Saint Kitts and Nevis
This report analyses the implementation of the AEOI Standard in Saint Kitts and Nevis with respect to the requirements of the AEOI Terms of Reference. It assesses both the legal frameworks put in place to implement the AEOI Standard and the effectiveness of the implementation of the AEOI Standard in practice.
The methodology used for the peer reviews and that therefore underpins this report is outlined in Chapter 2.
Overall findings
AEOI legal framework
Saint Kitts and Nevis’ legal framework implementing the AEOI Standard is in place and is consistent with the requirements of the AEOI Terms of Reference. This includes Saint Kitts and Nevis’ domestic legislative framework requiring Reporting Financial Institutions to conduct the due diligence and reporting procedures (CR1) and its international legal framework to exchange the information with all of Saint Kitts and Nevis’ Interested Appropriate Partners (CR2).
Effectiveness of AEOI in practice
Saint Kitts and Nevis’ implementation of the AEOI Standard is on track with respect to the requirements of the AEOI Terms of Reference to ensure the effectiveness of the AEOI Standard in practice. This includes ensuring that Reporting Financial Institutions correctly conduct the due diligence and reporting procedures (CR1) and exchanging the information in an effective and timely manner (CR2). Saint Kitts and Nevis is encouraged to continue its implementation process accordingly, to ensure its ongoing effectiveness.
Overall rating in relation to the effectiveness in practice: On Track
General context
Saint Kitts and Nevis commenced exchanges under the AEOI Standard on a non-reciprocal basis in 2018 (i.e. it sends but does not receive information).
In order to provide for Reporting Financial Institutions to collect and report the information to be exchanged, Saint Kitts and Nevis:
enacted the Common Reporting Standard (Automatic Exchange of Financial Account Information) Act 2016, as amended in 2018; and
introduced the Common Reporting Standard (Automatic Exchange of Financial Account Information) Regulations 2016, as amended in 2018.
Under this framework Reporting Financial Institutions were required to commence the due diligence procedures in relation to New Accounts from 1 January 2017. With respect to Preexisting Accounts, Reporting Financial Institutions were required to complete the due diligence procedures on High Value Individual Accounts by 31 December 2017 and on Lower Value Individual Accounts and Entity Accounts by 31 December 2018.
Following the initial Global Forum peer review, Saint Kitts and Nevis made various amendments to its legislative framework to address issues identified, the last of which was effective from 16 August 2018.
With respect to the exchange of information under the AEOI Standard, Saint Kitts and Nevis is a Party to the Convention on Mutual Administrative Assistance in Tax Matters and activated the associated CRS Multilateral Competent Authority Agreement in time for exchanges in 2018.
Table 1 sets out the number of Financial Institutions in Saint Kitts and Nevis that reported information on Financial Accounts in 2021 as defined in the AEOI Standard (essentially because they maintained Financial Accounts for Account Holders, or that were related to Controlling Persons, resident in a Reportable Jurisdiction). It also sets out the number of Financial Accounts that they reported in 2021. In this regard, it should be noted that Saint Kitts and Nevis requires the reporting of Financial Accounts based on a prescribed list of exchange partners and some accounts may be required to be reported more than once (e.g. jointly held accounts or accounts with multiple related Controlling Persons), which is reflected in the figures below. These figures provide key contextual information to the development and implementation of Saint Kitts and Nevis’ administrative compliance strategy, which is analysed in the subsequent sections of this report.
Table 2 sets out the number of exchange partners to which information was successfully sent by Saint Kitts and Nevis in the past few years (including where the necessary frameworks were in place, containing an obligation on Reporting Financial Institutions to report information, but no relevant Reportable Accounts were identified). These figures provide key contextual information in relation to Saint Kitts and Nevis’ exchanges in practice, which is also analysed in subsequent sections of this report.
In order to provide for the effective implementation of the AEOI Standard, in Saint Kitts and Nevis:
the St. Kitts and Nevis Inland Revenue Department (SKNIRD, the tax authority) has the responsibility to ensure the effective implementation of the due diligence and reporting obligations by Reporting Financial Institutions and to receive and transmit the information with partner jurisdictions;
technical solutions necessary to receive and validate the information reported by Reporting Financial Institutions were put in place by having a dedicated AEOI portal where Financial Institutions report information and a AEOI System that performs validation in accordance with the CRS Schema; and
the Common Transmission System (CTS) is used for the exchange of the information, along with the associated file preparation and encryption requirements.
