Saint Lucia
This report analyses the implementation of the AEOI Standard in Saint Lucia 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 Lucia’s legal framework implementing the AEOI Standard is in place but needs improvement in order to be fully consistent with the requirements of the AEOI Terms of Reference. While Saint Lucia’s international legal framework to exchange the information with all of Saint Lucia’s Interested Appropriate Partners (CR2) is consistent with the requirements, its domestic legislative framework requiring Reporting Financial Institutions to conduct the due diligence and reporting procedures (CR1) has deficiencies significant to the proper functioning of elements of the AEOI Standard. Most significantly, Saint Lucia’s legislative framework provides for a category of jurisdiction-specific Excluded Account that is not in accordance with the requirements and does not impose sanctions for the provision of a false self-certification.
Overall determination on the legal framework: In Place But Needs Improvement
Effectiveness of AEOI in practice
Saint Lucia’s 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 Reporting Financial Institutions correctly conduct the due diligence and reporting procedures (CR1) and exchanging the information in an effective and timely manner (CR2). Saint Lucia 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 Lucia commenced exchanges under the AEOI Standard in 2018.
In order to provide for Reporting Financial Institutions to collect and report the information to be exchanged, Saint Lucia:
enacted the Automatic Exchange of Financial Account Information Act No. 22 of 2016, which was subsequently amended by the Automatic Exchange of Financial Account Information (Amendment) Act No. 10 of 2017, the Automatic Exchange of Financial Account Information (Amendment Schedule 2) Order S.I. 105 of 2017 and the Automatic Exchange of Financial Account Information (Amendment) Act No. 7 of 2018;
introduced the Automatic Exchange of Financial Account Information (Designation of Excluded Accounts) Order No. 106 of 2017 and the Automatic Exchange of Financial Account Information (Designation of Non-Reporting Financial Institution) Order No. 107 of 2017, which were subsequently amended by the Automatic Exchange of Financial Account Information (Designation of Excluded Accounts) Order No. 119 of 2017, the Automatic Exchange of Financial Account Information (Designation of Non-Reporting Financial Institution) Order No. 7 of 2019 and the Automatic Exchange of Financial Account Information (Designation of Excluded Accounts) Order No. 8 of 2019; and
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 Lucia made various amendments to its legislative framework to address issues identified, the last of which was effective from 11 February 2019.
With respect to the exchange of information under the AEOI Standard, Saint Lucia 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 Lucia 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 Lucia 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 Lucia’s 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 Lucia 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 Lucia’s 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 Lucia:
the Inland Revenue Department (the tax authority) is the delegated Competent Authority and has the responsibility to ensure the effective implementation of the due diligence and reporting obligations by Reporting Financial Institutions and for exchanging the information with Saint Lucia’s exchange partners;
the tax authority maintains a close working relationship with the financial regulators, especially the Financial Intelligence Authority (FIA) and the Eastern Caribbean Central Bank (ECCB) in the discharge of its supervisory duties; the tax authority further maintains close working relationship with other units within the Inland Revenue Department, Financial Services Regulatory Authority (FSRA), the Registry of Companies and Intellectual Property (ROCIP) and the Registry of International Business Companies (ROIBC).
technical solutions necessary to receive and validate the information reported by Reporting Financial Institutions were put in place by the tax authority and its IT department, which ensures the validation of the data reported by Financial Institutions before it is exchanged with Saint Lucia’s exchange partners;
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 Lucia’s legal frameworks implementing the AEOI Standard concluded with the determination that Saint Lucia’s domestic legal framework is In Place But Needs Improvement and its international legal framework is In Place. This has been taken into account when reviewing the effectiveness of Saint Lucia’s 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 Lucia 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.
Determination: In Place But Needs Improvement
Saint Lucia’s domestic legislative framework is in place and contains most of the key aspects of the CRS and its Commentary requiring Reporting Financial Institutions to conduct the due diligence and reporting procedures, but it needs improvement in relation to the scope of Financial Accounts required to be reported (SR 1.2) and the enforcement framework (SR 1.4). Most significantly, Saint Lucia provides for a category of jurisdiction-specific Excluded Account that is not in accordance with the requirements and does not impose sanctions on Accounts Holders and Controlling Persons for providing a false self-certification.
SR 1.1 Jurisdictions should define the scope of Reporting Financial Institutions consistently with the CRS.
