St Kitts-Nevis tries to shut the stable door after the CBI horse has bolted

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Attorney General Vincent Byron addressing economic citizens and agents during a forum in Dubai. Looking on is Minister of Foreign Affairs, Mark Brantley

By Caribbean News Now contributor

BASSETERRE, St Kitts — In apparent belated recognition that the safeguards for real estate investors in the St Kitts and Nevis citizenship by investment (CBI) programme are inadequate, attorney general Vincent Byron, while speaking at a meeting with economic citizens and agents in Dubai last week, revealed that the government is taking the necessary steps to strengthen the legislation governing the operation of real estate escrow accounts.

According to the government, the CBI Escrow Accounts legislation, passed in November 2017, provides “guidelines” relating to escrow accounts and agreements under the CBI programme. An escrow, under the CBI programme, is a short-lived trust arrangement, which is the main mechanism for the consummation of real property sales. An escrow agent is a third party responsible for oversight of the monies, whilst the buying and selling process is being undertaken.

Chief executive officer of the Citizenship by Investment Unit (CIU), Les Khan, stated that the new legislation will significantly strengthen the country’s CBI programme by paying particular attention to construction and the payout of funds in escrow.

“It will ensure that any client purchasing a real estate option, the purchasing sale agreement must always be at the face amount of the investment – that being either the $200,000 or $400,000. An escrow agreement must be in place for the same amount. In the new legislation all real estate transactions will have to go into escrow and then released from escrow upon certification of the various stages of completion of the project. So basically, the escrow agreements will have payout stages,” Khan explained.

Khan said that the new legislation will tighten the government’s position and would “ensure that applications placed for real estate would be used for construction. This is different to what was done in the past because the regulations weren’t strong enough to ensure that payouts from escrow were based on construction levels.”

The St Kitts and Nevis CBI programme has been and apparently continues to be subject to rampant fraud and abuse by citizenship agents and local developers, depriving the government of tens if not hundreds of millions of dollars in economic input, none of which would have been possible without public officials being at worst complicit or at best turning a blind eye to the situation.

This abuse has also been, at least in part, facilitated by inadequate or non-existent legally mandated protections for investors and a failure on the part of the government to monitor and police such abuses.

The Citizenship (CBI Escrow Accounts) Bill, 2017, contains a clause that identifies who would be allowed to be CBI escrow agents in St Kitts and Nevis. These include a bank or any other entity whose business includes the provision of trust or custodial services; a registered trust company or any other entity whose business is the provision of trust or custodial services; an attorney-at-law; or a chartered accountant – all under certain conditions

It also requires all CBI escrow agents to be licensed, and to conduct their escrow business in accordance with a number of guidelines.

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