It should be noted that the review of Saint Kitts and Nevis’ legal frameworks implementing the AEOI Standard concluded with the determination that Saint Kitts and Nevis’ domestic and international legal frameworks are In Place. This has been taken into account when reviewing the effectiveness of Saint Kitts and Nevis’ implementation of the AEOI Standard in practice.
Findings and conclusions on the legal frameworks
The detailed findings and conclusions on the AEOI legal frameworks for Saint Kitts and Nevis are below, organised per Core Requirement (CR) and then per sub-requirement (SR) as extracted from the AEOI Terms of Reference (see Annex C).
CR1 Domestic legal framework: Jurisdictions should have a domestic legislative framework in place that requires all Reporting Financial Institutions to conduct the due diligence and reporting procedures in the CRS, and that provides for the effective implementation of the CRS as set out therein.
Saint Kitts and Nevis’ domestic legislative framework is in place and contains all of the key aspects of the CRS and its Commentary requiring Reporting Financial Institutions to conduct the due diligence and reporting procedures (SRs 1.1 – 1.3). It also provides for a framework to enforce the requirements (SR 1.4).
SR 1.1 Jurisdictions should define the scope of Reporting Financial Institutions consistently with the CRS.
Saint Kitts and Nevis has defined the scope of Reporting Financial Institutions in its domestic legislative framework in accordance with the CRS and its Commentary.
SR 1.2 Jurisdictions should define the scope of Financial Accounts and Reportable Accounts consistently with the CRS and incorporate the due diligence procedures to identify them.
Saint Kitts and Nevis has defined the scope of the Financial Accounts that are required to be reported in its domestic legislative framework and incorporated the due diligence procedures that must be applied to identify them in accordance with the CRS and its Commentary.
SR 1.3 Jurisdictions should incorporate the reporting requirements contained in Section I of the CRS into their domestic legislative framework.
Saint Kitts and Nevis has incorporated the reporting requirements in its domestic legislative framework in accordance with the CRS and its Commentary.
SR 1.4 Jurisdictions should have a legislative framework in place that allows for the enforcement of the requirements of the CRS in practice.
Saint Kitts and Nevis has a legislative framework in place to enforce the requirements in accordance with the CRS and its Commentary.
CR2 International legal framework: Jurisdictions should have exchange relationships in effect with all Interested Appropriate Partners as committed to and that provide for the exchange of information in accordance with the Model CAA.
Saint Kitts and Nevis’ international legal framework to exchange the information in place, is consistent with the Model CAA and its Commentary and provides for exchange with all of Saint Kitts and Nevis’ Interested Appropriate Partners (i.e. all jurisdictions that are interested in receiving information from Saint Kitts and Nevis and that meet the required standard in relation to confidentiality and data safeguards) (SRs 2.1 – 2.3).
SR 2.1 Jurisdictions should have exchange agreements in effect with all Interested Appropriate Partners that permit the automatic exchange of CRS information.
Saint Kitts and Nevis has exchange agreements that permit the automatic exchange of CRS information in effect with all its Interested Appropriate Partners.
SR 2.2 Such an exchange agreement should be put in place without undue delay, following the receipt of an expression of interest from an Interested Appropriate Partner.
Saint Kitts and Nevis put in place its exchange agreements without undue delay.
SR 2.3 Jurisdictions should ensure that the exchange agreements in effect provide for the exchange of information in accordance with the requirements of the Model CAA.
Saint Kitts and Nevis’ exchange agreements provide for the exchange of information in accordance with the requirements of the Model CAA.
Assessed jurisdiction’s comments on the assessment of its legal frameworks
Saint Kitts and Nevis is in agreement with the findings and determinations that are reflected in the report and would like to thank the assessors for their dedication and collaboration during the process.
Findings and conclusions in relation to effectiveness in practice
The detailed findings and conclusions in relation to effectiveness in practice of AEOI for Saint Kitts and Nevis are below, organised per Core Requirement (CR) and then per sub-requirement (SR) as extracted from the AEOI Terms of Reference (see Annex C).
CR1 Effectiveness in practice: Jurisdictions should ensure that in practice Reporting Financial Institutions correctly implement the due diligence and reporting procedures, which includes a requirement for jurisdictions to have in place an administrative framework to ensure the effective implementation of the CRS.
