General Information

In 2007 the International Foundations Act 2007 was put into effect allowing for the regulation of the International Foundations and related matters.

It is a species of foundation that is a separate legal entity where the founder makes a disposition of property which ceases to be part of his estate irrevocably and becomes the property of the foundation. The foundation is operated by a council which acts for and on behalf of it at all times. The foundation and its endowment act solely for the beneficiaries of the foundation or for the charitable purposes which  a foundation may set out in its charter.  The foundation may be established for a charitable or non charitable purpose or both or a clear purpose set out in the charter.

Establishment of an Antiguan and Barbudan Intenational  Foundation

The Financial Services Regulatory Commission maintains a Register of International Foundations. All International Foundations must be registered on the Register of International Foundations. The Register contains the Name of the Foundation, the name and address of the Antigua and Barbuda member of the foundation council. An application for entry on the Register must be made within forty five days of the execution of the charter of the Foundation.

Information needed for the Registration

An application for entry in the Register must include:

1. 1. Name of Foundation
2. 2. Name and Address of Antigua and Barbuda Member of Foundation Board
3. 3. Name and Address of All Non-Resident Members
4. 4. Name and Address of All Protectors
5. 5. Date of Execution of Charter by Founder
6. 6. Date of Execution of Charter by each Member
7. 7. Date of Execution of Charter by each Protector

The applicant must also attach the following—

The intended Prescribed Fee and a Certificate from the Antigua and Barbuda member which certifies:

(a) The name of the foundation;

(b) The name and address of the Antigua and Barbuda member;

(c) The name and address of each non-resident member;

(d) The name and address of each protector;

(e) The purpose of the foundation;

(f) The date of submission of the Certificate to the Commission; and

(g) If a re-domiciled foreign foundation:

i. The law under which the foundation was created;

ii. Original date of registration of the foundation in its original jurisdiction (or original date of execution if original date of registration is not available); and

iii. Date of amendment to provide for the law of Antigua and Barbuda to be the governing law of the foundation.

Founder and Beneficiaries

The following information has to be submitted to the Corporate Trust Services (Caribbean) Limited prior to incorporation:

1. 1. The name, nationality, home and business address and occupation of the Founder and a copy of his/her passport. If the Founder is a corporation then the information is required from the ultimate beneficial owner of that corporation.
2. 2. The name, address and identification number (passport or local ID) of any beneficiary known at the time of incorporation;
3. 3. A reference letter from a reputable law firm, bank or financial institution confirming the trustworthiness and reliability of the Founder;
4. 4. A statement as to the true purpose of the Foundation being established;
5. 5. A declaration as to the source of the funds the foundation is to be funded with.

The above information and documentation is kept strictly confidential and is solely for Corporate Trust Services (Caribbean) Limited’s records, however the name of the Founder does appear In the Articles of Incorporation of the Foundation and this is public record. Corporate Trust Services (Caribbean) Limited can act as founder in order to preserve the privacy of the client, in which case above information is required for the person on whose behalf the Foundation is to be incorporated.

Foundation  Charter

The charter is the governing document of the foundation.  It is executed by a founder and each member of the foundation council and any protector, either before two witnesses or a notary public of the court.

It must include the name of the foundation, the beneficiaries or purpose of the foundation, it must appoint a foundation council and specify members, set forth the respective rights, duties, responsibilities and beneficial interests of the foundation council and beneficiary, set forth the method of appointing and removing a member of the foundation council, specify the initial endowment and set forth the manner in which the endowment may be maintained and distributed.

The charter may designate a protector and set forth the protectors rights, duties and responsibilities.

The charter can also be used to designate property to the foundation and upon execution by the founder and each member of the foundation council the property is vested in the foundation.

Founders Rights

A founder cannot sit on the Foundation Council but may be a beneficiary or the sole beneficiary of the foundation.  The founder does not possess the power to direct the foundation council, to amend the foundation charter or dissolve the foundation.

Purpose

The foundation and its endowment act solely for the beneficiaries of the foundation or the charitable purposes a foundation may set out in its charter.  The foundation may be established for a charitable or non charitable purpose or both or a clear purpose set out in the charter. The purpose may never be one which is against Antiguan and Barbudan Law or public policy.

Foundation Endowment

The founders may make an initial gift of property to the International Foundation. All profits gain and appreciation of the property are the property of the international foundation.  The foundation can receive any property at any time from any person pursuant to the foundation charter.

The endowment shall be maintained for the benefit beneficiaries or the purposes of the foundation outlined in the charter.

Any assets acquired by the administration of the foundation and its endowment become part of the endowment of the foundation.

Property acquired by right accruing to the foundation is also part of the endowment.

Capital

There is no minimum capital requirement.

Representation

The Foundation Council should consist of at least one domiciliary of Antigua and Barbuda. Corporate Trust Services (Caribbean) Limited can act as such on client’s request. If not Corporate Trust Services (Caribbean) Limited,  Foundation Council Members details are to be provided on the attached application form.

Management and Domiciliary Services

Corporate Trust Services (Caribbean) Limited offers a full range of services to incorporate and maintain a Foundation.  Two significant services rendered by Corporate Trust Services (Caribbean) Limited are:

1. 1) Providing a local registered address and office, and
2. 2) Acting as the local Director of the Foundation. An Antigua and Barbuda based Foundation must have at least one domiciliary on the Foundation Council. Usually Corporate Trust Services (Caribbean) Limited acts as such and takes care of all legal requirements.

The following services are included in our basic service package:

-Providing the registered office.

-Providing one corporate foundation council member.

-Filing the required documents and forms with the Financial Services     Regulatory Commission.

Some other services that are rendered by Corporate Trust Services (Caribbean) Limited, upon clients request are:

. By resolution of the Foundation Council, the domiciliary member can issue Limited Powers of Attorney in favor of third parties for special transactions and services.

Accounting Services

Although there is no legal requirement to have financial statements prepared Corporate Trust Services (Caribbean) Limited recommends doing so for proper administration of the affairs of the Foundation. Those statements should comprise a Balance Sheet, Statement of Income and Expenses and Explanatory Notes and should annually be approved by the Board of Directors.

As all the financial details of the Foundation’s transactions and other financial data are readily available in the Foundation’s records, it is most efficient tat the local foundation council member takes care of the accounting.

By David Jessop

The Doha Round at the World Trade Organisation (WTO) is deadlocked. Although officials and Ambassadors continue behind the scenes to negotiate building blocks for an eventual agreement, there is sense that the political will required to re-energise the process does not exist.

So much so that in Geneva there is a view that so radically has the international trade landscape changed in the nine years since the process was launched,  that  the shape of any final deal will now require many if not all states to reconsider the effect of the offers they were prepared to make previously.

Since the Round began in Doha in 2001 world trading patterns have changed. The economies of advanced developing nations have been growing rapidly while in contrast those of the developed world that came close to systemic collapse in 2008,have since only slowly come out of recession.

Across this period China, India and Brazil have continued to industrialise, grow and trade. They have become members of the G20 and have penetrated developed and developing markets alike. As a consequence many of the eventual trade-offs envisaged by the US, Europe and others to achieve a trade round may no longer be sound, requiring it is suggested the developed world to examine the political implications of this structural change in the global balance of trade and economic power before proceeding; and for Washington and Beijing in particular to first consider when and how it might be possible to move forward again.

The result is that the focus in trade liberalisation is now shifting rapidly to bi-lateral and bi-regional deals such as those that Europe has recently struck with Central America and with Andean nations, or that which the Caribbean is negotiating with Canada. These are likely to multiply, leaving some trade officials to wonder whether a whole new negotiating arena may have to emerge to reconcile such arrangements before any global deal can take place.

At the same time it also seems that many developing nations that were previously comfortable with the general thrust of the Round, if not with its fine detail, may also be having concerns about the rise of China, India and Brazil and the impact they as opposed to the developed world will have as their tariffs are reduced. All of which leads to a privately held view in some parts of the WTO that the only way forwards multilaterally may be through limiting ambition and going for less than a full round.

As for the Caribbean, its position, like that of many developing nations, is to wait and see.

On the whole, the Caribbean’s experience of the way the WTO system works has not been that positive.

The WTO process has been bruising. Other nations, notably in Latin America, have sought to challenge the region’s established preferential arrangements with Europe in respect of bananas, sugar, rum rice and other products; and Caribbean Ministers have until relatively recently found themselves effectively excluded from the key political decisions which  are dominated by OECD nations and more recently the emerging economies of Brazil, China and India.

The one important victory that the region has been able to achieve was the WTO’s decision in 2004 to rule in favour of Antigua and against the United States in a dispute over the provision of internet gaming services. In outline this involved the WTO accepting on appeal Antigua’s claim that the US had damaged its interests by adopting measures which affected its cross-border supply of gambling and betting services. Following a ruling in early 2007 that the US had done nothing to abide by its judgement, Antigua filed a claim at the WTO for US$3.4billion in trade sanctions linked to a request for authorization for the island to ignore US patent and copyright laws.

However, since that time there has been no final resolution of the issue. Speaking recently to the Caribbean media, Antigua’s Prime Minister, Baldwin Spencer, expressed  serious concerns about Washington’s non-compliance, and indicated that it was his intentions that the island would impose sanctions on the US and that he would take the matter to Caricom Heads of Government.

However, Caribbean Heads while expressing ‘strong solidarity’ and concern about the negative economic impact non-resolution was having, coupled this with language that seemingly implied that the region was concerned that any such response might bring the region into conflict with the US Congress in relation to the ten-year extension of the Caribbean Basin Trade Partnership Act to 2020 or the recently launched Caribbean Basin Security Initiative.

What such sanctions might consist of or how they could be imposed without hurting Antigua economically is unclear, but the failure of the WTO process to be able to bring the issue to a conclusion with the US has consequences that go far beyond Antigua’s heated internal politics.

Bringing the case to a successful end is important not just for Antigua but for all small states. If the US requires adherence to a rules based system but then fails to meet its commitments at the WTO it brings the whole concept into disrepute. Worse it means that the Caribbean and other nations are participating in WTO proceedings on a false premise.

If, as seems to be happening, the dynamics of world trade have changed, small states have even more need of proof that that the body’s rules have teeth. While a less ambitious round may be a way forwards in the interim, small states require assurances that cases of the kind Antigua has brought, or that others in the region may be considering, result not in delay but in a just outcome.

David Jessop is the Director of the Caribbean Council and can be contacted at david.jessop@caribbean-council.org

Previous columns can be found at www.caribbean-council.org

July 9^th, 2010

(Courtesy CMMB vangie.bhagoo@mycmmb.com)

Over the past two years, the world witnessed a truly Keynesian approach to the economic crisis, as government expenditure ballooned in a valiant effort to shore up economic activity and to prevent a protracted global recession.

Arguably, expansionary fiscal policy was the primary reason for the relatively quick rebound in economic growth, since it seemed as though the crisis was unresponsive to the aggressive easing of monetary policy which was actually the first line of defense for several countries. One of the major reasons for that was waning consumer and business confidence, so that  even though interest rates fell to record low levels, spending and investments were held back, simply because expectations dictated that the economic situation would get worse. For this reason, governments throughout the world were forced to boost expenditure to help anchor short term expectations and improve sentiment.

Consumer spending in the US accounts for approximately 70% of that economy, and with about 8.5 million people losing their jobs since the crisis began, the Obama administration quickly implemented policies to stem further job losses and to create new jobs. China and Japan as well as some of the European countries and the larger emerging markets also followed this approach, spending billions of dollars to resuscitate their fragile economies. Even though there may be some long term consequences of these policies in terms of higher debt and inflationary pressures, the expansionary fiscal policies seem to have taken some (short term) effect as we continue to see gradual signs of recovery in those countries. In contrast to the outlook for the global economy, the prospect for the Caribbean region remains subdued.

The Caribbean region has definitely not been spared from the global economic downturn, with all of the sample countries estimated to have recorded economic contractions in 2009. Antigua and Barbuda is expected to haveshrunk the most, given the impact of the Stanford failure upon various facets of that economy. While the downturn is not assevere as in 2009, 2010 is expected to remain difficult for the Caribbean. With the exception of Trinidad & Tobago, every bcountry is likely to further contract/ remain stagnant and this compares to a relatively strong rebound in the US, expected to record growth in excess of 2% in 2010. As mentioned previously, this difference in prospects can partly be attributed to the expansionary fiscal policy adopted by the US over the last two years.

 Even though many have called for the Caribbean region to pursue fiscal stimulus to offset the contraction in private demand, most of these countries are unable to actively implement such counter-cyclical fiscal policies. Indeed, the region has historically faced inherent limitations in terms of the structure of their economies as well as their already constrained fiscal flexibility.

