ST. VINCENT & THE GRENADINES
OFFSHORE INCORPORATION SERVICES
LEGAL AND TAXATION REGIME
ST VINCENT AND THE GRENADINES OFFSHORE LEGAL AND TAXATION REGIME
Swiss lawyers introduced St. Vincent and the Grenadines (SVG) to the international financial services sector in 1976. Three years later the country gained independence from Britain and embarked on the process of nation-building - setting up the foundations of an independent nation state. When the country was more mature it was able to take a second look at the international finance industry in 1996 and take the policy decision to move this sector into the forefront of the national economy. The international finance legislation was overhauled and a package of financial laws was introduced. Regulated and licensed agents and trustees, known in SVG as Registered Agents, provide international financial services. The Offshore Finance Authority was created by Parliament to institute a new system to manage, direct control and supervise the offshore financial services industry in the country. Its role was clearly defined by its governing statute - 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.
In November, 2003, the Offshore Finance Authority was re-named as the International Financial Services Authority (IFSA). Speaking on the new name of the Authority, Deputy Governor Errol Allen said: "The change of name to International Financial Services Authority must however be seen in its proper context. If an organization is to meet the challenges of a changing world, it must be prepared if necessary to change everything about itself, except its beliefs, as it moves through corporate life. The only sacred part in an organization should be its basic philosophy of doing business. It therefore follows that our organization can change its operating practices and business strategies constantly, in response to a changing world." On the new financial environment Acting Offshore Finance Inspector Louise Mitchell stated "We have an industry to build. Much groundwork has been done. We are not starting from scratch. In fact we have a very solid foundation, but we have new [regulatory] rules in the game. The application of these new rules will require much effort and commitment on behalf both of the regulator and the regulated." IFSA has the following specific responsibilities:
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 Offshore Finance Inspector; and
To oversee the activities of the Registrar of IBC’s and the Registrar of International Trusts
In 2001, in response to the increased international attention being paid to the operation of international offshore financial centres, SVG's legislation was substantially amended, and an enhanced regulatory structure was put in place. At this time, the government, in its attempt to ensure that the international banking sector was 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 SVG, in conjunction with the OFA. The International Banks Act was amended in May 2002 to provide for the joint supervision of international banks with the ECCB. This development has greatly increased the capacity of the regulatory regime.
St. Vincent and the Grenadines now 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 Offshore Finance Authority, has concentrated its efforts on ensuring that only banks with a real presence, and sound business operations and policies, operate in SVG.
There are no shell banks licensed in St. Vincent and the Grenadines. All banks have been and will be subject to further on-site examinations by the authorities every 12-18 months.
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