Rating: Non-Compliant
As Sint Maarten has only recently put in place a domestic legislative framework requiring Reporting Financial Institutions to conduct the due diligence and reporting procedures, it has not yet put in place an administrative framework to ensure compliance by Reporting Financial Institutions or to collaborate with exchange partners (CR1 Effectiveness in practice). Sint Maarten’s implementation is therefore non-compliant with respect to ensuring that Reporting Financial Institutions are correctly conducting the due diligence and reporting procedures. Sint Maarten should therefore continue its implementation process to ensure its effectiveness, including by addressing the recommendations made.
SR 1.5 Jurisdictions should ensure that in practice Reporting Financial Institutions identify the Financial Accounts they maintain, identify the Reportable Accounts among those Financial Accounts, as well as their Account Holders, and where relevant Controlling Persons, by correctly conducting the due diligence procedures and collect and report the required information with respect to each Reportable Account. This includes having in place:
an effective administrative compliance framework to ensure the effective implementation of, and compliance with, the CRS. This framework should:
be based on a strategy that facilitates compliance by Reporting Financial Institutions and which is informed by a risk assessment in respect of the effective implementation of the CRS that takes into account relevant information sources (including third party sources);
include procedures to ensure that Financial Institutions correctly apply the definitions of Reporting Financial Institutions and Non-Reporting Financial Institutions;
include procedures to periodically verify Reporting Financial Institutions’ compliance, conducted by authorities that have adequate powers with respect to the reviewed Reporting Financial Institutions, with procedures to access the records they maintain; and
effective procedures to ensure that Financial Institutions, persons or intermediaries do not circumvent the due diligence and reporting procedures;
effective enforcement mechanisms to address non-compliance by Reporting Financial Institutions;
strong measures to ensure that valid self-certifications are always obtained for New Accounts;
effective procedures to ensure that each, or each type of, jurisdiction-specific Non-Reporting Financial Institution and Excluded Account continue to present a low risk of being used to evade tax; and
effective procedures to follow up with a Reporting Financial Institution when undocumented accounts are reported in order to establish the reasons why such information is being reported.
Findings:
Sint Maarten has not yet implemented a framework to ensure that Reporting Financial Institutions correctly conduct the due diligence and reporting procedures. The key findings were as follows:
While Sint Maarten is taking initial steps to understand its population of Financial Institutions using relevant information sources, such as a list from the Central Bank of Curaçao & Sint Maarten, the Foreign Financial Institutions list for FATCA purposes and a list of entities registered for tax purposes, Sint Maarten has not yet taken action to ensure that Reporting Financial Institutions are classifying themselves correctly under its domestic rules and reporting as required.
So far, Sint Maarten has assigned the equivalent of one full time staff to work on the implementation of the AEOI Standard.
Sint Maarten has not yet developed procedures or carried out activities to enforce the requirements, including through the inspection of records of Reporting Financial Institutions and the application of dissuasive penalties and sanctions for non-compliance.
Sint Maarten does not have a framework to ensure self-certifications are obtained as required or to follow up with Reporting Financial Institutions that report undocumented accounts. It also does not have a framework to take action to address the circumvention of the requirements, which reflects the lack of a legal basis to prevent all relevant persons from adopting practices intended to circumvent the reporting and due diligence procedures.
It is noted that Sint Maarten does not have a jurisdictions-specific list of Non-Reporting Financial Institutions or Excluded Accounts for ongoing monitoring.
Sint Maarten was not able to confirm that it will collect and monitor information on the proportion of Financial Accounts that are reported that include information on the Tax Identification Numbers and dates of birth with respect to the individuals associated with them. These data points are key to exchange partners to effectively utilise the information and are important to developing an effective compliance strategy to ensure the AEOI Standard is being effectively implemented. Sint Maarten stated that it will collect and monitor information on the number of undocumented accounts reported by its Reporting Financial Institutions, although as no information has been reported so far, it is unclear how this will be done. This information is crucial to implementing the requirement to follow up on undocumented accounts. It was also not possible to obtain feedback from its exchange partners, as information was not exchanged until September 2022.
Based on these findings it was concluded that Sint Maarten is not meeting expectations in ensuring that Reporting Financial Institutions correctly conduct the due diligence and reporting procedures, including by having in place the required administrative compliance framework and related procedures. Sint Maarten should continue its implementation process accordingly, including by addressing the recommendations made.
Recommendations:
Sint Maarten should develop an overarching compliance strategy to underpin its compliance activities, informed by a risk assessment that takes into account a range of relevant information sources.
Sint Maarten should develop and implement effective procedures to identify its population of Financial Institutions to ensure that they correctly apply the definitions of Reporting Financial Institution and Non-Reporting Financial Institution and report information as required, specifically including non-regulated entities that are Financial Institutions for the purposes of the AEOI Standard.
Sint Maarten should develop and implement an appropriate framework, including in-depth reviews, to verify whether Reporting Financial Institutions are effectively implementing the AEOI Standard. This should include procedures to monitor and verify whether Reporting Financial Institutions are obtaining self-certifications as required and procedures to follow up with Reporting Financial Institutions that reported undocumented accounts to ensure that the requirements are being complied with.
Sint Maarten should develop and implement effective enforcement mechanisms to address non-compliance by Reporting Financial Institutions, including the application of dissuasive penalties and sanctions as appropriate, and routinely apply them where non-compliance is identified.
Sint Maarten should put in place a clearly defined policy to ensure that, where circumvention of the AEOI Standard is identified, action is taken to address it. Reference is made to the recommendation made when assessing Sint Maarten’s legal framework implementing the AEOI Standard.
Sint Maarten should implement systems to monitor the reporting of Tax Identification Numbers, dates of birth and undocumented accounts by Reporting Financial Institutions to inform its compliance strategy.
SR 1.6 Jurisdictions should collaborate on compliance and enforcement. This requires jurisdictions to:
use all appropriate measures available under the jurisdiction’s domestic law to address errors or non-compliance notified to the jurisdiction by an exchange partner; and
have in place effective procedures to notify an exchange partner of errors that may have led to incomplete or incorrect information reporting or non-compliance with the due diligence or reporting procedures by a Reporting Financial Institution in the jurisdiction of the exchange partner.
It should be noted that, as Sint Maarten exchanges information on a non-reciprocal basis and does not therefore receive information, it is not required to have in place procedures to notify its exchange partners. SR 1.6 b) has therefore not been assessed in this case.
Findings:
Sint Maarten has not yet put in place procedures to collaborate with its exchange partners to address errors or suspected non-compliance notified by them to Sint Maarten.
Based on these findings it was concluded that Sint Maarten is not meeting expectations in relation to collaborating with tis exchange partners to ensure that Reporting Financial Institutions correctly conduct the due diligence and reporting procedures. Sint Maarten should therefore continue its implementation process accordingly, including by addressing the recommendation made.
Recommendations:
Sint Maarten should develop and implement effective procedures to address errors or suspected non-compliance by its Reporting Financial Institutions notified to it by its exchange partners.