The average level of public sector debt to GDP is in excess of 90% in the Caribbean, with some of the countries exceeding 100% and some being the world’s most indebted emerging markets. The public sector debt in St Kitts and Nevis is currently equivalent to just about 180% of the country’s GDP, while Jamaica is around 120% of GDP.

Even though the debt ratio is at a comfortable level in Trinidad and Tobago, the issue lies in the country’s reliance onenergy prices and demand internationally. Indeed, the collapse in natural gas and oil prices would have impacted directly upon public finances and the government’s ability to provide fiscal stimulus. In fact, energy sector revenue accounts for more than 50% of government revenue. Further to this, the collapse of CL Financial would have put extra pressure on the fiscal accounts, as the government led the bailout of the largest conglomerate in the country. The government will have a deficit of around 5% of GDP in the fiscal year 2010, which it will need to finance. On the positive side though, with an investment grade credit rating, the government has the ability to tap the domestic and international capital market to finance this deficit and because the current debt level is around 40% of GDP, increasing this moderately would not significantly damage the country’s debt profile. This puts Trinidad and Tobago in a better position than the rest of its Caribbean counterparts.

The other Caribbean countries have been traditionally plagued by high indebtedness and very weak and narrow economies. In this context, financing a growing fiscal deficit becomes increasingly challenging in an environment where the regional governments’ revenue base is quite narrow as well. In addition, interest payments usually account for asubstantial chunk of government revenue for many Caribbean countries, particularly Jamaica when in 2009, interest payments accounted for 63% of general government revenue, which significantly inhibits fiscal flexibility. Further to this, with the exception of Barbados (who is also rated investment grade); the other Caribbean countries are either rated as junk, (also called speculative grade) or not rated at all. This poses another major challenge in terms of accessing theinternational capital markets to raise funds to fill the shortfalls in the fiscal accounts.

Despite these challenges and limited options to finance fiscal deficits in the Caribbean, many governments have been able to come to market successfully, and issue mainly domestic debt, which in my opinion is a better long run solution. While this increases the debt load, the proportion of external debt will not rise, which reduces vulnerabilities in terms of interest rate and foreign exchange fluctuations. Additionally, with interest rates at relatively low levels, governments were able to borrow at a cheaper cost to them. Demand is still high for some of the stronger government paper, like in the case of Trinidad and Tobago, where many of the bonds were issued at a premium due to excessive demand.

As the dust settles in the global economy, it is clear that the Caribbean region will stumble a bit longer, largely as a result of the region’s inability to respond to the same extent as the rest of the world. Fiscal deficits are already high in the region, and there is little that can be done to improve the situation. These deficits can either be reduced through increasing the revenue base, or reducing expenditure. In a time when expansionary fiscal policy may be necessary to bolster economic activity alongside limited options in terms of enhancing the revenue base, higher fiscal deficits and increased financing requirements for the region is a real possibility. Governments however must be prudent in its conduct of fiscal policy so that the region’s legacy of debt should not be aggravated further, as this can threaten to undermine the economic stability of the Caribbean region.

 

 

 

 

By Diana Ramroop (Courtesy Caribbean Money Market Brokers CMMB)

It’s that time of the year again, when the Christmas tree is up, our homes are decorated, the malls are filled with lavish

Christmas decorations, radio stations fill the air with happy and joyous Christmas songs and we are probably all bus y making

preparations for the holidays. It is at this time of the year, we tend to appreciate our families more than usual and we take

stock of how our year was spent and we think about the resolutions that we would like to make for the upcoming year. For

some of us, this year may have brought us happiness, sorrow, disappointment, maybe some transition in our lives or it may

have been uneventful, just another year gone by.

The year 2009, started off in turmoil as the manufacturing sector globally had declined. According to JP Morgan’s global

manufacturing index, there was a ‘severe’ 17% annualized contraction in global activity. Manufacturers around the world had

already begun to cut job in an effort to conserve cash. Steel companies like ArcelorMittal, US Steel Corp and AK Steel were

working at 43% capacity. The S&P 500 Index was down about 34.5% for 2008. The Volatility Index (VIX) had increased from

26.2 at the start of January 2008 to 40 as at the end of 2008. Globally, central banks were desperately slashing interest rates

and using stimulus packages to prevent their economies from sliding into further recession. Policy interest rates in the US

were slashed from 3% at the start of the 2008 to a mere 0.25% by the end of 2008 while in Europe rates were cut from 4.5%

to 1% by the start of 2009. The outlook for 2009 looked grim. Let us recollect some of the major events that affected the

international market for 2009 thus far:

Stimulus packages and government bailouts

TARP

The TARP (Troubled Asset Relief Programme) was initiated by the US government in October 2008 in order to loan

emergency funds to banks with ‘troubled assets’, such as, loans on real estate and other mortgage-related assets and

securities based on these assets, saw financial institutions receiving about $700 billion in such funds. For 2009, we would

have seen companies such as Citibank and Bank of America each receiving an additional $20 billion in TARP funding

bringing their total receipt to $45 billion each. Due to restrictions placed on executives’ compensation, equity purchase

option and compliance policies, companies such as Bank of America, JP Morgan Chase, and American Express quickly

sought to repay their TARP funds.

Cash for Clunkers

This was ran by the US government between July 01 2009 to 26 August 2009 at a cost of $3 billion dollars. The aim of this

programme was to get US consumers to purchase more fuel efficient cars while trading in less fuel efficient ones, thereby

promoting auto sales and ultimately stimulating the economy. This programmed led to a 19.4% increase in sales for Toyota,

17.6% for General Motors, 14.4% for Ford, 13% for Honda and 8.7% for Honda. This initiative was not very successful as its

costs vastly outweighed the benefits by $1.4billion and it was the Japanese and Korean manufacturers that increased their

market share at the expense of US manufacturers.

Fall of the US Dollar?

To fund these stimulus packages, the US government, through the Federal Reserve, has been increasing its money supply.

It is estimated that the money supply (notes, coins and central bank reserves less dollars held abroad) grew by 14.3% from

Sept. 08 to Sept. 09. At the same time, the debt-to-GDP level has risen from 51% in 1988 to currently about 73.6% of GDP.

It is projected that the debt level will continue to increase to about $13 trillion by 2013.As result of this; there have been

concerns about the ability of the US to fulfill its interest payment obligations. This has been causing pressure on the US dollar

as investors are seeking alternative investments like gold, copper or a basket of currencies as opposed to just one main

currency. This year we would have seen that US dollar’s value which can be measured by Bloomberg’s Dollar Bullish

Sentiment Index had fallen to 30.8 as at 18 September 2009 from a high of 68.86 a year ago. The lowest level this index

reached was in March 2008 when it fell to 30.3. In stark contrast to the dollar, gold reached a record high of $1133/oz on 16

Nov. 2009 as investors sought a hedge against the dollar.

Healthcare Reform

In some quarters, the present healthcare system in the US was deemed inadequate, in that it failed to address the needs of

everyone and it was too costly to the average citizen, thereby excluding citizens from accessing this vital service. It was

estimated that healthcare spending accounts for about 17% of GDP and any reform of this sector would have a major impact

on the economy. To transform the health sector it would cost an already debt -laden US government about $1 trillion over a

decade. Proposals made thus far, places insurance mandates on employers and employers, sets prices and coverage,

establishes an option to be run or subsidized by the state, and to pay for all of this taxes would have to be increased. The

increase in taxes, which should take effect in 2011 and may range from 1% - 5.4%, depends on the income level of the

insured. These are substantial changes that would affect the type of insurance products purchased, kind of service provided

and the cost to companies and individuals. Subsequently, all of this would affect the earnings of companies in this sector.

This is why Fitch rating agency has a negative outlook for this sector in 2010.

As the year draws to a close, the US economy has shown small signs of recovery. Credit Suisse raised their GDP forecast

for this quarter to an annualized rate of 4.5% up from 3.5%. In addition to that, unemployment fell slightly by 0.2%, the trade

gap closed by 7.6% in October, export levels were up 2.6% and sales of US retailers climbed by 1.3% in November. We

would have also seen that the S&P 500 index is up about 33%, the VIX is down to 22.32. If these trends continue, it is our

expectation that 2010 would be a better year for investors.

TAX ALERT

On Wednesday, December 9, the UK government announced a one-off, 50 percent tax on discretionary bonuses awarded or paid by the financial services industry during the period December 9, 2009, to April 5, 2010. The draft legislative language is potentially subject to change and is unlikely to be voted on by Parliament before the first quarter of 2010. In all events, the UK government intends to have the legislation in place by the due date for the tax’s collection (August 31, 2010).

This tax is on the financial services entity and is not deductible for purposes of UK corporation tax (it would not appear to be an income tax for purposes of the US foreign tax credit); it is not an additional income tax on the recipient. Performance-based remuneration, whether paid in cash, benefits, or most equity-based compensation, in excess of 25,000 sterling generally is subject to the tax. The tax applies to performance-based remuneration awarded or paid to UK-resident employees, independent contractors, and non-UK residents who performs relevant financial service duties in the UK during the period April 6, 2009, to April 5, 2010. The tax does not reach non-variable pay that is not subject to performance conditions.

The tax will apply to UK-resident entities which are licensed by the Financial Services Authority (the FSA) and conduct “relevant regulated activities” including: (a) deposit-taking; (b) dealing in securities as principal or agent; (c) arranging deals in securities; (d) acting as custodian; and (e) retail mortgage lending. It will also reach UK-resident investment companies or financial trading companies which are affiliated with an FSA-regulated entity.

For non-UK resident businesses, the tax will apply to the UK branch of a non-UK bank, provided that the bank is authorized by the FSA and accepts deposits or “wholly or mainly” conducts relevant regulated activities through a UK permanent establishment. Also, the UK branch of a non-UK “relevant foreign financial trading company,” which includes a securities dealer, is subject to the tax. Non-UK entities engaged in insurance, sponsoring venture capital trusts or OEICs and friendly or building society services are exempt.

Complicated rules govern the treatment of a UK permanent establishment which is itself not FSA-licensed, but affiliated with an FSA-licensed person. While the language is not completely clear, it appears that sponsors of private equity and other alternative investment funds operating in the UK are exempt from this tax unless they are affiliated with a bank or other financial institution that is FSA-licensed.

For a non-UK resident financial services business, the questions to ask are:

1. Is your UK permanent establishment, parent entity, or other affiliate licensed by the FSA?

2. If so, do your activities wholly or mainly consist of “relevant regulated activities”?

The draft legislation anticipates many standard approaches to sidestepping its coverage. For example, neither delaying the payment of an award that has arisen contractually during the period, nor shifting the obligation to pay from a UK permanent establishment to the non-UK parent entity, will avoid this tax.

· 

The Dow Jones industrial average yesterday fell below 8,000, shedding 4 percent, its bleakest performance on any Inauguration Day since the index was started 124 years ago. Nasdaq and the Standard & Poor’s 500-stock index both plunged more than 5 percent.

Disillusioned investors fled financial companies as fresh evidence mounted that the industry’s problems are larger than previously understood, larger than the response so far mustered by the government and perhaps larger than the resources remaining in its rescue program.

The possibility of bank nationalizations, in which governments take direct control of financial institutions, is being debated in Britain and elsewhere, as some of the world’s biggest banks report surprisingly dire results. The industry’s plight, tightly intertwined with the ongoing recession, is among the great challenges confronting President Obama.

Problems have spread to companies that investors considered conservative and safe. Institutions including German giant Deutsche Bank, money managers State Street and Bank of New York Mellon, and even several members of the Federal Home Loan Banks system have revealed unexpected and significant problems, leaving almost no part of the financial industry untouched.

Losses at companies already tarred by the crisis also have been deeper than analysts expected. Regions Financial, a large southeastern bank, yesterday reported a fourth-quarter loss of $6.2 billion, greater than its total profits in the past five years. Citigroup said it lost $19 billion last year.

The Royal Bank of Scotland disclosed this week it may have lost $41 billion last year, leading the British government to announce a second bailout for the company that increases the government’s stake in one of Britain’s largest banks

The federal government’s promise to prevent the failure of large U.S. banks may be exacerbating their problems. As banks sink, financial analysts increasingly are warning that government intervention is inevitable and could come at the expense of shareholders, perhaps in the form of nationalization. This appears to be driving away investors and hastening the intervention. As with the government’s summer promise to save Fannie Mae and Freddie Mac, but only if necessary, the last resort has become the expected outcome.

Until banks can attract fresh capital from debt or equity investors, it will be difficult to stabilize and jump-start lending, said Binky Chadha, chief U.S. equity strategist at Deutsche Bank in New York. But the government’s patchwork approach to the bailout has would-be investors sitting on the sidelines, he said.