Saint Kitts and Nevis’ implementation of the AEOI Standard is on track with respect to ensuring that Reporting Financial Institutions are correctly conducting the due diligence and reporting procedures and are therefore reporting complete and accurate information. This includes ensuring effectiveness in a domestic context, such as through having an effective administrative compliance framework and related procedures (SR 1.5), and collaborating with its exchange partners to ensure effectiveness (SR 1.6). Saint Kitts and Nevis is encouraged to continue its implementation process to ensure its ongoing effectiveness.
SR 1.5 Jurisdictions should ensure that in practice Reporting Financial Institutions identify the Financial Accounts they maintain, identify the Reportable Accounts among those Financial Accounts, as well as their Account Holders, and where relevant Controlling Persons, by correctly conducting the due diligence procedures and collect and report the required information with respect to each Reportable Account. This includes having in place:
an effective administrative compliance framework to ensure the effective implementation of, and compliance with, the CRS. This framework should:
be based on a strategy that facilitates compliance by Reporting Financial Institutions and which is informed by a risk assessment in respect of the effective implementation of the CRS that takes into account relevant information sources (including third party sources);
include procedures to ensure that Financial Institutions correctly apply the definitions of Reporting Financial Institutions and Non-Reporting Financial Institutions;
include procedures to periodically verify Reporting Financial Institutions’ compliance, conducted by authorities that have adequate powers with respect to the reviewed Reporting Financial Institutions, with procedures to access the records they maintain; and
effective procedures to ensure that Financial Institutions, persons or intermediaries do not circumvent the due diligence and reporting procedures;
effective enforcement mechanisms to address non-compliance by Reporting Financial Institutions;
strong measures to ensure that valid self-certifications are always obtained for New Accounts;
effective procedures to ensure that each, or each type of, jurisdiction-specific Non-Reporting Financial Institution and Excluded Account continue to present a low risk of being used to evade tax; and
effective procedures to follow up with a Reporting Financial Institution when undocumented accounts are reported in order to establish the reasons why such information is being reported.
In order to ensure that Reporting Financial Institutions correctly conduct the due diligence and reporting procedures, Saint Kitts and Nevis implemented most of the requirements in accordance with expectations. However, an issue was identified. The key findings were as follows:
Saint Kitts and Nevis designed and started implementing an overarching strategy to ensure compliance with the AEOI Standard developed with the inclusion of a risk assessment taking into account a range of relevant information sources, such as the “AEOI Compliance Form” questionnaire to be submitted on an annual basis by Reporting Financial Institutions, feedback received from partner jurisdictions and AML risk rating.
Saint Kitts and Nevis has worked effectively to understand its population of Financial Institutions, utilising various relevant information sources, such as the list of Financial Entities registered with the Financial Services Regulatory Commission, the database of the Internal Revenue Service, information from public sources and the results of onsite visits. Saint Kitts and Nevis has begun follow-up activities with Financial Institutions that do not report information, or that do not submit a nil return, and is taking action to ensure they are classifying themselves correctly under its domestic rules and reporting information as required.
The Inland Revenue Department, responsible for implementing Saint Kitts and Nevis’ AEOI compliance strategy, appears to have the necessary powers and resources to discharge its functions. With respect to resourcing, Saint Kitts and Nevis’ International Tax Unit has a team of three full time employees that monitor and ensure compliance by Reporting Financial Institutions and are also responsible for all other international tax matters. They are currently supported by five auditors assigned to the unit on a temporary and part-time basis to assist in the implementation of the jurisdiction’s AEOI compliance mechanisms. They have access to training, technical support and a system to receive and analyse reported information. There are also plans to increase the resources in the International Tax Unit with five additional full-time employees.
It appears that Saint Kitts and Nevis has started enforcing the requirements, including through the review of the questionnaire responses by all Financial Institutions on their due diligence processes and controls (including with respect to self-certifications), the inspection of records of Reporting Financial Institutions, desk-based audits and onsite visits. However, while the SKNIRD issued recommendations for Reporting Financial Institutions to address gaps in their compliance with the AEOI Standard, the application of penalties and sanctions for non-compliance has not been considered.
Saint Kitts and Nevis actively monitors to identify possible cases of circumvention and is ready to take effective action to address circumvention of the requirements if such circumvention is detected and it will follow up on any undocumented accounts reported (while Reporting Financial Institutions are required by law to report undocumented accounts, to date there have been no reports of undocumented accounts in Saint Kitts and Nevis).
It is noted that Saint Kitts and Nevis does not have a jurisdiction-specific list of Non-Reporting Financial Institutions or Excluded Accounts for ongoing monitoring.
