Nevis Financial Services

Regulation and Supervision Department

NEWSLETTER

Confidentiality
Issue No. 22
Confidentiality and its application to Financial Services
Legislative Environment and Key Stakeholders
Tipping Off
The Federation of St. Kitts and Nevis ensures that a high level of
confidentiality is maintained within its Financial Services Sector through the
enactment of various legislation, namely the Confidential Relationships Act,
Cap 21.02, the Banking Act Cap 21.01, the Nevis Offshore Banking
Ordinance Cap 7.05 and AML/CFT Regulations.
These laws safeguard investors by prohibiting disclosure of any information
obtained in the course of business by professional persons. Pursuant to the
Confidential Relationship Act, such persons include accountants, attorneys,
broker or other kind of commercial agent or adviser, bank or other financial
institution, any public officer or other government employee or other
persons prescribed as such for the purposes of the Act.

Confidentiality and its Application to Financial Services

Confidentiality is the protection of personal Information. Under the
Confidential Relationships Act, confidential information is defined as but not
limited to:
Information concerning any property, or relating to any business of a
professional nature or commercial transaction which has taken place, or
which any party concerned contemplates may take place, which the
recipient thereof is not, otherwise than in the normal course of business or
professional practice authorised by the principal to divulge.
Consequently, the Confidential Relationships Act applies to all
confidential information with respect to business of a professional nature
which arises in or is brought into Saint Christopher and Nevis and to all
persons who come into possession of such information at any time
thereafter, whether within or without Saint Christopher and Nevis (s.3 (1)).
Any person who divulges information, other than:
i) in the course of taking or giving evidence, for the purpose of or in the
course of a criminal trial,
ii) in the execution of a police officers duties investigating any criminal
offence, or
iii) during an examination or investigation under the Banking Act;
commits an offence under section 4 of the Act and is liable to:
a)
b)

in the case of an individual, to a fine not exceeding ten thousand

dollars, or imprisonment for 12 months or to both such fine and
imprisonment; or
in the case of a body corporate, to a fine not exceeding fifty thousand
dollars.

Section 31(1) of The Banking Act, Cap 21.01, speaks to the importance
of confidentiality within the Financial Services Sector. Under this section,
the Act states that:

August 2014
No person who has acquired knowledge in his capacity as director,
manager, secretary, officer, employee or agent of any financial institution
or as its auditor or receiver or official liquidator or as director, officer,
employee or agent of the Central Bank, shall disclose to any person or
governmental authority the identity, assets, liabilities, transactions or other
information in respect of a depositor or customer of a financial institution
except:
a) with the written authorization of the depositor or customer or of his
heirs or legal personal representatives; or
b) for the purpose of the performance of his duties within the scope of his
employment in conformity with the provisions of this Act; or
c) when lawfully required to make disclosure by any court of competent
jurisdiction within; or
d) under the provisions of any law of (or agreement among the
participating Governments;) but nothing herein shall prevent a financial
institution from providing to a person, upon a legitimate business
request, a general credit rating, a summary of which will be provided to
the depositor or customer upon request.
For breaches under this Act, every person who contravenes the
provisions of subsection (1) commits an offence under section 31(2) and
is liable on summary conviction to a fine not exceeding fifteen thousand
dollars or to imprisonment for a term not exceeding two years or to both
such fine and imprisonment.

Legislative Environment,
Regulated Entities

Regulatory

Bodies

&

Below is a summary of the identification of the key players within this

sector, the relevant legislation and the general provisions from each that
should govern the activities and responsibilities of regulated bodies and
regulated entities where confidentiality is concerned.

EMPLOYEES OF REGULATORY BODIES

Financial Services Regulatory Commission Act

Section 15(1) of this Act states that a Commissioner, an officer or an

employee of the Commission shall be required to take an oath of secrecy.
The Act further states that a Commissioner, an officer, an employee, an
agent or an adviser of the Commission shall not disclose any information
relating to:
a) the business or affairs of the Commission;
b) any application made to the Commission under this Act or any
enactment specified in Schedule 1;
c) the business or affairs of a regulated entity; or
d) the affairs of a customer, member, client or policyholder of a regulated
entity, that the Commissioner, officer, employee, agent or adviser has
acquired in the course of his or her duties or in the exercise of the
Commissions functions under this Act or any other law.

ISSUE

NO.22

AUGUST

Financial Intelligence Unit Act, Cap 21.09

Under this Act, section 12(1) references confidentiality and states that a
person who obtains information in any form as a result of his or her
connection with the Intelligence Unit shall not disclose that information to
any person except so far as it is required or permitted under this Act or
other written law.
A person who communicates any information contrary to subsection (1)
commits an offence under section 12(2), and is liable, on summary
conviction, to a fine not exceeding ten thousand dollars or to imprisonment
for a term not exceeding one year or both.
2.