“In each episode of financial intervention, the rules have been a little different,” Chadha said. “Hopefully [the new administration] will lay out the rules, and it will be a lot clearer. In the meantime, the textbook model of wiping out the equity holders is clearly a concern, and should be a concern.”

The basic problem facing the financial industry, and the new administration, is that banks lack the money to cover their losses. The capital reserves that banks are required by regulators to maintain against losses have been badly eroded.

The banking industry has acknowledged losses of roughly $1 trillion since the start of the financial crisis. Goldman Sachs last week projected that this total could more than double. Nouriel Roubini, a professor at New York University’s Stern School of Business noted for his pessimism, said yesterday that losses could hit $3.6 trillion.

The Bush administration pumped almost $300 billion into U.S. banks, but the scale of investment is dwarfed by the still-emerging problem. The government’s actions stemmed the market’s panic in the fall, but it did not succeed in stabilizing the industry.

Investors now appear to be stampeding again. Shares of Wells Fargo have lost roughly half their value since the start of the year. Bank of America is down 64 percent. J.P. Morgan Chase is down 43 percent. Citigroup is down 58 percent. Those are the four largest U.S. banks.

Obama administration officials are considering several approaches focused on the troubled loans and other assets that are the source of the losses, including the creation of a government-owned “bad bank” that would buy troubled assets from financial firms, quarantine them and then sell them, generally at a substantial loss. The aim is to revitalize lending. Bad banks have been created by countries including Sweden, but the idea has never been tried on a comparable scale.

It is increasingly likely that any approach will require more than the roughly $320 billion remaining in the financial rescue program approved by Congress in the fall, several officials said.

The problems continue to grow.

A number of banks once considered healthy have been hobbled by the acquisitions of troubled institutions, often in deals urged by the U.S. and European governments. Investors are increasingly fearful of losses at Wells Fargo, which they viewed as the healthiest of large U.S. banks before it swallowed Wachovia. Bank of America needed more than $20 billion in additional government assistance in part to help it swallow the troubled investment bank Merrill Lynch.

Meanwhile, banks that specialize in managing money for large institutions have become the latest quiet corner of the financial industry infected by the crisis. Bank of New York Mellon reported yesterday it earned $28 million in the fourth quarter, less than a tenth of the amount Wall Street had expected.

State Street said that it had unrealized losses of about $9 billion as of the end of 2008, a massive figure that surprised analysts who previously regarded the company as relatively sheltered from the crisis. The company’s shares fell by 59 percent yesterday as several financial analysts said State Street could be forced to raise capital.

Problems in Europe also grew. The Irish parliament voted yesterday to complete the nationalization of Anglo Irish Bank, the country’s third-largest bank. It is the second round of government bailouts for the Irish banking industry.

The action in the markets underscored the need for Obama to set his sights on repairing the banking system before turning his attention to a broader economic stimulus package, said Brian Gardner, senior vice president for Washington research at Keefe, Bruyette & Woods.

“What gets at the core economic issues of the day is fixing the financial system,” Gardner said. “This all started from a crisis in the financial system, and it’s going to be solved by fixing the financial system.”

An Extract from the Washington Post, Wednesday January 21, 2009

By Binyamin Appelbaum and Heather Landy

Washington Post Staff Writers

 

One may recall optimistic proclamations made in 2008 that Trinidad and Tobago (T&T) would not be affected by the global financial crisis; however, to date we see evidence that the T&T is by no means insulated from the global financial and economic turmoil. To an extent, the premise that the Caribbean was insulated from the global crisis was somewhat understandable. This is because Caribbean financial markets are typically small, underdeveloped and largely unsophisticated, with tightly regulated commercial banks and generally risk-averse managers; as such US mortgage-backed securities were not dumped in this region. However, we all live in a global village and the financial sector contagion was bound to take a toll on these vulnerable economies!

For the most part, the region weathered the financial crisis quite well in comparison to global counterparts. Banks within the Caribbean tend to transact business with commercial banks in the US and, as a result, were not exposed to most of the liquidity woes of the investment banks. Furthermore, legislated reserve requirements, which are deposit-based, provided regional banks with the necessary cushion for liquidity demands. One exception would be Jamaica where exposures to US investment banks resulted in margin calls on investments. This had the effect of squeezing liquidity in the country’s financial sector. As both the private sector and the government struggled to access US dollars, the Jamaican dollar (JMD) fell precipitously (against the US dollar) by about 13% during the second half of 2008, and the Bank of Jamaica in efforts to address the liquidity issues and stem the JMD decline drew down international reserves by USD600 million.

The problem is that policy makers in the region did not recognize that the financial crisis would have an indirect impact on economies, which caused the run-up to a full scale economic crisis. The financial crisis basically choked-off credit, which started strangling GDP growth through declining industrial production, consumer spending, manufacturing etc. Naturally, the economic crisis followed hard and fast as one by one, major economies fell into recession. Commodity highs unravelled rapidly as speculators recognised the potential for significant losses stemming from the falloff in global demand.

Despite the fact that lower commodity prices have generally led to falling inflation in most economies, the fall in fuel prices does not bode well for Trinidad’s economy as the energy sector accounts for more than 50% of GDP and approximately 90% of exports.

Reality Check

If there are any doubts that the Caribbean is being affected by the global contagion, one has only to look at what is happening with the tourism industry, remittance flows, export revenues, foreign direct investments and by extension, economic growth. Caribbean economies are predominantly dependent on inflows from tourism and remittances. An exception would be Trinidad, which is the world’s largest supplier of methanol, and a producer of urea, ammonia, steel and natural gas. Even Jamaica’s bauxite industry is suffering, with plans to lay off even more workers this year. Notably, the region’s tourism and remittances are fuelled by the US and UK markets, both of which are currently in a recession.

The tourism outlook is gloomy with projections for a 20% downturn in Barbados, which, according to the Vice President of the Barbados Hotel and Tourism Association, would have a detrimental impact on that country’s tourism sector.

Additionally, the Jamaica Hotel and Tourism Association (JHTA) proclaimed that Jamaica is already a whopping 30% off target for the season and higher up the islands, the Atlantis Resorts in the Bahamas have laid off almost 800 workers already. To add insult to injury, the British government announced plans to introduce a new tax, the Air Passenger Duty, as part of a drive to reduce carbon emissions. Under the new law, which is expected to take effect in November 2009, passengers flying within 2,000 miles of London will have to pay incremental taxes on their ticket fare. This will place further strain on tourism revenues as Europeans would opt to vacation closer to home in light of tight economic conditions.

Regional goods being exported are typically made up of products such as sugar, cocoa, citrus, bananas, vegetables, food and beverages. The high elasticity of demand for these goods, together with the fact that the US is one of the major export destinations for the region, does not bode well for the trade balance of these economies. Notably, we see that approximately 37.2% of Jamaica’s exports and 57.5% of Trinidad’s exports are US bound. In particular, Trinidad’s exports comprise mainly industrial supplies such as oil, natural gas, steel and given the dramatic fall in commodity prices, Trinidad should expect to see drastically reduced export earnings.

Once again, we see how the US is intertwined with the Caribbean as it is a major source of Foreign Direct Investments (FDI) for the region. Because the US is currently in a recession with its major industries in consolidation mode, investor confidence stuck at all time lows, and credit conditions persistently tight; it is unlikely that investors would consider large investment projects as viable in present times.

Across the region, GDP growth has been falling. Estimated growth rates for all of the major economies in the region have shown significant weakness. Annualised GDP growth projections at the close of 2008 for Jamaica, Barbados, and Trinidad and Tobago are 0.5%, 1.5%, and 3.5% respectively. In 2009 these figures are expected to fall further to 0%, 1%, and 1.5%-2% for the respective economies. With inflation cooling, most economies are expected to start cutting interest rates in order to support their faltering economies. It may be some time before Trinidad uses this approach as inflation is still very much a concern; however, Barbados has already declared a 100 basis point cut to its Minimum Savings Rate (MSR), bringing it to 3%, effective 1 February 2009. Jamaica will most likely have no choice but to cut rates by the end of the year in the face of weak economic conditions. Receding growth has become the issue of the day and generally monetary policy is employed by dropping interest rates to stimulate credit and by extension the proponents of growth such as consumer expenditure. However, in some cases, banks are hoarding cash and have simultaneously made the borrowing process more stringent. In light of such deterrents, lowering the policy rate may not have the desired effect.

Nap Time is Over

Caribbean economies tend to be reactive rather than proactive. Only when a crisis unfolds do we seem to shake our sedate demeanour and spring to action in a typical ‘knee-jerk’ manner. Instead of being in a state of denial, the region needs to engage in more thorough strategic planning; this should take into consideration worst-case scenarios and actual plans for them so that any impact would be limited. There is no denying that our economies face challenging times ahead with no road map for the unchartered territory in which the global economy now finds itself. So the question is, what can we do to mitigate the negative factors impacting our region?

Caribbean governments and the private sector, individually and collectively, need to go back to fundamentals. Specifically, the focus needs to shift to measures such as the following:

- Careful consideration of what constitutes appropriate fiscal measures together with prudent and timely implementation. For example, it would have been more appropriate for the government of Trinidad & Tobago to have restrained expenditure over the past 4 years rather than doubling their expenditure. If this was done, the government would have been better positioned to increase expenditure in 2009 to offset the slowdown in the private sector, rather than being forced to cut as it is currently doing.

- Improving operational efficiencies to minimise wastage or redundancies to mitigate the expected decline in revenues.

- Attention should be paid to the inherent vulnerabilities of being overly dependent on a few trade partners for exports. The Caribbean needs to start looking at Central and South America as export markets, sources of tourists, etc.

- Greater focus should be paid to becoming self-sufficient in as many sectors as possible to mitigate external shocks such as the recent commodities bubble. Incentives for agriculture and fisheries should be emphasized.

- Ensure access to multilateral funding, should liquidity concerns arise.

- Crafting strategic plans that include aggressive steps aimed at reducing the region’s high level of exposure to exogenous shocks. Governments must as a matter of routine, use medium and long term development plans as a tool that provides the context for policy formulation. These plans must be reviewed and revised if necessary as conditions change.

- Actively seeking out ways to resolve deterrents to the Caribbean Single Market and Economy (CSME). Given the level of individual country vulnerability, a collaborative effort should strengthen resilience and permit members to leverage each other’s competitive advantages. For example, a country with surplus capital such as Trinidad can invest in another that has viable projects that require funding. United we stand, divided we fall. These are unprecedented times and they call for new and drastic measures to chart a course in unknown territory. It is time to put differences aside and work together for a common good. Global leaders understand the need for international support as their economies are inextricably linked and dependent on each other. The Caribbean would do well to wake up and learn a thing or two on survival.

Article submitted by

Juliana Davis

Analyst

CMMB, Trinidad and Tobago

 

 

Introduction

Antigua and Barbuda is a twin island state located in the Eastern Caribbean. The major island, Antigua, is 108 square miles in size with a resident population of approximately 65,000 with more than one-third of the population living in the capital city of St. John’s. Barbuda has a population of 1500 with its principal community in Codrington.

Additionally, Antigua and Barbuda (hereinafter referred to as “Antigua”) is a member of the Caribbean Community and Common Market (CARICOM), an economic organization of Caribbean States.

Antigua boasts of political stability with a parliamentary democracy fashioned from the British Parliamentary system and its laws are based on the English Common Law. Appeals from the Island’s High Court are to the Eastern Caribbean Supreme Court while the Final Court of Appeal is the Judicial Committee of the Privy Council in London.

English is the official language.

Antigua possesses the most thriving tourist industry in the Eastern Caribbean and with its modern, multinational community, enjoys one of the highest standards of living in the Caribbean.

Its financial services industry and commercial activities have grown tremendously since its Independence from Britain in 1981 and there has been the collateral development of a unique infrastructure to support its commercial and financial activities.

The combination of excellent service, modern corporate and fiscal legislation affords an extremely attractive environment for the establishment of offshore corporations and its international banks, local banks, law firms, tax advisors, accounting firms and trust companies service the needs of the financial services industry very well.

Interactive gaming and interactive wagering (“online gaming”) has become an integral part of the financial services industry in Antigua. Interactive gaming is a legal licensable activity in Antigua through the Interactive Gaming and Interactive Wagering Regulations, 2007, No.34 of 2007 (“The IGIWR”) and the International Business Corporations Act (The “IBC Act”). The IGIWR enables the Division of Gaming under the Financial Regulatory Services Commission (the Commission”). The IGIWR replaces and repeals earlier regulations under which interactive gaming companies have been registered since 1994. Antigua was one of the first jurisdictions to licence and regulate interactive gaming services.