Saint Lucia 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 Lucia 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 largely in accordance with the CRS and its Commentary. However, a deficiency has been identified. More specifically, Saint Lucia has provided for a jurisdiction-specific Excluded Account that is not in accordance with the requirements. The scope of Financial Accounts, including the provision of Excluded Accounts, is material to the proper functioning of the AEOI Standard.
Saint Lucia should amend its domestic legislative framework to remove the Pension Fund Accounts from its jurisdiction-specific list of Excluded Accounts as they do not meet the requirements in the AEOI Standard, such as full reporting to the authorities with respect to the Account Holders and penalties on early withdrawals.
SR 1.3 Jurisdictions should incorporate the reporting requirements contained in Section I of the CRS into their domestic legislative framework.
Saint Lucia 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 Lucia has a legislative framework in place to enforce the requirements in a manner that is largely consistent with the CRS and its Commentary. However, deficiencies have been identified. Most significantly, Saint Lucia’s legislative framework does not impose sanctions on Account Holders and Controlling Persons for the provision of a false self-certification. This is a key element of the required enforcement framework and is therefore material to the proper functioning of the AEOI Standard.
Saint Lucia should amend its domestic legislative framework to include sanctions on Account Holders and Controlling Persons for the provision of a false self-certification.
Saint Lucia should amend its domestic legislative framework to require Reporting Financial Institutions to maintain records of self-certifications for at least five years from the deadline to report the information, rather than six years from the date when an account is closed.
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 Lucia’s international legal framework to exchange the information is in place, is consistent with the Model CAA and its Commentary and provides for exchange with all of Saint Lucia’s Interested Appropriate Partners (i.e. all jurisdictions that are interested in receiving information from Saint Lucia 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 Lucia 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 Lucia 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 Lucia’s 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 Lucia notes the comments on the AEOI legal determination report and commits to making the necessary changes in adherence to the recommendations.
Findings and conclusions in relation to effectiveness in practice
The detailed findings and conclusions in relation to effectiveness in practice of AEOI for Saint Lucia 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 Lucia’s 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 exchange partners to ensure effectiveness (SR 1.6). Saint Lucia 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 Lucia implemented most of the requirements in accordance with expectations. However, some issues were identified. The key findings were as follows:
Saint Lucia implemented an overarching strategy to ensure compliance with the AEOI Standard developed after conducting a risk assessment that took into account relevant information sources. These consisted of the profile of the financial sector, discussions with the financial regulators, the conclusions of the CFATF Mutual Evaluation Report, peer input, outcomes of audits already carried out and the submissions made by Reporting Financial Institutions. Saint Lucia’s compliance strategy facilitates compliance and incorporates a credible approach to enforcement. Saint Lucia intends to keep its compliance strategy and risk assessment under review (on an annual basis) to ensure its effectiveness on an ongoing basis.
Saint Lucia has worked effectively to understand its population of Financial Institutions, including relevant non-regulated entities, utilising various relevant information sources, such as the list of regulated Financial Institutions, the Foreign Financial Institution list for FATCA purposes, registers with entities carrying out relevant economic activities and information from Reporting Financial Institutions regarding accounts that they maintain and are identified as being held by other Financial Institutions. Saint Lucia has taken action to ensure that Reporting Financial Institutions are classifying themselves correctly under its domestic rules and reporting information as required. Saint Lucia intends to keep its understanding of its Financial Institution population up to date on a routine basis.
The tax authority responsible for implementing Saint Lucia’s compliance strategy appears to have the necessary powers and resources to discharge its functions. With respect to resourcing, Saint Lucia has assigned the equivalent of two full time staff to monitor and ensure compliance by Reporting Financial Institutions, who are supported by IT staff personnel, a legal officer and can draw on the assistance from the FIA staff and the auditors from the Inland Revenue Department. Overall, they appear to have effectively implemented an operational plan to verify compliance with the requirements, incorporating appropriate compliance activities. While Saint Lucia has not fully carried out its planned compliance activities, initial review activities have started.
It appears that Saint Lucia is ready to effectively enforce the requirements, including through the inspection of records of Reporting Financial Institutions and the application of dissuasive penalties and sanctions for non-compliance. Saint Lucia has conducted compliance activities, such as desk-based reviews and the inspection of records held by Reporting Financial Institutions. It plans to conduct onsite visits but has temporarily replaced them with tailored online meetings due to impediments resulting from the COVID-19 situation. These have covered several Reporting Financial Institutions where issues were identified with respect to their filing of information. While there were no instances to date where penalties or sanctions for non-compliance were applied, Saint Lucia has a defined pathway on how to address identified instances of non-compliance. Similarly, the review of self-certification as part of the compliance review strategy has not yet commenced, but there are plans to start review activities shortly.
