Prevention Act 2001.

(2) No civil or criminal liability action may be brought nor any professional sanction

taken against any person or against directors or employees of a financial institution who in good

faith transmit information or submit reports to the Financial Intelligence Unit.

Confidentiality

7. (1) Any person who obtains information in any form as a result of his connection with the

Financial Intelligence Unit shall not disclose that information to any person except so far as it is

required or permitted under this Act or other written law.

- 306 - ANNEX IV

(2) Any person who wilfully discloses information to any person in contravention of

subsection (1) above shall be guilty of an offence and shall be liable on summary conviction to a

fine not exceeding one hundred thousand dollars or to imprisonment for a term not exceeding

three years or to both such fine and imprisonment.

Annual report

8. (1) The Director shall

(a) advise the Minister of the work of the Financial Intelligence Unit and in particular on

matters that could affect public policy or the priorities of the Financial Intelligence Unit;

(b) prepare and submit to the Minister on or before the 1st day of April in each year an

annual report reviewing the work of the Financial Intelligence Unit;

Financial Intelligence Unit.

(2) The Minister shall lay or cause to be laid a copy of every annual report on the table of

the House of Assembly.

Annual budget

9. (1) The Financial Intelligence Unit shall prepare for each financial year an annual budget of

revenue and expenditure which shall be submitted to the Minister at least four months prior to the

commencement of the financial year.

Accounts and Audit

10. (1) The Financial Intelligence Unit shall keep proper accounts and other records in relation

thereto, and shall prepare in respect of each financial year a statement of accounts.

(2) The accounts of the Financial Intelligence Unit for each year shall be audited by the

Director of Audit.

(3) As soon as the accounts have been audited the Financial Intelligence Unit shall submit

a copy to the Minister and a copy of any report made by the Director of Audit.

(4) The Minister shall lay a copy of the audited accounts on the table of the House of

Assembly.

Regulations

11. (1) The Minister may make regulations prescribing all matters

(a) required or permitted by this Act to be prescribed; or

(b) necessary to be prescribed for carrying out or giving effect to this Act.

- 307 - ANNEX IV

1.1.1.

1.1.2.

cipa

offic

And register

agent

1.1.3.

1.1.4.

1.1.5.

1.1.6.

1.1.7.

1.1.8.

16. FINANCIAL INTELLIGENCE UNIT (AMENDMENT) ACT 2006

2. Section 4 of the Financial Intelligence Unit Act 2001, referred to in this Act as the

principal Act, is amended-

(a) in subsection (1), by inserting after the words “Act 2001” the words “and offences

under the United Nations (Anti-Terrorism Measures) Act 2002”; and

(b) in subsection (2), by inserting after the words “Act 2001” in each place where it

occurs in the subsection the words “and the United Nations (Anti - Terrorism

Measures) Act 2002”.

3. Section 6 of the principal Act is amended in subsection (1) by inserting the words “and the

United Nations (Anti -Terrorism Measures) Act 2002” after the words “Act 2001” and before

the fullstop.

17. FINANCIAL INTELLIGENCE UNIT (AMENDMENT) ACT, 2002

Subsection (2) (e) of section 4 of the Financial Intelligence Unit Act is amended by inserting

immediately after the words “commission of an offence” the following words: “or a

suspected offence or information relating to a

suspicious transaction report”.

18. INTERNATIONAL BANKS ACT, 2004

8. (1) A licensee shall have a physical presence in the State which shall include the

following:

(a) a physical place of business in the State where all books and records are kept;

(b) a minimum of two employees, one of whom shall be of senior management

level;

and who is not an officer of the licensee.

(2) A licensee that does not have a physical presence in the State at the commencement of

this Act must within six months of this Act coming into force or any further period

the Authority may in writing allow, establish a physical presence.

(3) It shall be a condition of every licence granted under this Act that the licensee shall

immediately notify the Authority, in writing of any change in the location of its office

in the State and of any change of its registered agent. ….

- 308 - ANNEX IV

Subsection

Licence

19. (1) The Authority, under the supervision of the Minister, shall be responsible for

ensuring the proper administration of this Act.

(2) The functions of the Authority in administering this Act include but are not

limited to the following:

(a) to examine by way of the receipt of regular return, on site inspections or in

any other manner it thinks fit the affairs or business of a licensee carrying on

business within or outside the State for the purpose of determining that the

licensee is in a sound financial position and is carrying on its business in a

satisfactory manner;

(b) in respect of a holding company, parent company or any other company

that holds shares in a licensee

(i) to inspect the books of the company;

(ii) to request any information from the appropriate authorities in

any country where the company is located;

or the laws of another state which has requested assistance on the basis that it

has reasonable grounds to believe that an offence has or may have been

committed by a licensee or by any of the licensee’s directors or officers;

(d) to examine accounts, audited annual accounts and quarterly returns

forwarded to it under section 13; and

(e) to examine and approve or deny the applications for licences under this

Act.

(3) The Authority may, in the exercise of its powers under subsection (2), call upon

an auditor, director, officer or employee of a licensee

(a) to produce all books, minutes, cash, securities, vouchers and other documents

- 309 - ANNEX IV

1.1.9.

46 o

199

Schedule 3

and records relating to its assets, liabilities and business generally at a time

fixed by the Authority or the Executive Director; and

(b) to give the Authority or the Executive Director any information

concerning its affairs and business as may be requested.

(4) An auditor director, officer, or employee of a licensee who is required under this

Part to make any disclosure to the Authority shall not by reason of making the

disclosure be regarded as being in breach of his duty to the licensee.

(5) In the performance of its functions under this Act and subject to the

confidentiality provisions in this Act and elsewhere under the laws of the State, the

Authority shall at all reasonable times

(a) have access to the books, records, vouchers, documents, cash and

securities of any licensee;

(b) request any information, matter or thing from any person who the

Authority has reasonable grounds to believe is carrying on international

banking business without a licence;

aboard to the same extent that an examination may be made of the licensee,

for the purpose of enabling the Authority to perform its functions under the Act.

(6) The Executive Director or the Authority or any person or entity acting under or

with either of them may remove, communicate, send or in any manner transmit any of

the information, document or related material to another State in accordance with the

Mutual Assistance in Criminal Matters Act and any other enactment.

(7) The Executive Director or the Authority or any person or entity acting under or

with either of them may remove, communicate, send or in any manner transmit any of

the information, document or related material to an approval agency of the

government as listed in Schedule 3.

- 310 - ANNEX IV

(8) For the purposes of subsection (5) the Executive Director shall have access to the

name or title of an account of a customer and any other confidential information

about the customer that is in the possession of a licensee and any account established

by a licensee on behalf of a customer shall state the name and address of the customer

and or the beneficiary of the account.

(9) The Authority may, if it appears that there are reasonable grounds for suspecting

that there is a contravention of this Act or that a contravention is likely, petition the

court for an order authorizing it to take any action it considers necessary in the

interest of the depositors or other creditors and to preserve any assets of the bank that

is the subject of the order.

(10) The Authority shall examine or cause to be examined the affairs of each licensee

or previous licensee from time to time or whenever in its judgment an examination is

necessary or expedient in order to determine that the licensee or previous licensee is

in a sound financial condition and that the requirements of this Act have been

complied with in the conduct of its business.

(11) For the purposes of determining the condition of a licensee or previous licensee

and its compliance with this Act, the Authority may at any time examine or cause to

be examined any of its affiliates to the same extent that an examination may be made

of the licensee or previous licensee.