Before the advent of gaming via the internet, Antigua had long legalized betting and gaming, having in 1963 introduced the Betting and Gaming Act, Cap. 47 of the Laws of Antigua. This piece of legislation restricts gaming to hotel establishments on the island. Any other form of gaming from any other unlicensed premises remains an offence contrary to the provisions of the Small Charges Act, Cap. 405 of the Laws of Antigua and Barbuda.

This requirement has over the years been relaxed without parliamentary approval and casinos have been allowed to thrive outside of the hotel environment as prescribed by law.

The chapter will firstly discuss the law relating to online gaming and then set out relevant issues relating to what is commonly referred to as ‘brick and mortar’ or traditional casinos.

Interactive Gaming and Interactive Wagering (Online Gaming)

Online gaming companies are classified as “Financial Institutions” and are subject to all the Anti-Money Laundering (“AML”) and Caribbean Financial Action Task Force (“CFATF”) requirements of the jurisdiction. All online gaming companies are subject to the Money Laundering Prevention Act 1996 (“MLPA”) and the Prevention of Terrorism Act 2001 (“PTA”).

Antigua is internationally regarded as a premier jurisdiction and its regulations and regulatory regime are first rate. Its focus is of a three-pronged nature namely: “money laundering prevention”, “player protection” and “industry enhancement”.

As a matter of interest, Antigua achieved an historical milestone as a developing country and most notably as one of the smallest member nations of the World Trade Organization (WTO) on March 24, 2004 when the Dispute Settlement Body (DBS) of the WTO delivered a most important decision in favour of Antigua on the issue of whether US laws, which prohibit Americans from gambling in offshore Internet casinos, such as those licensed in Antigua, amounted to an unfair trade barrier since it restricted the supply of gambling services notwithstanding the fact that US domestic online gaming companies, specifically horse race betting sites, were allowed to exist and operate legally there. Conjunctively the Appellate Body of the WTO affirmed the DBS findings when it ruled on April 7, 2005 in favour of Antigua in its Appellate Report. Once the US was found to be in violation, several other WTO members, including the European Union, were entitled to request compensation from the US as a result. This decision has further inspired the commitment of the Government of Antigua to the advancement of the online gaming sector and Antigua continues to solidify itself as a leader in this dynamic industry.

Taxation

Online gaming services are not subject to any form of taxation. Hence online gaming companies are exempt from income tax, capital gains tax, withholding taxes, estate, inheritance and succession taxes and taxes on dividends, interest or other return. Previously, companies involved in internet gaming, sports books and virtual casinos paid a 3% tax on gross handle, that is, gross take-in minus payouts to clients on bets. This provision was however repealed entirely in 2001.

The Application Procedure.

The application procedure in the Interactive Gaming and Interactive Wagering Regulations 2007, S.I. No. 34 of 2007 (the “Regulations”) is designed to elicit from the applicant, through the filing of statutory forms, as much information as possible so as to enable the Commission, through the Division of Gaming, to carry out its detailed enquiries and reach an informed decision as to the suitability of the applicant for a licence within 60 days of the application being lodged .

The applicant must be an International Business Corporation registered in Antigua and Barbuda limited by shares.

As part of the Commission’s enquiries to satisfy itself that the company is controlled by persons of integrity, and managed by persons of competence and integrity, detailed personal declaration forms need to be completed by each person who: -

(a) is a director, partner and chief executive officer;
(b) is the holder of 5% or more of the issued share capital of an applicant company;
(c) is a publicly traded company;
(d) has controlling interest in the applicant;
(e) is a key person in the applicant ; or
(f) is otherwise requested to do so by the Commission to include all beneficial owners of shares .

The personal declaration form requires full details of the individual and the members of his family (parents, brothers, sisters and dependants), marital information, educational qualifications, military service, arrests, detentions and litigation, passport and travel information, education/qualifications, employment history. The form requires the disclosure of all of the individual’s assets and liabilities with supporting documentation, if necessary. A source of funds declaration is also required. The Commission also requires the names of three referees who will be required to provide the individual with character references.

The Commission must carry out checks to independently verify that the information provided is correct and the applicant must give the Commission an ‘Authority For Release of Information’ for the purpose of such checks.

The Regulations provide that the Commission may grant an application for an online gaming licence only if it is satisfied that:-

(a) The applicant is a suitable company to hold an online gaming licence, and;
(b) each business or person associated with the product to be provided is suitable to be associated with a licensed provider’s operations.

The Regulations provide further that in deciding whether an applicant is a suitable company to hold an online gaming Licence, the Commission may have regard to the following matters:

(a) the applicant’s character or business reputation;
(b) the applicant’s good business reputation, sound financial position and financial background;
(c) the applicant has arranged, or is arranging, a satisfactory ownership, corporate or other business structure;
(d) the applicant has, or is able to obtain, appropriate resources and is able to maintain required reserves as established by the Commission in order to ensure that the players shall have winnings paid and deposits returned;
(e) the applicant has the appropriate technical ability to conduct interactive gaming or interactive wagering;
(f) the applicant has the appropriate business ability to conduct interactive games under an interactive gaming or interactive wagering licence;
(g) the applicant is committed to maintaining a physical presence in Antigua and Barbuda;
(h) the applicant shall follow appropriate policies and procedures to restrict underage gambling or wagering;
(i) the applicant shall follow appropriate policies and procedures to minimize behaviour associated with problem gaming or wagering;
(j) the applicant shall take appropriate measures to restrict and eliminate any pornography from a licensed site;
(k) the applicant shall take measures to discourage a compulsive or pathological gambler from utilizing a licensed site;
(l) the applicant is in the Commission’s opinion not tainted with illegality;
(m) the applicant shall follow policies and take affirmative steps to prevent money laundering and other suspicious transactions included but not limited to the financing of terrorism; and
(n) the applicant shall comply with the policies and directives which the commission deems appropriate .

The Commission shall consider whether each director, partner, chief executive officer and shareholder with 5% or more ownership of a controlling interest in the applicant is suitable based on the following:

(a) good character, honesty and integrity;
(b) good business reputation, sound current financial position and financial background; and
(c) general suitability to be associated with a licence holder .

The Regulations allow for the transfer of an interest in the licence holder from one person or entity to another. As with the initial application such a transfer is subject to the approval of the Commission which must consider ‘inter alia’ the extent of the interest to be transferred, the consideration and details of any other financial arrangements between the parties involved . So too does it require, the licence holder to report any material changes in the company, such changes to include a change in, or addition to the licence holder’s key person(s)or the director(s) or executive officers; any act or default impacting negatively on the reputation and financial background of the licence holder; a material reduction in the financial resources of the licence holder; a change in ownership of the licence holder; a change in control of the licence holder; a merger or acquisition of the licence holder and termination or suspension of a licence holder’s licence in another gaming jurisdiction .

Player Registration and Accounts Regulations

The Regulations provide that no gambling can be carried out until the player has been registered and holds an account with the licence holder . No person under the age of 18 may be registered and before an applicant for registration is registered, he must provide details of —

(i) his identity;
(ii) his date of birth; and
(iii) his place of residence .

A licence holder must not allow a registered player to participate in an authorized game until the player’s identity has been authenticated under the licence holder’s approved control system .

The licence holder must not allow a person under the age of eighteen (18) years to participate in operations related to the conduct of authorized games or to participate as a player . Winnings of any person under the age of 18 are subject to forfeiture by the Commission while any money held on deposit of which an underage person is the beneficiary, those funds shall be returned to the underage person .

The legislation aims to provide players with some protection from their own actions in the following ways:
1. The licence holder is required to post a warning, approved by the Commission, of the addiction possibilities of gambling and provide information to players to assist compulsive or pathological gamblers;
2. The player may request to be self excluded from a licensed interactive gaming or interactive wagering site by means of a telecommunications device. Once excluded, the payer may not be reinstated for a period of six months from the date of self exclusion; and
3. The player shall have the right to determine a maximum stake or wager, for example, $1,000. Once that $1,000 limit is established the licence holder may not allow that player to increase the maximum stake beyond $1,000 unless the licence holder has received 7 days written notice of such increase. .

Rules as to Players’ Accounts

The Regulations set out specific rules to be followed for the opening and maintenance of player accounts. The rules are established in order to allow the player direct access to the funds in the account, to play an interactive game or interactive wager with the licence holder and to obtain part or all of the amount paid into the account as a prize in an authorized game or as authorized by the licence holder or the Commission or to transfer an account to another account in the name of the player so long as the transfer is not suspicious in nature .

Save that the deposit of cash or currency is strictly prohibited , the rules below apply to the opening of an account. Accounts may be opened by any of the following methods:

(a) by credit card;
(b) by debit card;
(c) by electronic transfer;
(d) by wire transfer;
(e) by cheques; or
(f) by such other payment method approved by the Commission .

The licence holder is required to limit an individual player to one player account per system and the following set of rules apply to each account:
(a) no payment in excess of Five Thousand Dollars ($5000.00) may be made to a player from that player’s account unless satisfactory evidence of the player’s age, place of residence and identity has been provided to the licence holder;
(b) winnings or payments from the player’s account must, if possible, be made to the account from which the funds paid into the player’s account originated;
(c) if it is not possible to credit the account referred to in (b), above, with the winnings or payments the winnings and payments shall be mailed to the player at the player’s account address, once satisfactory evidence of the correctness of that address has been provided and in accordance with the control system; and
(d) a report on payments exceeding Twenty Five Thousand Dollars ($25,000.00) made to a player from the player’s account must be provided to the Supervisory Authority under the MLPA within 48 hours of being made ;

A licence holder must, at the request of the registered player in whose name a player’s account is established, remit funds to the credit of the account as directed by the player no later than five (5) business days, if practicable, after the request is received. Should the licence holder, at the request of the player, remit the funds to the player, it must be remitted in the name of the player whose identity has been provided to the player’s physical address, which is the verification location of the player. The licence holder shall be permitted to delay the payment of funds to the player if the licence holder reports fraudulent activity to the Commission or reasonably suspects suspicious activity .

Advertising Regulations

Every advertisement of interactive gaming and interactive wagering services relating to authorized games shall comply with the following general requirements:-

(a) it shall not be indecent, pornographic or offensive;
(b) it shall not be false, deceptive or misleading; and
(c) it shall not be intended to appeal specifically to minors .

Every advertisement is subject to the review of the Commission which may require the Commission to stop the advertisement being shown or to change the advertisement .

The Licence

Once the licence has been granted, the licence holder is not only required to comply with the Regulations but with all other conditions endorsed on the licence. The licence will specify :

(a) the full particulars of the licence holder;
(b) the date and issue of the licence and the date of expiration;
(c) the address of the certified premises from which the licence holder shall conduct its business;
(d) a statement that the licence is non-transferable;
(e) the licence number; and
(f) any conditions or terms attached to the licence .

As a condition of the licence the Commission will require a reserve of $100,000.00 or other acceptable similar security. The reserve must be paid into an account established by the Commission, for the benefit of any claimant against the licence holder to secure the faithful performance of the obligation of the licence holder with respect to payment of prizes and monies held on account for players The reserve requirement must remain in effect until cancellation of the interactive gaming or interactive wagering licence. It should be noted that in lieu of the reserve prescribed in the Regulations, an applicant or a licence holder may provide the reserve in another form prescribed by the Commission .

Breaches of the conditions attached to the licence or breaches of the Regulations themselves shall entitle the Commission to suspend or revoke the licence or may entitle it to assess a civil penalty against a licence holder in an amount not exceeding Five Thousand Dollars ($5000.00) per day for each day the breach or violation is outstanding, plus the Commission’s costs and expenses upon a finding that:

(a) the licence holder is no longer suitable to hold an interactive gaming or interactive wagering licence;
(b) the licence holder has been convicted of an indictable offence or other crime, especially one involving moral turpitude, which the Commission, in its sole discretion, deems to affect the suitability of the licence holder;
(c) the licence holder has contravened a material term or condition of the interactive gaming or interactive wagering licence;
(d) the licence holder has failed to discharge financial commitments for the licence holder’s operations or the Commission has reason to believe that such a failure in imminent;
(e) the licence holder is insolvent, has been petitioned into bankruptcy or has applied to take advantage of any bankruptcy law or has applied for or is compelled by any means or for any reason, to apply for an order to either discontinue or to wind up its operations or has appointed under the laws of any jurisdiction a trustee, receiver, manager, liquidator or administrator or has mortgaged or otherwise encumbered either the licence or business assets associated with the company’s operations without the approval of the Commission;
(f) the licence holder has obtained the licence through material misrepresentation;
(g) the licence holder has failed to take sufficient steps to report suspicious transactions that could indicate money laundering, has failed to verify the identity of a potential player, has accepted cash payments to player’s accounts, or is involved in any transaction that, in the opinion of the Commission, is either improper or illegal;
(h) the licence holder has sub-licensed or assigned its licence to a third party without the Commission’s approval;
(i) the licence holder has failed to maintain a physical presence in Antigua and Barbuda;
(j) the licence holder has failed to meet commitments to players;
(k) the licence holder has failed to pay licence and other fees in a timely manner;
(l) the licence holder has failed to comply with the requirements of the Commission; or
(m) the Commission, in its sole discretion, has determined that there is material and sufficient reason for suspending or revoking the licence .