Table 3 provides a summary of the specific activities undertaken, or that are planned to be undertaken, in relation to each of the key parts of the framework described above.
In terms of the Financial Account information collected and sent by Saint Kitts and Nevis, it was found to include a lower proportion of Tax Identification Numbers with respect to the individuals associated with the accounts when compared to most other jurisdictions. Furthermore, while the collection and reporting of dates of birth is generally higher across jurisdictions, Saint Kitts and Nevis nevertheless reported a much lower rate of collection of dates of birth when compared to other jurisdictions. These are key data points for exchange partners to effectively utilise the information. Follow-up discussions confirmed that Saint Kitts and Nevis is aware of these issues and is taking steps to address them. Saint Kitts and Nevis stated that no undocumented accounts were reported.
Eight exchange partners highlighted issues with respect to the information received, such as missing or invalid Tax Identification Numbers or incorrect address. Follow-up discussions confirmed that Saint Kitts and Nevis is aware of these issues and is seeking to improve the situation. More generally, many of the exchange partners that received a significant number of records from Saint Kitts and Nevis indicated that they achieved a success rate when matching the information received from Saint Kitts and Nevis with their taxpayer database that was broadly equivalent to, or better than, what they usually achieve.
Based on these findings it was concluded that, overall, Saint Kitts and Nevis is meeting expectations in ensuring that Reporting Financial Institutions correctly conduct the due diligence and reporting procedures, including by having in place the required administrative compliance framework and related procedures. It was also noted that there is room for improvement with respect to further implementing effective compliance reviews and enforcement activities. Saint Kitts and Nevis should therefore continue its implementation process accordingly, including by addressing the recommendation made.
Saint Kitts and Nevis should continue to implement and expand its activities to verify and ensure that Reporting Financial Institutions are correctly conducting their due diligence and reporting obligations.
SR 1.6 Jurisdictions should collaborate on compliance and enforcement. This requires jurisdictions to:
use all appropriate measures available under the jurisdiction’s domestic law to address errors or non-compliance notified to the jurisdiction by an exchange partner; and
have in place effective procedures to notify an exchange partner of errors that may have led to incomplete or incorrect information reporting or non-compliance with the due diligence or reporting procedures by a Reporting Financial Institution in the jurisdiction of the exchange partner.
It should be noted that, as Saint Kitts and Nevis exchanges information on a non-reciprocal basis and does not therefore receive information; it is not required to have in place procedures to notify its exchange partners. SR 1.6 b) has therefore not been assessed in this case.
In order to collaborate on compliance and enforcement, it appears that Saint Kitts and Nevis implemented all of the requirements in relation to issues notified to them (i.e. under Section 4 of the MCAA or equivalent) in accordance with expectations. While no such notifications have yet been received, Saint Kitts and Nevis has the necessary systems and procedures to process them as required.
Based on these findings it was concluded that Saint Kitts and Nevis is fully meeting expectations in relation to collaborating with its exchange partners to ensure that Reporting Financial Institutions correctly conduct the due diligence and reporting procedures. Saint Kitts and Nevis is encouraged to continue its implementation process accordingly, to ensure its ongoing effectiveness.
CR2 Effectiveness in practice: Jurisdictions should exchange the information effectively in practice, in a timely manner, including by sorting, preparing, validating and transmitting it in accordance with the AEOI Standard.
Saint Kitts and Nevis’ implementation of the AEOI Standard is on track with respect to exchanging the information effectively in practice, including in relation to sorting, preparing and validating the information (SR 2.4), correctly transmitting the information in a timely manner (SRs 2.5 – 2.7) and providing corrections, amendments or additions to the information (SR 2.9). The requirements in relation to the receipt of the information (SR 2.8) have not been assessed as Saint Kitts and Nevis exchanges information non-reciprocally, so does not receive information. Saint Kitts and Nevis is encouraged to continue its implementation process accordingly, to ensure its ongoing effectiveness.
SR 2.4 Jurisdictions should sort, prepare and validate the information in accordance with the CRS XML Schema and the associated requirements in the CRS XML Schema User Guide and the File Error and Correction-related validations in the Status Message User Guide (i.e. the 50000 and 80000 range).
