CBI ESCROW ACCOUNTS BILL PASSES IN KEEPING WITH GOVERNMENT’S THRUST TO PROTECT ST. KITTS-NEVIS’ PLATINUM CITIZENSHIP PROGRAM

BASSETERRE, ST. KITTS, NOVEMBER 15TH, 2017 (PRESS SEC) – The Saint Christopher and Nevis Citizenship (CBI Escrow Accounts) Bill passed through Parliament yesterday, Tuesday, November 14th, 2017, in keeping with the Government’s thrust to maintain and protect the reputation of the platinum standard Citizenship by Investment (CBI) Program of St. Kitts and Nevis.

The Prime Minister and Minister responsible for Finance, Dr. the Honourable Timothy Harris, introduced the Bill for its first reading on Tuesday, June 13th.

When the CBI Escrow Accounts Act becomes operational, it will provide guidelines relating to escrow accounts and agreements under the Citizenship by Investment Program.  An escrow account is a bank account opened with an escrow agent in the escrow agent’s name, for the benefit of the parties to a principal agreement such as a real estate purchase contract.

The escrow agent oversees the management of an escrow account subject to certain conditions based on the principal agreement and the escrow agreement.  The escrow agent – who is a neutral third party – temporarily holds the purchase money and supervises the payments (the timing and amounts of disbursements).  Under the Bill, remuneration or fees that an escrow agent is entitled to receive for performing such services shall not be paid from or collected from the escrow account.

Also, the Bill ensures the impartiality or neutrality of the escrow agent by stipulating that, “The parties to an escrow agreement shall appoint an escrow agent who is not a party to the principal agreement and who has no direct or indirect interest in the principal agreement.”  This means that someone who is “a service provider, a developer or the vendor in relation to the principal agreement shall not act as an escrow agent for that transaction.”

The escrow agent is required to, among other things, keep proper records, give written notice to both parties regarding monetary transactions and the balance of the escrow account, and also monitor the performance and activities of the parties to determine if they are fulfilling their obligations in accordance with both the principal agreement and the escrow agreement.

The CBI Escrow Accounts Bill that was passed yesterday defines an escrow agent as:

(a) a bank or any other entity whose business includes the provision of trust or custodial services who is licensed under the Banking Act and who shall conduct escrow business in accordance with the provisions of the Banking Act.

(b) a registered trust company or any other entity whose business is the provision of trust or custodial services who;

  • (i) is a trust company licensed to conduct trust business in the Island of Saint Christopher or the Island of Nevis or who has been granted a licence to be a Registered Agent in accordance with the Nevis International Exempt Trust Ordinance;
  • (ii) has paid-up capital of at least one million dollars;
  • (iii) has in its employ, on either a full-time or part-time basis, a certified or chartered accountant; and
  • (iv) is licensed by the Financial Services Regulatory Commission to act as an escrow agent.

(c) an attorney-at-law who

  • (i) is a holder of a valid practicing certificate in accordance with the provisions of the Legal Profession Act;
  • (ii) has indemnity insurance of at least one million dollars with a company registered under the Insurance Act;
  • (iii) has employed, on either a full-time or part-time basis, a certified or chartered accountant; and
  • (iv) is licensed by the Financial Services Regulatory Commission to act as an escrow agent.

(d) a chartered accountant who

(i)        is the holder of a valid practicing certificate in accordance   with the provisions of the Institute of Chartered Accountants of the Eastern Caribbean Agreement Act;

(ii)       is a practicing member of the Institute of Chartered Accountants of the Eastern Caribbean (St. Kitts and Nevis Branch);

(iii)      has indemnity insurance of at least one million dollars with a company registered under the Insurance Act;

(iv)      is licensed by the Financial Services Regulatory Commission to act as an escrow agent.

 

Some important stipulations of the Bill follow:

 

“An applicant for citizenship pursuant to the provisions of the Citizenship By Investment Regulations shall enter into an escrow agreement with an escrow agent licensed by the Financial Services Regulatory Commission.  All monies referred to under regulation 5 (9) (b) of the Citizenship By Investment Regulations shall be held by the escrow agent in an escrow account in Saint Christopher and Nevis in accordance with the terms of the relevant escrow agreement.  An escrow agent shall establish and maintain separate escrow accounts, for each escrow agreement, with a bank licensed under the Banking Act…The Financial Services Regulatory Commission shall supervise the escrow business of escrow agents.”

 

The Bill also lays out conditions and procedures for the Financial Services Regulatory Commission’s “suspension, revocation or refusal of licence” for escrow agents, as well as record-keeping requirements.  For instance, “an escrow agent shall submit reports or any underlying documents relating to escrow business to the Financial Services Regulatory Commission on a monthly and annual basis.”

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