It should be noted that before a licence is revoked or suspended the licence holder is guaranteed the right to be heard and the right to a fair hearing through a “show cause procedure” and the rules of natural justice apply to such a proceeding. The final decision by the Commission may be appealed to the Minister responsible for Finance and, thereafter, to the High Court of Justice .

Key Person Licence

The Regulations requires a Key Person(s) to be licensed by the Commission . A key person is an individual who in relation to the licence holder occupies or acts in a managerial position, operations director position or carries out managerial functions. He may be a person in a position to control or exercise significant influence over the systems or operations conducted by the licence holder. He may be a supervisor of persons responsible for the control system, including operational and monetary control, the Information Technology Director and the Client Service Provider.

The Commission will consider in relation to each key person applicant the following:

(a) the applicant’s good character, honesty and integrity;
(b) the applicant’s good business reputation, sound current financial position and financial background; and
(c) the applicant’s general suitability to carry out the functions of a licence holder .

The Commission may, on its own motion and with notice to the licence holder, register any person whom it reasonably perceives to be a key person and shall issue a key person licence on such conditions as it considers necessary for the proper conduct of interactive games and as are desirable in the interest of the public .

The Key Person licence will subsist for a term of one year but may be revoked or suspended for any of the following reasons:

(a) the licence holder in not, or is no longer, suitable to hold a key person licence;
(b) the licence holder has been convicted of an indictable offence, or an offence involving moral turpitude;
(c) the licence holder has contravened a condition of the licence;
(d) the licence holder has contravened a provision of the IBC Act or the Regulations or gaming laws of any other jurisdiction;
(e) the licence was obtained by a material misrepresentation; or
(f) any act, omission or conduct of the licence holder that, in the opinion of the Commission, affects the integrity of the interactive gaming or interactive wagering or affects the public interest in an adverse and material manner .

Application and licence and Other Fees

A non-refundable application fee of Fifteen Thousand Dollars ($15,000.00) is payable with the licence application for the costs and expenses of conducting the investigation, due diligence, review and assessment of the applicant.

A Reserve Fund established with the Commission of One Hundred Thousand Dollars ($100,000.00).

An annual licence fee of One Hundred Thousand Dollars ($100,000.00) is payable by the licence holder in respect an interactive gaming licence and Seventy Five Thousand Dollars ($75,000.00) is payable in respect of an interactive wagering licence . The licences are granted for a period of one year, after which they are subject to renewal.

On a renewal of the licence, a licence holder will be required to pay to the Commission a non-refundable fee of Five Thousand Dollars ($5,000.00) .

On an application for a key person licence a non-refundable deposit of One Thousand Dollars ($1,000.00) must be tendered to the Commission whilst a licence fee of One Thousand Dollars ($1,000.00) will be payable for the first year of the licence and Two Hundred and Fifty Dollars ($250.00) for each subsequent year thereafter .

Where a person or a group of persons propose to acquire control of a licence holder, a request for the Commission’s approval must be accompanied by a non-refundable deposit of Ten Thousand Dollars ($10,000.00) .

There is also imposed and annual Monitoring Fee of a minimum Twenty Five Thousand Dollars ($25,000.00)

Control Systems

The Commission recognizes that the potential for money laundering presents a risk to all forms of gaming, including interactive gaming and wagering, and therefore requires the use of a computerized monitoring system approved by it. It is required that the system, including software, hardware and systems affecting the outcome of authorized interactive gaming or wagering, should be capable of detecting potential money laundering activity by analyzing the realtime transactions and user profiles and associating those with known and emerging risk profiles. These activities include, but are not limited to, detecting a high volume of, or high dollar amount transactions from, a narrow range on Internet Protocol (“IP”) addresses; detecting a high volume of, or high dollar amount transactions from a narrow range of Bank Identification Numbers (“BIN”) where available; detecting unusual betting patterns associated with money laundering; and detecting attempts to invade thresholds . The system must be designed to detect and alert the licence holder, who in turn shall notify the Commission immediately.

This control system must be submitted to the Commission in writing at least 90 days before the licence holder proposes to commence operations .

In summary, the licence holder’s control system submission to the Commission should include:

1) representations of accounting systems and chart of accounts;
2) copies of all accounts held at financial institutions (bank accounts, payment provider accounts, etc.)
3) financial reconciliations and controls to ensure financial adequacy;
4) an organizational chart including roles, responsibilities and delegations;
5) copies of administrative systems, policies and procedures;
6) descriptions of information systems including logical access control;
7) descriptions of change and configuration management systems;
descriptions of business continuity and disaster recovery;
9) descriptions of operational systems including terms and conditions and rules of games;
10) descriptions of physical and environmental security and physical access control;
11) descriptions of systems relating to the secure processing, recording and maintenance of all gaming, wagering, and financial transactions (including but not limited to gaming equipment);
12) copies of responsible gaming and wagering policies and procedures;
13) copies of the restriction of underage gaming and wagering policies procedure;
14) copies of anti-money laundering policies and procedures; and
15) a listing of all Uniform Resource Locators (URLs) or domain names associated with the licence holder .

In relation specifically to anti money laundering, the provisions of the MLPA, as amended, is paramount, although the Commission is authorised to make rules and set procedures for the licence holder to know its players, customers and business associates; protocols for licence holders to recognize, address and question suspicious or possible fraudulent transactions that might lead to illegal activities concerning players’ accounts; AND requirements for licence holders to monitor and report suspicious transactions concerning players’ accounts to the commission or to the Supervisory Commission of the Office of National Drugs and Money Laundering Control Policy (“ONDCP”) pursuant to the MLPA .

Suppliers

The Commission may require the disclosure of suppliers or entities that have a contractual relationship with the licence holder whether or not they receive a percentage of the winnings, turn over or game play of an interactive gaming licence holder. As such, payment processors must be identified by the licence holder to the Commission prior to utilisation and no licence holder may utilize an unidentified payment processing system .

Physical Presence

The Regulations mandate that the licence holder must maintain a physical presence in Antigua. In determining whether this criterion is met, the Commission will consider the following:

(a) whether the primary servers on the licence holder are located in Antigua and Barbuda;
(b) whether at least one director is resident in Antigua and Barbuda; and
(c) whether the majority of key persons are resident in Antigua and Barbuda .

In any case, the licence holder must have its primary servers located in Antigua and Barbuda, which shall, as a minimum requirement, contain all information relating to all players, including game history, financial history and current liabilities .

Further, any approved interactive gaming equipment used by the licence holder must be situated at approved premises and must be secure from unauthorized persons. The location of any backup server must also be disclosed to the Commission.

The licence holder is prohibited from conducting gaming activities outside of Antigua and Barbuda unless it is also operating outside of Antigua and Barbuda pursuant to the laws of that other jurisdiction. The other jurisdiction in which the licence holder is also operating must be disclosed to the Commission and the Commission must approve of the business being conducted there by the licence holder .

Approved Equipment and System

The Commission is entitled by the Regulations to maintain standards, specifications and guidelines in relation to gaming equipment and systems and requires a licence holder to submit to agencies approved by the Commission its interactive gaming system for testing prior to commencement of operations. Thereafter the licence holder must certify to the Commission that the testing was satisfactorily accomplished. The certification must confirm the following:

(a) the name of the owner of the software or system;
(b) the name of the testing agency;
(c) the professional credentials of the testing agency;
(d) the gaming programme(s) present on the software;
(e) the server protocols, communication protocols and other specifications;
(f) whether the system is fully secure and guaranteed;
(g) whether the software can be changed without having to rewrite the entire software programme;
(h) any other material information regarding the specific software;
(i) a declaration that the gaming programmes in the software are fair and reliable;
(j) a declaration that the equipment includes functionality to restrict problem gamblers and underage gamblers and detect money laundering; and
(k) a declaration that the gaming equipment complies with applicable specifications, standards or guidelines issued by the Commission .

Annual Review

In the exercise of its supervisory authority over the licence holder, the Commission shall review at least once per year the books, accounts and financial statements of the licence holder for the financial year at the licence holder’s expense . The review is designed to establish whether there has been compliance with the conditions of the licence and with the regulations. It is also intended to establish whether there has been compliance with the MLPA, the PTA and any other directions or guidelines set by the Commission. It will inquire into the solvency of the licence holder, its capital adequacy, its reserves and its management of players’ funds . An annual examination will also be made into the control systems of the licence holder .

Reporting

The licence holder is required to file with the Commission the following reports:

(a) semi-annual statement of assets and liabilities;
(b) annual audited statements no later than 90 days after the end of the financial year to which it relates;
(c) annual certification of incumbency;
(d) such other returns as may be required;
(e) on a monthly basis, all complaints and disputes concerning
(i) underage gaming or wagering,
(ii) compulsive, problem or pathological gaming or wagering, or
(iii) fairness
(f) any fraudulent or suspicious transaction that may involve money laundering, within 24 hours of such a transaction occurring .

Gaming Offences

The following offences are created by the Regulations:

(i) In relation to an authorised game, dishonestly obtaining a benefit by any act, practice or scheme, or otherwise dishonestly obtaining a benefit through the use of any device or item;
(ii) Obtaining, or inducing a person to deliver, give or credit any money, benefit, advantage, valuable consideration or security;
(iii) Directly or indirectly forging or altering a gaming record;
(iv) Knowingly using or attempting to use a forged or altered gaming record;
(v) Impersonating a licence holder, an agent, a key person, a member of the Commission or anyone acting in an official capacity under the Regulations;
(vi) As a member of the Commission, ask for, receive or obtain, or agree to receive or obtain, any money, property or benefit of any kind for himself or another person for an improper use;
(vii) Giving, or promising or offering to give, any money, property or benefit of any kind to, any member of the Commission or a member of the Commission or to anyone acting in an official capacity under any law in force in Antigua and Barbuda for an improper use;
(viii) The taking part in an authorised game by any employee if the employee is directly involved in functions related to the conduct of the game;
(ix) Allowing an underage person to participate in internet gaming or internet wagering
(x) Allowing problematic or pathological gaming or wagering to occur; and
(xi) Allowing players to be treated unfairly by internet gaming or internet wagering systems .

Any person who commits the above offences shall be liable on conviction to a fine not exceeding Fifty Thousand Dollars ($50,000.00) or to imprisonment for a term not exceeding five (5) years. Prizes won under circumstances in which the above offences are proved shall be forfeited to the Commission .

Brick and Mortar Casino Establishments

The licensing of ‘brick and mortar’ casinos is governed by the Betting and Gaming Act, Cap.47 of the Laws of Antigua (“the Act’), the Betting and Gaming (General Control of Gaming Premises) Regulations (“the Gaming Premises Regulations’) and the Betting and Gaming (Control of Games) Regulations (‘Control of Games Regulations’).

The Act empowers the Minister of Finance to grant betting and gaming licences .

The Licence

Licences may be issued to any person who owns or manages a hotel and who has the means of establishing a gaming room suitable for tourists and which gives to tourists the freedom of its facilities . The licence may be subject to the condition that the licensee shall comply with certain requirements as to the establishment, expansion or improvement of particular attractions and accommodations for tourists at the place where the hotel is already established .

The applicant for a gaming licence is required to submit to the Minister the following:

(a) A representation that the applicant owns/manages a hotel which gives tourists the freedom of its facilities;
(b) A list of the games he proposes to conduct on the premises;
(c) An Oath of the applicant or some other person verifying that the applicant has not been convicted of a felony or a misdemeanour involving moral turpitude;
(d) In case of a company, an Oath of all the directors and shareholders verifying that they have not been convicted of a felony or a misdemeanour involving moral turpitude;
(e) Two character references of the applicant; and
(f) All information regarding the applicant’s place of gambling, his employees, the owners and shareholders and stockholders .

A gaming licence shall show the date of commencement of the licence and shall run for a period of 12 months, subject to its further renewal .

Licence Fees

Licence fees payable to the Commissioner of Inland Revenue are as follows:

(a) In a hotel of 80 or more rooms the sum of One Hundred and Eleven Thousand Dollars ($111,111.00); or
(b) In a hotel of less than 80 rooms the sum of Thirty Seven Thousand and Thirty Seven Dollars Eastern Caribbean Currency (37,037.00) .