Saint Lucia is ready to take effective action to address circumvention of the requirements if such circumvention is detected and ensure to follow up on undocumented accounts should such be reported (it has not identified any reported to date).
Saint Lucia will also keep its jurisdiction-specific lists of Non-Reporting Financial Institutions and Excluded Accounts under review to ensure they continue to pose a low risk of being used for tax evasion purposes.
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 Lucia, it was found to include a much 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 Lucia 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 Lucia is aware of these issues and is taking steps to address them. With respect to undocumented accounts, none have yet been reported.
More generally, many of the exchange partners that received a significant number of records from Saint Lucia indicated that they achieved a success rate when matching the information received from Saint Lucia 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 Lucia 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 fully implementing its plans to systematically carry out reviews. Saint Lucia is therefore encouraged to continue its implementation process accordingly, including by addressing the recommendations made.
Saint Lucia should fully operationalise an effective overarching compliance strategy, which includes planned compliance activities and verification actions.
Saint Lucia should implement its procedure to monitor and verify whether Reporting Financial Institutions are obtaining valid self-certifications as required, including dedicated communication activities, with a particular focus on self-certifications obtained after the opening of a Financial Account.
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.
In order to collaborate on compliance and enforcement, it appears that Saint Lucia 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 Lucia has the necessary systems and procedures to process them as required. It also appears that Saint Lucia will notify its partners effectively of errors or suspected non-compliance it identifies when utilising the information received.
Based on these findings it was concluded that Saint Lucia 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 Lucia 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 Lucia’s 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 – 2.8) and providing corrections, amendments or additions to the information (SR 2.9). Saint Lucia 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 Lucia’s exchange partners did not raise any specific concerns with respect to their ability to process the information received from Saint Lucia and therefore with respect to Saint Lucia’s implementation of these requirements.
Based on these findings it was concluded that Saint Lucia is fully meeting expectations in relation to sorting, preparing and validating the information. Saint Lucia is encouraged to continue its implementation process accordingly, to ensure its ongoing effectiveness.
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 Lucia linked to the CTS.
Based on these findings it was concluded that Saint Lucia is fully meeting expectations in relation to agreeing and using appropriate transmission methods with each of its partners. Saint Lucia 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.
Feedback from Saint Lucia’s exchange partners did not raise any concerns with respect to timeliness of the exchanges by Saint Lucia and therefore with respect to Saint Lucia’s implementation of this requirement.
Based on these findings it was concluded that Saint Lucia is fully meeting expectations in relation to exchanging the information in a timely manner. Saint Lucia is encouraged to continue to ensure the ongoing effectiveness of its implementation.
SR 2.7 Jurisdictions should send the information in accordance with the agreed transmission methods and encryption standards.
Feedback from Saint Lucia’s exchange partners did not raise any concerns with respect to Saint Lucia’s use of the agreed transmission methods and therefore with Saint Lucia’s implementation of this requirement.
Based on these findings it was concluded that Saint Lucia is fully meeting expectations in relation to sending the information in accordance with the agreed transmission methods and encryption standards. Saint Lucia 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.
Six exchange partners highlighted delays in the sending of status messages by Saint Lucia, representing 7% of its partners. This represents a relatively high proportion of partners and has not improved over time. Saint Lucia is aware of these issues and is in the process of addressing them, but not all of the issues appear to have been resolved.
Based on these findings it was concluded that, overall, Saint Lucia is meeting expectations in relation to the receipt of the information. It was also noted that there is room for improvement with respect to the timeliness of sending status messages. Saint Lucia is encouraged to continue to ensure the ongoing effectiveness of its implementation, including in relation to the area highlighted.
Saint Lucia should ensure it sends status messages to all of its exchange partners in a timely manner.
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 Lucia 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 Lucia’s exchange partners and therefore with respect to Saint Lucia’s implementation of these requirements.
Based on these findings it was concluded that Saint Lucia appears to be meeting expectations in relation to responding to notifications from exchange partners and the sending of corrected, amended or additional information. Saint Lucia is encouraged to continue to ensure the ongoing effectiveness of its implementation.