REGULATED ENTITIES

The Proceeds of Crime Act, Cap 4.28 (POCA), the Anti-Terrorism Act,
Cap 4.02 (ATA), Anti-Money Laundering Regulations, 2011 (AMLR),
Financial Services (Implementation of Industry Standards) Regulations,
2011 (FSIISR) and the St. Christopher and Nevis (Mutual Exchange of
Information on Taxation Matters) Act, Cap 20.60 all provide guidance for all
regulated businesses and their duty of vigilance in relation to money
laundering, terrorist financing and exchange of information. The POCA,
ATA, AMLR and FSIISR further speak to maintaining confidentially when
there is suspect of criminal conduct. They state ..in respect to any person
who voluntarily discloses information to an authorized body arising out of a
suspicion or belief that any money or other property represents the
proceeds of criminal conduct is protected by law under these Acts from
being sued for breach of any duty of confidentiality. However, any
misappropriation of confidential information remains an offence under the
the Confidential Relationships Act s.4(1) to (6), the Banking Act s.31(2) and
the Nevis Offshore Banking Ordinance s.41(1) and (2).
3.

SPECIFIC FINANCIAL SERVICES SECTORS

The Acts that govern the operation of domestic banks, international

banking, insurance companies, co-operative societies and money services
businesses all highlight legislative requirements regarding confidential
information and penalties for infringement.
Section 54 of the Nevis Offshore Banking Ordinance states that a person
who discloses confidential information contrary to 39(1) (by written request,
business purposes or authorized body) is guilty of an offence and is liable
on conviction to a fine not exceeding twenty thousand dollars or to
imprisonment for twelve months or both. Similarly, section 80(4) of the Cooperative Societies Act, 2011 states that a person who contravenes
confidential information except for instances listed in subsection 80(2)
commits an offence and is liable on summary conviction to a fine not
exceeding ten thousand dollars or to imprisonment for a term not exceeding
one year or to both. Likewise, the Money Services Business Act 2008,
under section 23 states a person who has acquired knowledge in his
capacity as director, manager, secretary, officer, employee or agent of any
licensee or as its auditor or receiver or official liquidator or as director,
officer, employee or agent of the Authority, shall disclose to any person or
governmental authority the identity, assets, liabilities, transactions or other
information in respect of a customer of the licensee except for the instances
disclosed in this Act.

4. FINANCIAL SERVICES PRODUCTS

A sector is only as strong as the confidence and value placed on the
products being offered. Hence, the legislative requirements in terms of

PAGE

2014

confidentiality for international insurance companies, trusts, limited

liability companies, multiform foundations and mutual funds all contain
provisions on confidentiality.
Section 44(10) of the Nevis International Mutual Funds Ordinance, Cap
7.09 and s.38(1) of the Nevis International Insurance Ordinance, Cap
7.07 state that any information, furnished to Registrar is privileged and
shall not be disclosed to any person except authorized by the Minister
or for criminal proceedings.
Both the Multiform Foundations Ordinance, Cap 7.08 and the Nevis
International Exempt Trust Ordinance Cap 7.03 in sections 113(1) and
56(1) respectively, state that with regards to confidential information the
Confidential Relationships Act shall apply to every multiform foundation
and trust registered under their respective Ordinances. Likewise, LLCs
under s.(10(3) of the Limited Liability Companies Ordinance, Cap 7.04
are required to keep information as required by law, confidential.

Tipping Off
Tipping off is a serious criminal offence. Section 33 of the POCA, s.5
of the ATA and s.12 of the FSIISR state that a person who knows or
suspects that an investigation into money laundering/terrorist offence
has been, is being, or is about to be made, and divulges that fact or
other information to another person, whereby the disclosure of the fact
or other information is likely to prejudice the investigation, commits an
offence, and shall be liable, on conviction, to a fine not exceeding one
hundred thousand dollars and to imprisonment for a term not exceeding
three years.
An example of Tipping off might be if you tell a client that a Suspicious
Activity Report (SAR) is or is about to be filed in respect of him/her. It is
important to note that you do not have to speak to commit the
offence. You can tip off by failing to respond where an answer is
expected.
Therefore, all relevant parties are reminded that it is a criminal offence
to disclose any information to any other person that is likely to prejudice
an investigation and such may include disclosure of the existence of an
internal report. Clients affairs should always be kept confidential and
particularly the existence of money laundering/terrorist offence
suspicions. Money laundering suspicions should not be discussed
with clients.
All Regulated Entities are strongly encouraged to develop policies that
will foster an environment based on confidentiality. Breaches of
confidentiality will cause investors to loose confidence in our Financial
Services Sector; a sector that is critically important to the development
of Nevis. As such, greater steps should be taken to safeguard clients
information. Failure to act in a accordance with statutory requirements
constitutes an offence and all concerned shall be liable on conviction to
fines as imposed by the Confidential Relationships Act 4(1-6); the
Banking Act 31(2), the Financial Intelligence Unit Act 12(2) and any
other penalties under any Act that governs a specific sector or product.
Source
http://www.nevisfsrc.com/regulatory-framework/supervision

Nevis Financial Services Regulation and Supervision Department

Main Street, Charlestown, Nevis | Tel: 869-469-1469 | Fax: 869-469-7739 | www.nevisfsrc.com