Restrictions under the Licence

The following restrictions and conditions are created under the licence:

(1) No person shall be allowed in a gaming room in a state of drunkenness;
(2) The licence holder may prohibit admission into the gaming room of anyone whom he believes will be a hindrance to the operations thereof;
(3) In regulating admission into a gaming room no discrimination by reason of race, colour, religion or social condition shall be made;
(4) No licence holder shall offer by advertisement his facilities for gaming to the public of Antigua and Barbuda, or publicize in Antigua and Barbuda his place for gaming in newspapers, magazines, the radio or any other form of advertisement that will reach the public directly;
(5) The gaming rooms shall be closed throughout Good Friday;
(6) No person under the age of 18 years shall be admitted into a gaming room;
(7) No facilities for seeing any television broadcast or hearing any sound broadcast shall be provided or allowed to be used in the gaming rooms and neither the licence holder nor any servant or agent of his shall cause or permit such facilities to be provided in any place under his control in any such manner that they can be enjoyed by persons resorting to the gaming rooms;
(8) No music, dancing or other entertainment shall be provided or allowed;
(9) No gaming room shall be open between 4.00am and 9.00 pm of the same day unless such times for non-closure are adjusted by the Minister in consideration of a fee fixed by him;
(10) No alcoholic beverages shall be served in a gaming room in the licensed premises; and
(11) No gaming room shall be opened at any time that it are required to be closed by the regulations .

Any violation of the terms and conditions of a valid licence, the licence holder shall be guilty of an offence and shall be liable upon summary conviction to a fine not exceeding Twenty-Five Thousand Dollars Eastern Caribbean Currency, or to imprisonment for a period not exceeding six months, or to both fine and imprisonment .

Supervision of Licence Holder

The Act and the Regulations provide for the appointment of Casino Inspectors who are permitted to visit and inspect licensed premises at any time to ascertain whether the Act or any regulations applicable to the licensed premises are being contravened. As such, the Inspectors may require the licence holder to produce any books or documents relating to the gaming business which they are free to examine and to take copies of and to make inquiries upon . Any licence holder who refuses to permit any inspector or officer, after production of his authority to enter into any licensed premises, or obstructs such an inspector or officer in the discharge of his functions is guilty of a contravention of the Regulations .

The Regulations also prohibit any game being played in any licensed premises in the absence of the Casino Inspector . In case the licence holder, his agent or employee acts in contravention of the Act or any regulations made under the Act or Regulations it is the duty of the Inspector to intervene to prevent the violation and to report same a Board appointed by the Minister of Finance for action .

Taxation

A Gaming Tax is charged in respect of gaming at licensed gaming premises at a rate of fifteen per cent of the total amount collected in respect of gaming by the licence holder . This tax is payable daily to the Commissioner of Inland Revenue together with a prescribed return . A licence holder is therefore required to keep and maintain a daily record of the amount collected in respect of gaming and this record shall be made available for inspection of the Commissioner of Inland Revenue . Should the licence holder fail to make the payment as prescribed, he shall become liable to a penalty being ten percent of the amount that remains unpaid. Should non payment of tax due last for six days, the Commissioner of Inland Revenue may authorise the levying of a distress upon the goods, chattels, and effects of the licence holder .

Where a licence holder fails to account for, or to pay tax due or refuses to furnish the return as prescribed by the Act he is guilty of an offence and is liable on summary conviction to a fine of Nine Thousand Two Hundred and Sixty Dollars and to imprisonment for a term of one year . In addition, any person who hinders the Commissioner of Inland Revenue in the performance of his duties or exercise of his authority in relation to the licence holder is guilty of an offence and is liable on summary conviction to a fine of Three Thousand Seven Hundred and Four Dollars ($3704.00) and to imprisonment for a term of one year .

Other Regulations

The Control of Games Regulations sets out in considerable detail regulations which govern the following:

1. The attire of croupiers and employees on duty;
2. The conduct of croupiers and employees;
3. The conduct of players;
4. Order in gaming rooms;
5. General rules for the games;
6. Conditions applicable to all games;
7. Unauthorised Instruments of gaming;
8. Control of Slot Machines; and
9. Authorised games .

The schedules to the Control of Games Regulations set out extensive rules on the following games:

(a) Roulette;
(b) Craps; and
(c) Black Jack

Description of author

Arthur G. B. Thomas was called to the Antigua Bar in 1991 and since then has been engaged in private legal practice in the areas of corporate and commercial law, civil litigation, land law, intellectual property, and banking and insurance for the most part. He has a specialist interest in all forms of gaming law and acts on behalf of a number of interactive gaming and interactive wagering companies licenced in Antigua and Barbuda. He has acted for gaming operators since 1994 and is a general member of the International Masters of Gaming Law.
Arthur read law at the University of the West Indies, Cavehill Campus, Bridgetown, Barbados from 1986 to 1989, graduating with a Bachelor of Laws Degree, Upper Second Class Honours. From 1989 to 1991 he attended the Norman Manley Law School, Kingston, Jamaica where he completed the Legal Education Certificate; the professional qualification which allows Caribbean trained lawyers to practice in all of the English-speaking Caribbean with a common law tradition. He holds a Master of Laws Degree in International Taxation from Regent University, Virginia, USA.

 

1. Introduction

 

An IBC intending to carry on international banking business is required to have a licence under section 229 of the International Business Corporations Act.  The articles of incorporation of such corporations will have to provide that the corporation is restricted from carrying on any international banking business unless the Board has granted approval for a licence.

 

2. Procedure for obtaining the licence:

 

A person who intends to carry on an international banking business has to submit to the Financial Services Regulatory Commission (Commission) an application in the prescribed form, along with the articles of incorporation or articles of continuance, as the circumstances require, and a non-refundable annual fee of $15,300. These documents along with the License application, Articles and Memorandum, are required to be submitted in triplicate. The decision to grant a licence is taken by the Board of the Commission.

 

3. Due Diligence Requirements

 

In order for approval to be granted we are required to conduct due diligence search on the director(s)/ senior management, the cost of which must be borne by the applicant. The cost normally ranges between US$3000 to US$5000 depending on the extent of the check. This cost must be paid to the Commission, prior to approval by the Board of the Commission. During the examination of the application the Commission may also carry out such investigation and inquiry as is required of the financial circumstances of the applicant corporation and of its affiliates or associates. In particular, the examination focuses on the financial status and history of the applicant corporation and any of its directors, affiliates and associates; the character and experience of the directors or proposed directors; the adequacy of its capital; the needs of the public or persons it intends to serve, its earnings prospects and prospects as an employer within Antigua and Barbuda.

 

4. Capital Requirements:

 

Regulation 4 (1) of Statutory Instrument No.42 of 1998 of the IBC Act prescribes the minimum paid-up capital of US$5,000,000 for establishing an international banking corporation. This regulation also requires that out of the stated capital requirement of US$ five million US$1.5 million or its Eastern Caribbean dollar equivalent should be deposited in a hypothecated account at a domestic licensed financial institution in Antigua and Barbuda. The hypothecation agreement must provide that the funds cannot be withdrawn from the bank without the express permission of the Financial Services Regulatory Commission

 

5. Fees:

 

The annual License fee is US$15,000, to be paid on subsequent anniversaries of the incorporation.

 

6. Time taken to process an application:

 

The law requires that the Commission must issue or refuse a licence within three months of the receipt of the application, or if additional information is required by the Commission, then within fourteen (14) days of the receipt of the additional information. The Commission may attach terms and conditions to the licence, if required in public interest.

 

7. Conditions of licence:

 

It is a condition of the licence that the prescribed annual fee be paid on time. The licencee is prohibited from establishing any subsidiary or branch within or outside Antigua and Barbuda or offer or provides any services on the Internet without approval of the Commission. The licensee is also required to establish a physical presence in Antigua and Barbuda and submit financial returns to the Commission as prescribed in Section 242 of the IBC Act. In addition, Section 61 of the IBC Act requires that the directors of a banking corporation be natural persons, and at least one director must be a citizen and resident of Antigua and Barbuda.

 

8. Revocation of licence:

 

The Commission may revoke the licence if a licencee does not commence the international banking business within six months of the issuance of the licence; contravenes a condition of the licence; is convicted of an offence under the IBC Act, or the Money Laundering (Prevention) Act or ceases to carry on the international banking business for which the licence was issued.

 

9. Onsite Inspection:

 

A licensed institution is subject to annual onsite examination by the Commission. The cost of the examination has to be borne by the licensed institution.

 

10. Assessment Criteria

 

The Commission is guided by the concept of consolidated supervision contained in the Core Principles for Effective Banking Supervision, released by the Basel Committee on Banking Supervision. In order for it to be able to assess its ability to supervise, examine and regulate the licensee effectively, the Commission will need to examine the proposed corporate structure and corporate affiliations. Therefore, applicants for licences must provide information on the nature and extent of the current and proposed financial services activities of the major shareholders and their affiliates (other than the proposed licensee), and on the nature and degree of supervision applied to those activities.

 

The specific factors that the Commission will consider in assessing the level of risk posed by the corporate structure and its impact on the ability of the Commission to supervise (referred to as “supervisability”) are outlined below.

      

(a)   Activities of the Licensee

 

·                  The financial services activities of the bank or trust company

 

(b)            Systemic Importance of the Licensee

 

·                  The absolute size or intended role of the bank or trust company relative to the size of the financial sector of the Antigua and Barbuda.

 

(c)             Predominant Nature of the Group’s Financial Activities

 

·                  The extent of the applicant’s financial services activities, having regard to the:

 

-            complexity of the corporate structure of the group;

 

-            strategic direction of the group and the nature of the planned financial services of the group;

 

-            potential for prudential concerns such as contagion, connected lending among members of the group, etc.;

 

-            existence and extent of financial services activities within the group that are in regionally separate locations; and

 

-            branding to be used by the licencee and the extent that it is different and distinct from the branding used for the other activities of the group, so as  to identify possible contagion concerns.

 

(d)            Independence of Licensee

 

The extent to which the bank or trust company is an independent and self-sustaining operation with the authority to make decisions independent of the group.  In making this determination, the Commission will consider:

 

1        the extent to which directors on the board of the licencee are independent from the boards of the other entities in the group; and

 

2        the extent to which the management of the bank is unique to the licencee

 

(e)             Regulatory Oversight of the Group

 

·                  The extent to which the regulatory and supervisory practices of the Home Supervisors and the supervisors of the affiliates within the corporate group conform to Basel Core Principles.

     

11. Information Requirements

 

The Commission has identified the key information that the applicant should submit in support of an application.  This information is requested to ensure that the principal shareholders are strongly committed to the licencee, that it has, and will continue to have, sufficient capital, and that it has adequate controls in place to support its operations from the outset, thereby reducing the likelihood of failure.  Key information required when filing a draft application includes:

 

(a) Ownership and Financial Strength

 

(i)               name of applicant;

 

(ii)             name of jurisdiction and date of incorporation or establishment of the applicant;

 

(iii)           address of principal place of business and head office of the applicant;

 

(iv)           copy of constating documents and amendments, and company by-laws certified by legal counsel with any restriction noted (include name and address of the legal counsel);

 

(v)             current organization chart for the applicant and its ultimate parent, if any, and all entities in the corporate group, showing:

 

1        all entities in the control chain (with percentage owned) between the applicant and its ultimate parent and the affiliates of the parent and applicant; and

2        entities in which the applicant beneficially owns 10 per cent or more of the voting rights

 

(vi)           details of any information on any voting agreement or other arrangements that involve persons exercising direct or indirect control over the applicant or its ultimate parent;

 

(vii)         list of names of all persons owning a significant interest in the applicant (more than 5 per cent of any class of voting shares or 10 per cent of any class of non-voting shares), including date of birth, address, occupation, and citizenship, as well as the percentage of shares held;

 

(viii)       details of any shares or ownership interests of the applicant held by a government or a political subdivision, and agent or agency thereof, together with a summary of their involvement with the applicant;

 

(ix)           summary of the financial and other activities carried on by the applicant and its affiliates, including a list of jurisdictions in which they operate;

 

(x)             foreign-owned financial institutions should provide information on the type and scope of supervision that applies in its home jurisdiction and whether it is subject to comprehensive consolidated supervision and regulation.  It should advise whether the regulatory authority, where the applicant principally carries on its financial business, is aware of the applicant’s intention of owning an offshore bank or trust company, and whether the applicant needs regulatory approval from the home regulator to establish it.  The contact details of the regulator and, if applicable, the process and timing of the regulatory approval in the home jurisdiction should also be included;

 

(xi)           copy of the audited consolidated financial statements of the applicant and of the ultimate parent, if applicable, for the last  five years (balance sheet, income statement, statement of cash flow) and a copy of the latest annual report;

 

(xii)         details of whether the applicant has been the subject of any criminal convictions or breaches of statutory or other administrative or regulatory enactments; and

 

(xiii)       evidence that the nature and sufficiency of the applicant’s financial resources are such that it would be capable of providing continuing support to the licensee or would have access to financial resources to enable it to do so. 