Feedback from Saint Kitts and Nevis’ exchange partners did not raise any specific concerns with respect to their ability to process the information received from Saint Kitts and Nevis and therefore with respect to Saint Kitts and Nevis’ implementation of these requirements. More generally, one of Saint Kitts and Nevis’ exchange partners reported rejecting more than 50% of files received, due to the technical requirements not being met. This is a relatively low amount when compared to other jurisdictions. It was noted that Saint Kitts and Nevis has still not yet addressed the issue.
Based on these findings it was concluded that, overall, Saint Kitts and Nevis is meeting expectations in relation to sorting, preparing and validating the information. It was also noted that there is room for improvement with respect to ensuring that correct files are sent to all exchange partners. Saint Kitts and Nevis is encouraged to continue its implementation process accordingly, including by addressing the recommendation made.
Saint Kitts and Nevis should continue to engage with its exchange partner to address the issue raised.
SR 2.5 Jurisdictions should agree and use, with each exchange partner, transmission methods that meet appropriate minimum standards to ensure the confidentiality and integrity of the data throughout the transmission, including its encryption to a minimum secure standard.
In order to put in place an agreed transmission method that meets appropriate minimum standards in confidentiality, integrity of the data and encryption for use with each of its exchange partners, Saint Kitts and Nevis linked to the CTS.
Based on these findings it was concluded that Saint Kitts and Nevis is fully meeting expectations in relation to agreeing and using appropriate transmission methods with each of its partners. Saint Kitts and Nevis is encouraged to continue to ensure the ongoing effectiveness of its implementation.
SR 2.6 Jurisdictions should carry out all exchanges annually within nine months of the end of the calendar year to which the information relates.
One exchange partner highlighted delays in the sending of information by Saint Kitts and Nevis. This represents a relatively high proportion of exchange partners. Furthermore, Saint Kitts and Nevis has still not yet sent some of the information due to be exchanged in 2021.
Based on these findings it was concluded that, overall, Saint Kitts and Nevis is meeting expectations in relation exchanging information in a timely manner. It was also noted that there is room for improvement with respect to ensuring that information is exchange with all of its partners in a timely manner. Saint Kitts and Nevis is encouraged to continue to ensure the ongoing effectiveness of its implementation, including by addressing the recommendation made.
Saint Kitts and Nevis should ensure it sends information to all of its partners in a timely manner.
SR 2.7 Jurisdictions should send the information in accordance with the agreed transmission methods and encryption standards.
Feedback from Saint Kitts and Nevis’ exchange partners did not raise any concerns with respect to Saint Kitts and Nevis’ use of the agreed transmission methods and therefore with Saint Kitts and Nevis’ implementation of this requirement.
Based on these findings it was concluded that Saint Kitts and Nevis is fully meeting expectations in relation to sending the information in accordance with the agreed transmission methods and encryption standards. Saint Kitts and Nevis is encouraged to continue to ensure the ongoing effectiveness of its implementation.
SR 2.8 Jurisdictions should have the systems in place to receive information and, once it has been received, should send a status message to the sending jurisdictions in accordance with the CRS Status Message XML Schema and the related User Guide.
It should be noted that, as Saint Kitts and Nevis exchanges information on a non-reciprocal basis and does not therefore receive information, it is not required to have in place systems to receive the information and provide status messages. SR 2.8 has therefore not been assessed in this case.
SR 2.9 Jurisdictions should respond to a notification from an exchange partner as referred to in Section 4 of the Model CAA (which may include Status Messages) in accordance with the timelines set out in the Commentary to Section 4 of the Model CAA. In all other cases, jurisdictions should send corrected, amended or additional information received from a Reporting Financial Institution as soon as possible after it has been received.
Saint Kitts and Nevis appears ready to respond to notifications and to provide corrected, amended or additional information in a timely manner and no such concerns were raised by Saint Kitts and Nevis exchange partners and therefore with respect to Saint Kitts and Nevis’ implementation of these requirements.
Based on these findings it was concluded that Saint Kitts and Nevis appears to be meeting expectations in relation to responding to notifications from exchange partners and the sending of corrected, amended or additional information. Saint Kitts and Nevis is encouraged to continue to ensure the ongoing effectiveness of its implementation.
Assessed jurisdiction’s comments on the assessment of effectiveness in practice
Saint Kitts and Nevis reiterates its commitment to the work of the Global Forum on Transparency and Exchange of Information.
The Competent Authority of Saint Kitts and Nevis continue to work with exchange partners and domestic stakeholders to ensure the effective exchange of financial information in compliance with the Standard.
The Competent Authority of Saint Kitts and Nevis appreciates the support and guidance received during this process.