Saint Vincent and the Grenadines - Finance Sector

St. Vincent and the Grenadines was a colony of Britain that became independent in 1979. Its parliamentary system of democracy mirrors that of Westminster as does the evolution of the two party system in St. Vincent. The legal system is that of the common law, with a common Eastern Caribbean Court of Appeal and the final appeal in the Downing Street Privy Council.

While the financial services sector is a prominent part of the investment development strategy of the country, tourism is the prime income earner, and agriculture generally comes in second.

In 1996 the international finance legislation was overhauled and a package of financial laws was introduced. The laws provide the basis for the formation of the following entities:

  • International Banks.
  • International Business Companies including LLC's and hybrid companies.
  • International Trusts.
  • Mutual Funds.
  • International Insurance Companies.

International entities registered in St. Vincent and the Grenadines are not subject to taxation. Favourable tax laws are common also in the domestic economy, where there is no capital gains tax, no inheritance tax, no tax on dividends and Corporate tax ranges from 10-35%. There is freedom to repatriate capital and profits up to US$100,000. Amounts exceeding that sum require approval before repatriation, which is usually given. There are no exchange controls on current transactions under US$100,000.

Regulated and licensed agents and trustees, known in St. Vincent and the Grenadines as Registered Agents, provide international financial services. The International Financial Services Authority supervises these agents.

St. Vincent and the Grenadines has a small, carefully vetted and properly regulated international private banking sector. At present there are only ten banks licensed to conduct international banking business. The regulatory body, the International Financial Services Authority, has concentrated its efforts on ensuring that only banks with a real presence, and sound business operations and policies, operate in St. Vincent and the Grenadines.

The government, in its attempt to ensure that the international banking sector is reputable, took the strategic decision in 2001 that the Eastern Caribbean Central Bank should have a significant role to play in the supervision of the international banks in St. Vincent and the Grenadines, in conjunction with the IFSA. The International Banks Act was amended in 2002 to provide for the joint supervision of international banks with the ECCB. This development has greatly increased the capacity of the regulatory regime. The Central Bank has been regulating commercial banks in the Eastern Caribbean for many years, and it now brings its wealth of experience in banking supervision to the offshore sector.

The role and function of the ECCB includes:

  • To issue currency notes and coins in the territories of participating governments.
  • To supervise and regulate mainly domestic banks of the member states.
  • All domestic commercial banks in St. Vincent and the Grenadines are regulated by the ECCB.

St. Vincent and the Grenadines, as a result of substantive legislative and administrative review over the past two years, has an anti money-laundering regime that is on a par with the highest of international standards. The FATF have recognized the substantial progress made by St. Vincent and the Grenadines in this regard.

The Regulatory Authority - Structure and Function  

The International Financial Services Authority was created by Parliament to institute a new system to manage, direct control and supervise the offshore financial services industry in this country.

Its role is clearly defined by the governing stature. The Saint Vincent and the Grenadines Offshore Finance Authority Act, 1996. The business of The Authority is under the direction of a five-member board of directors.

The Authority is headed by the Executive Director who is also the Chief Executive Officer of that body. The day-to-day business of the administration and management of the International Financial Services Authority, together with the supervisory duties of the Authority, fall within this portfolio.

The statutory duties of the Executive Director are outlined in The Offshore Finance Authority Act, The Registered Agent and Trustee Licensing Act, the International Business Companies Act, the International Banks Act, the International Trusts Act, the Mutual Funds Act, and the International Insurance Act.

The International Financial Services Authority has been charged with these particular duties:

  • To administer and oversee the process of licensing Registered Agents, Private Trustees, Financial Fiduciaries, and Registered Trustees and regulate the activities of Registered Agents and their services to ensure compliance.
  • To administer and oversee the licensing, regulation and supervision of International Banks.
  • To appoint, and to supervise the activities of, the Executive Director.
  • To oversee the activities of the Registrar of IBCs and the Registrar of International Trusts.