 

      In cases where a licensee will be directly or indirectly held by one or a few individuals, the Commission will require additional personal information including, as a minimum, each individual’s place and date of birth, current address, and curriculum vitae.  The Commission will also require personal financial information that demonstrates clearly that a proposed shareholder has, or has access to, the necessary financial resources to provide ongoing financial support to the licensee.

     

      For each individual, provide details of any material regulatory actions, criminal convictions or breaches of statutory or other administrative/regulatory enactments against the individual. 

 

(b) Business Plan

 

      A three-year business plan, including:

 

(i)               the reasons why the applicant wants to establish an offshore bank or trust company;

 

(ii)             an analysis of target markets and opportunities that the proposed licencee will pursue and the plans to address them;

 

(iii)           an analysis of competitors, showing both threats and opportunities and plans to address them;

 

(iv)           the reasons why the applicant believes that the licensee will be successful and the overall strategy for achieving this success.  The strategy should set out key assumptions made;

 

(v)             an overview of business to be conducted by the proposed licensee and the services to be offered;

 

(vi)           pro forma financial statements, including balance sheet, income statement, and cash flow statement, for the first three years of operations (both pessimistic and optimistic versions). Identify and discuss key assumptions used, including start-up costs, detailed capital calculations, as applied by the Commission including a description and any amount of off-balance sheet activities. Major assets, liability, income and expense categories should be identified.

 

(vii)         overview of the investment and lending policies, standard and procedures in respect of the licensee’s portfolio of investments and loans.

 

(viii)       A detailed explanation of the “Know Your Customer” policies and procedures.

 

(ix)           source of initial and future capital for expansion, in the form of a capital plan and funding policies, including an estimate of future capital requirements.  The capital should meet the business requirements of the licensee.

 

(x)             proposed by-laws;

 

(xi)           projected staff complement and an organization chart showing reporting lines for senior positions and key responsibilities and a description of the functions the individuals will perform;

 

(xii)         where an internet platform (e-commerce) would form the key delivery structure of the licencee, the risk impact that this technology would pose, for both the applicant and its clients, must be identified and addressed to the satisfaction of the Commission.  The business plan must address:

 

§ how customers, employees and vendors will be authenticated and authorized to prevent repudiation and fraud;

§ The physical and logical network security, including security of the web site;

§ security of customer information;

§ management of systems capacity;

§ encryption of communications;

§ provision of EDP audits; and

§ continuing and contingency costs related to the development and maintenance of IT plans;

 

(xiii)       description of any material outsourcing arrangements in the group, with partners, or with third parties, that may be anticipated, including any data processing functions that may be conducted outside the licensing territory;

 

(xiv)       the intended financial year end for the licensee;

 

(xv)         detailed provisioning policies and a description of the general allowances that are anticipated in executing its business plan; and

 

(xvi)       contingency plans resulting from variations associated with key assumptions used in developing the business plan (provided sensitivity analysis showing the results on the business plan under various scenarios).

 

(c) Management

 

(i)               Information on each senior executive officer of the licencee directly responsible for oversight of the operations, and on each director, is required in order to address the statutory provisions relating to incorporation.  The information should include:

 

1        full name and address;

2        title;

3        birthplace and date of birth;

4        citizenship;

5        description of the principal business of the individual (if not a full-time employee of the licensee);

6        details of any material regulatory actions, criminal convictions or breaches of statutory or other administrative/regulatory enactments against the individual or institution, for which he/she was a senior office; and

 

(ii)             for each director and senior executive officer who will work in the licensee, submit a completed Personal Questionnaire.

 

(iii)           the name and address of the external audit firm and partner;

 

(iv)           the name and address of the legal counsel.

 

(d) Corporate Governance, Risk Management, Control Policies and Processes

 

      As part of the licensing process, applicants must provide a description of the proposed major risk management and control processes and policies for the new licencee.  A review of these processes will enable the Commission to have reasonable assurance that the licencee will be able to comply with the governing statues, regulations and guidelines.  The scope of the work will depend on the size and the risk profile of the institution. In this regard, the applicant should provide the following:

 

(i)         Strategic Plan: with details of the underlying assumptions supporting the plan.  The plan should elaborate on anticipated changes in its business environment.

(ii)        Policies on Major Risk Categories: Identify the applicant’s major risk areas and the policies and control procedures to monitor risk tolerance and risk management.  Among the major risks are market, credit, operational, technology, liquidity, legal, regulatory, and strategic.  Provide details of any risk management and control processes that are integrated with those of the operations of the parent. Include a description of the applicant’s anti-money laundering procedures.

(iii)       Board of Directors and Committees:  Describe the composition of the Board and whether there will be committees, their mandates and responsibilities.  Particular consideration should be given to audit committees. Describe the applicant’s conflict of interest policy and, if applicable, the oversight that will be provided by the parent’s management committees. The corporate governance practices adopted by the licencee will likely depend on its size, complexity, the nature of its significant activities and the risks associated with these.

(iv)       Internal Audit: Describe the applicant’s system of internal controls and its process for evaluating those controls.  Involvement of any internal audit groups from the parent company to assess internal controls of the licencee should also be documented.

(v)        Compliance: Describe the process the applicant will follow to ensure compliance with its governing legislation, regulations and the guidelines issued by Commission.  Include the name of the senior office responsible for compliance.  Make specific mention of anti-money laundering processes.

(vi)       Systems and Business Resumption: Describe in overview form, the applicant’s computer systems, including type of hardware and software, and the functions for which they will be used.  Include any plans for e-commerce, addressing the related risk controls to be used.  A business resumption plan for data recovery should be included.

(vii)      Funding and Liquidity: Provide draft policies and procedures that have been tailored for the licencee with respect to funding and liquidity risk management.

 

(e) Other Requirements

 

      In addition, the following are required:

 

(i)               a Support Principle acknowledgement letter from the ultimate controlling shareholder(s), with respect to supporting the operations and capital needs of the licencee.  This acknowledgement will be effected by the provision of a letter duly signed by a senior officer;

 

(ii)             details of whether any regulatory authority has refused an application for incorporation of a financial institution by the proposed applicant.

 

      Other requirements may apply, depending on the nature of the application and the specific risks that the application poses.  These requirements will be discussed with an applicant in each case (e.g., e-commerce and its inherent technological risks).

 

12. The Review Process

 

      The Commission will review the draft application and, as required, will contact the applicant to discuss its completeness, status, and outstanding issues.  Where necessary, the Commission may request additional information to complete the application assessment.  The Commission will not consider an application complete until all requested information is received and it is in a form satisfactory to the Commission.  Delays in regulatory approval often result from incomplete information being filed.

 

13. Submission of Formal Application

 

      Once the requirements for incorporation have been met, the applicant should submit a formal application.  This application should include:

 

(i)               a formal letter of application;

 

(ii)             a certified copy of resolution of the Board of Directors of the applicant, approving the application;

 

(iii)           the signed Support Principle acknowledgement letter from the ultimate controlling shareholder(s), with respect to supporting the operations and capital needs of the licencee; and

 

(iv)           if applicable, a no objection or consent letter from the regulator in the home jurisdiction. The Commission may request the completion of a questionnaire by the home supervisor.

 

14. Incorporation and authorization

 

      The applicant will get incorporated after the application for licence has been approved in principle. Incorporation does not entitle the applicant to commence business until a licence has been issued.

 

If you need further assistance, please do not hesitate to contact the Commission at the following address:

 

Supervisor of International Banks and Trust Corporations

Financial Services Regulatory Commission

First Caribbean Financial Centre

Old Parham Road

PO Box 2674

St. John’s, Antigua

Tel: (268) 481-1170, 1171, 1172; Fax (268) 461-1182, 463-0422

Email: anuifsa@candw.ag,

Website: antiguaifsa.com

 

APPLICATION FOR LICENCE TO CARRY OUT INTERNATIONAL BANKING BUSINESS UNDER SECTION 228 OF THE INTERNATIONAL BUSINESS CORPORATIONS ACT

 

 

 

 

Please complete all sections as fully as possible attaching appendices where appropriate.

 

 

 

I. Applicant Details

 

 

1. Name or proposed name of applicant.

2. Registered office with telephone and fax numbers.

3. Address in Antigua and Barbuda where full business records will be kept:

 

(As the applicant is not expected to establish physical presence before approval has been granted, you may provide the Antigua and Barbuda address including telephone and fax number of the Registered Agent or Registered Office).

 

4. The country and location of any intended offices of the bank outside of Antigua and Barbuda and the legal nature of such offices (branch, agency, representative office or other).

 

II. Ownership Details

 

5. (a) List all names (including any previous names), addresses and nationalities of all beneficial shareholders and ultimate beneficial shareholders (current & proposed) together with the number and class of shares (to be) held directly or on their behalf

 

(b) For each person in (a) above attach statements of their financial condition.

 

6. In those cases where shares are beneficially owned by a corporate body or bodies, or the company is part of a group, the chain of connection (group organisation chart showing all associated and affiliated companies) to the ultimate beneficial owners must be attached.

 

Attached                                                         Yes      No       N/A    

 

7. Provide the latest audited financial statements of the applicant and immediate parent (and if applicable the consolidated accounts of the group).

 

Attached                                                         Yes      No      

8. Where a trust is involved in the ownership chain, provide:

 

1        A copy of the trust deed

2        Names and current address of the beneficiaries

3        Names and current addresses of the settlors

4        Names and current addresses of the trustees.

5        The relationship of the settlors to the beneficiaries

 

Attached                                                         Yes      No       N/A    

 

9. Detail below the proposed authorised and issued share capital and the method of capitalisation.

 

10.  Detail the origin of source(s) of funds to support the bank.

 

 

III. Applicant’s Personnel

 

 

11. Provide a list detailing the names and addresses of the current and proposed Board of Directors and senior management (controllers, directors, officers, managers, consultants and administrators etc.) showing their respective positions with the applicant.

 

 

12. Where the beneficial owner and controller are different, please provide a short narrative outlining the relationship between the two.

 

 

Resident Agent

 

13. Name and address of the proposed Resident Agent

 

 

Personal Information

14. Personal Information is required for all individual beneficial owners (having ownership of 5% or more of any class of stock, and whether natural or legal persons), current and proposed directors and senior management (controllers, directors, officers, managers, consultants and administrators etc.), and resident agents.  This must be submitted in the prescribed format.

           

            Attached                                                                             Yes          No                  

 

IV. Third Party Service Providers

 

15. List below any third party service providers including but not limited to intermediaries, sales or marketing agents, outsourcing etc. State any connection between the applicant (including proposed directors and officers of the applicant) and any person or organisation remunerated directly or indirectly (e.g. brokers, etc) by the company.

 

V. Accounts and Audit

 

16. For new companies, to what date will the company make up its first set of audited accounts, and what date will it use annually thereafter?

 

17. What accounting standards will apply to the accounts of the company?

 

18. Who will be the auditors of the company? Give their details like the name, address, telephone and fax number, including the name of a contact person.

 

19. List the names and addresses of the correspondent banks in which the company has accounts or in which the company intends to have accounts.

 

20. The name, address, telephone and fax number for the principal law firm(s) used by the company in Antigua & Barbuda and/or abroad, including in each case the name of a contact person.

 

 

VI. General

 

21. Have any of the parties connected with this application ever applied, either individually or in conjunction with others, for authority to transact business in any other jurisdiction?  If so please give details.

 

22. What local (Antigua and Barbuda) resources will be required during the formative years in the way of staff and accommodation (offices and personnel) - direct and indirect (additional staff required by managers etc)?

 

23. Assuming this application is successful, what economic benefit will Antigua and Barbuda gain from the company?  Please quantify if possible.  Existing companies should also provide this information for their last financial year.

 

24. Furnish a copy of the Auditors’ acceptance to act as auditor of the applicant (on headed paper including the name and address of the auditor)

 

Attached                                                                     Yes

 

25. Attach a copy of the applicant’s Memorandum & Articles of Association

 

Attached                                                                     Yes      No       To Follow

 

26. Documentation: Attach all documents listed in the checklist.

27. Fee: Ensure that the appropriate fee is enclosed with the application.

I/We hereby apply for authorisation under Part III of the International Business Corporation Act, 1982 for carrying on international banking business, as defined in section 4 (2) of that Act.

 

I/ We confirm that the details given in this application are correct and in the event that any of the information given herein is found to be false or misleading I/We will be subject to such action as the Commission may deem appropriate, apart from such civil or criminal liability as may accrue under the laws of Antigua and Barbuda.

 

I/We also undertake to notify the Commission in case of any change in the information furnished herein within a reasonable time but not exceeding 30 days of such change.

 

 

 

Signed:………………………………….            (Duly authorised signatory)	Signed:………………………………….            (Duly authorised signatory)
Name:……………………………………            (In BLOCK CAPITALS)	Name:……………………………………            (In BLOCK CAPITALS)
Position Held:…………………………..	Position Held:…………………………..
Date:…………………………………….	Date:…………………………………….

Checklist of Documents to be submitted with the application

 

 

1.                  Supporting business plan and feasibility study, which should clearly address, inter alia, the following:

 

a)                  the rationale on which the application for licence is based;

 

b)                  the identified economic needs which the company intends to meet (or which have been identified as not now being adequately met by existing financial intermediaries);

 

c)                  the specific service area(s) to be addressed by the company, and growth prospects for the service are over the next five years;

 

d)                 specific details as to the exact nature and source of capital financing to be made available to the company for start-up and on-going operations;

 

e)                  a certified statement or other proof, of the applicant’s ability to meet the statutory requirements for minimum paid-up capital;

 

f)                   management, staffing and operational structure proposed for the company;

 

g)                  A certified statement or other proof, of the Owners’/Directors’ net worth.

 

2.                  Financial Statements:

 

a)                  If the Applicant’s company was in existence and operating prior to the date of application, copies of Audited Financial Statements (Balance Sheet, Profit and Loss, Auditor’s Report and Notes to Accounts) for the five consecutive years immediately preceding its application, except however that where such applicant has been functioning for less than five years, submit a copy of its Audited Financial Statements for each year it has been in operation.

 

b)                  Opening “pro forma” balance sheet, where (a) does not apply.

 

c)                  Operating projections for the proposed licencee’s first 3 years of business.  This should include Balance Sheet, Income Statement and Cash Flow projections prepared in accordance with international accounting standards.  Details of any financial and/or economic assumptions on which these projections are based should be clearly indicated.

 

d)                 Where applicant is a subsidiary or affiliate of another company, submit in addition to (a) or (b) above, audited financial statements of the Parent Company and all other “connected” companies for the same periods.

 

3.                  Certification of Incorporation of a locally incorporated company.

 

4.                  Memorandum and Articles of Association (two copies each).

 

5.                  Corporate Chart, which should show clearly, the relationship of the proposed licencee to the parent company, subsidiary, and other connected persons, where applicable.

 

6.                  Curriculum Vitae for each person whom it is proposed to appoint at the date of commencement of the business as a Director, and Senior Corporate Officer from the rank of manager, and above.

 

7.                  Indicate any Director, and Senior Corporate Officer who is or has been involved in litigation or any administrative proceedings, give details.

 

8.                  An affidavit sworn to by each director and shareholder, of the legal and beneficial ownership of the shares of the company.  The affidavits must contain details of their current and former names, dates and places of birth, nationalities and current residential addresses.

 

9.                  Similar information as requested in 6 & 7 above, along with a certified copy of current financial statements of affairs, of any person(s) who directly or indirectly will possess or control five (5) percent or more of the voting power of the company, or ten (10) percent, or more, of the non-voting shares of the company.

 

 

PERSONAL PARTICULARS

 

[To be completed in duplicate by every individual beneficial owner (having ownership of 5% or more of any class of stock, and whether natural or legal persons), current and proposed directors and senior management (controllers, directors, officers, managers, consultants and administrators etc.), and resident agents.]

 

 

1. Surname                                               

2. Forename(s)……….……………………..….

3. Private address (with fax and telephone no.)…………………..…………………

———————————————————————————–

4.   Business address (with fax and telephone no.)

————————————————————

————————————————————————————-

Date of birth ……………………     

Country of birth..………..……………….

7.  (a) Nationality ……………………..(b) Passport No.       ———————————      

(attach a legible copy of the pages from the individual’s passport(s) containing the person’s photograph as well as the passport(s) number and place of issue.)

 

8.  Occupation—————————————————————————————-

9.  Position held in the applicant firm——————————————–

10. Shareholding in the applicant firm—————————————————————-

11. Educational Qualifications————————————————————————-

12. Professional training (including details of any banking and related courses) (Attach photocopies of certificates).

……………………………………………………………………………………..……….

…………………………………………………………………………………………..….

 

13. Working experience in banking.  (Give the following details over the past 15 years commencing with the present employment.)

 

1.      Period of employment

2.      Name of the employer

3.      Address of the employer

4.      Nature of employer’s business

5.      Position and responsibilities

 

14. Are you a member of any professional banking association?  Give details.

………………………………………………………………………………………………

………………………………………………………………………………………………

15. Are you a director of a banking company?  Give details.

 

………………………………………………………………………………………………

..…….………………………………………………………………………………………

16. Of what other bodies corporate are you a director or partner?

 

……………………….……………………………………………………………………

…………………………….………………………………………………………………

Good Reputation and Character

(In respect of each question below, where the reply is YES give full details.)

 

17.       Have you at any time been convicted of any offence (other than a traffic offence) by any court whether civil or military?  Give details.

……………………………….……………………………………………………………

…..……..…………………………….……………………………………………………

 

18. Have you been censured, disciplined or publicly criticised by any professional body to which you belong or belonged or refused entry to any profession?  If so give particulars.

…………….…………………………………….…………………………………………

……………….………………………………………….…………………………………

 

19. Have you been adjudged bankrupt by a Court anywhere? If so give particulars.

………………….……………………………………………….…………………………

…………………….…………………………………………………….…………………

 

20. State whether you are currently engaged, or have been engaged during the previous five years, in any litigation.

……………………………….……………………………………………………………

…..……..…………………………….……………………………………………………

 

21. State whether you have ever been refused or had revoked any licence or authorisation to carry on banking, insurance, broking, fund management or any other finance business.

 

……………………………….……………………………………………………………

…..……..…………………………….……………………………………………………

 

22. State whether you have ever resigned from, been refused or had revoked membership of any association of dealers in securities or other financial instruments or of any stock exchange or of any professional body or decided, after making your application, not to proceed with it

 

……………………………….……………………………………………………………

…..……..…………………………….……………………………………………………

 

23. Have you ever held a practising certificate subject to conditions?

 

……………………………….……………………………………………………………

…..……..…………………………….……………………………………………………

 

24. Have you ever been dismissed or requested to resign from any office or employment, removed from any fiduciary office or position of trust, subject to disciplinary proceedings by your employer or barred from entry to any profession or occupation?

……………………………….……………………………………………………………

…..……..…………………………….……………………………………………………

 

25. Has any body corporate, partnership or unincorporated institution with which you are, or have been associated as a director, partner, officer, or manager, or a shareholder owning more than 5% of the voting equity, been the subject of an investigation by a governmental, professional, or other regulatory body?

……………………………….……………………………………………………………

…..……..…………………………….……………………………………………………

 

26. State whether you have ever been disqualified from acting as a director of a company, or from acting in the management or conduct of the affairs of any company, partnership or

unincorporated association

……………………………….……………………………………………………………

…..……..…………………………….……………………………………………………

 

27. Has any body corporate, partnership or other unincorporated institution with which you were associated as a director, partner, controller or manager, been wound up, gone into receivership, made subject to any administration order, otherwise made any compromise or arrangement with its creditors or ceased trading either while you were associated with it or within one year after you ceased to be associated with it

 

……………………………….……………………………………………………………

…..……..…………………………….……………………………………………………

 

28. State whether, in connection with the formation or management of any body corporate, partnership or unincorporated association, you have been adjudged by a court to be civilly liable for any fraud, misfeasance or wrongful trading or other misconduct by you towards such a body or towards any members or creditors of such a body

……………………………….……………………………………………………………

…..……..…………………………….……………………………………………………

 

29. Have you failed to satisfy any debt adjudged due and payable by you under an order of a court or made any compromise arrangement with your creditors within the last 15 years?

……………………………….……………………………………………………………

…..……..…………………………….……………………………………………………

 

 

30. State below any other material information, which you consider relevant to the assessment of your expertise, experience and record.

 

……………………………….……………………………………………………………

…..……..…………………………….……………………………………………………

 

31. Attach the following:

 

1.      Two references from well established banks stating the nature and extent of their knowledge of and experience with the person. 

2.      Two other professional references stating the nature and extent of their knowledge of and experience with the person. 

 

 

 

I, ……………………………………..certify that I have supplied the above information and to the best of my knowledge and belief the information is true and complete. I confirm that in the event that any of the information given herein is found to be false or misleading I will be subject to such action as the Commission may deem appropriate, apart from such civil or criminal liability as may accrue under the laws of Antigua and Barbuda.

 

I also undertake to notify the Commission in case of any change in the information furnished herein within a reasonable time but not exceeding 30 days of such change.

 

 

 

 

Date:……………………………….              Signature:………………………..…………

 

 

The Property Tax and Valuation Act, 2006 came into force on 17th November, 2006. Some of the provisions of the Act are highlighted below to assist you in familiarizing yourself with the Act.

Property is classified as agricultural, residential or other property. The Chief Valuation Officer may sub classify other property into commercial, cultural, historical, hotel, industrial, institutional and recreational. [See Sections 7(1) & (2)] If you are aggrieved by the classification or sub-classification of your property you may appeal to the Property Valuation Appeal Board for reclassification. [See Section 7(3)] Where a developer undertakes a programme of development that requires installation and maintenance of special services such as potable water, electricity, roads, sanitation and such other services, the property will be classified as a special development location. [See Section 8]

The previous Property Tax Act, 2000 provided a list of properties that were exempted from property tax. Under the 2006 Act property vested in a prescribed statutory non profit body, property owned by a prescribed charitable organization or institution, property used wholly in the packaging and processing of agricultural produce of a CARICOM country and plant and machinery used in a business are now added to the list of properties that are exempted from property tax. Environmental and ecological sites designated by Order of Cabinet have been removed from the list of properties exempted from property tax. [See
Section 14]

A dwelling house constructed after this Act came into force will be exempted from property tax for a period of two years. However it is important to note that property tax is payable on the land that the dwelling house is constructed. [See Section 15] A dwelling house deduction of $150,000.00 will be allowed when determining the taxable value of a dwelling house. [See Section 16] The Act provides for property tax rebates in the following instances:

1. A rebate of 5% where the property tax due and payable for a tax year is paid on or before the due date. [See Section 17(1)]
2. If the property tax is paid in installments no rebate will be given on the first installment but a 5% rebate of the total amount of the property tax payable will be given on the second installment if it is paid by the due date. [See Section 17(2)]
3. A local pensioner, upon written application to the Commissioner, will be allowed a rebate on the property tax payable on his or her dwelling house provided no part of the dwelling house is leased to another person. The pensioner’s total income will affect the total rebate allowed. A pensioner with a total income exceeding $75,000.00 will not be allowed a rebate on property tax. [See Section 18]
4. Where a part of a property is used in the interest of national development as agricultural land, upon providing the Commissioner with a certificate by the Director of Agriculture of the satisfactory use of the land, a 90% rebate will be allowed. Where a part of a property is used in the interest of national development as industrial property a 25% rebate will be allowed. Where a part of a property is used in the interest of national development as a hotel a 25% rebate will be allowed. Property situated in a special development location will be allowed a 25% rebate. You will note that the term “used in the interest of national development” is the common theme in relation to these rebates. The Act states that this term means that the property is used in a manner consistent with a national programme approved by government. [See Section 19]
5. Institutional, cultural, historical or recreational properties used mainly for local community purposes that are not used for residential or commercial purposes will be allowed a 100% rebate. [See Section 20]

Your property tax is due 90 days from the date of issue which is outlined on the demand note issued by the Commissioner. [See Section 27(1)] If you pay your property tax in installments, the first installment which cannot be less than 50% of the total tax due must be paid during the period of 60 days before the due date and the balance must be paid on or before the due date. [See Section 27(2)]

Failing to pay your property taxes may result in any one of the following:

1. Property tax will be a first charge on the property that tax is due and payable and this charge will be prior to all other liens and demands affecting the property. [See Section 28]
2. If property tax is not paid by the due date a penalty of 10% on the total tax due shall accrue and if the property tax and 10% penalty is not paid one calendar month after the due date then a penalty of 2% per month on the unpaid tax shall accrue. [See Section 29]
3. The Commissioner may pursue outstanding property taxes in a manner similar to a civil debt. [See Sections 30 & 31]
4. If property tax is not paid within 90 days of the due date the Commissioner has the power to issue a warrant of distress to levy by distress any goods or chattel building that is located on the property in which property tax is outstanding. [See Sections 32-37]

The Commissioner may exercise his power to sell the property in respect of which property tax is due and payable where the property tax has been in arrears and unpaid for more than 5 years after the due date. [See Sections 38-48] It is always worth examining the legislation being passed in Parliament as this is how you get to know your rights and the extent of the authority of the various government agencies within your society.