Brain Stuart-Young provides an overview of the financial services sector of the Jurisdiction.
Since the days of welcoming the British navy to Nelson’s Dockyard, Antigua and Barbuda have had a rich history of being a friendly harbour for visitors. This tradition of service continues, although visitors nowadays tend to arrive on board super-yachts and mega-cruisers, and on international flights from all around the world.
Among the many attractions offered are services from the jurisdiction’s international financial centre, especially those providing global banking services. The 25-year-old jurisdiction is experienced in the special needs of private wealth management services, and has developed banking products tailored to suit Caribbean and international client relationships. Those seeking a safe financial haven will find Antigua a stable business environment to shelter from the storms of volatile economies.
International Financial Services and Regulation
Many of the attributes that make Antigua a successful tourism destination also serve to make it a highly regarded international financial centre. In support of an alternative industry, Antigua enacted its International Business Corporations Act in 1982 to govern international business services there. The act provides for the legal formation of international business corporations, banking, trust and estate allocation services, portfolio management, corporate administration, and insurance companies.
Local regulations have kept pace with the demands of international authorities for fully transparent financial services, and the government has strengthened its regulatory and supervisory machinery for financial institutions. It continues to improve its capacity for law enforcement with regard to preventing financial crimes or the funding of terrorism, and its Financial Intelligence Unit (FIU) is a member of the Egmont Group and exchanges essential information to prohibit illicit transactions.
The jurisdiction is a member of the Caribbean Financial Action Task Force (CFATF), and has always been deemed a co-operative country in the efforts to prevent money laundering and the financing of terrorism. Both International Monetary Fund (IMF) and World Bank teams have reviewed the regulatory and banking environment, and found Antigua to be in compliance with international banking standards. Recently, Parliament also processed new legislation such as the International Trust Act, the International Foundation Act, the International Limited Liability Company Act, and the Company Management and Trust Service Providers Act. These new legislative initiatives all work to make Antigua a pre-eminent jurisdiction for wealth management services.
Modern Business Centre
The World Bank in its ‘Doing Business 2009’ report, covering 181 countries, listed Antigua 42nd as a jurisdiction with good reforms in which to do business, ahead of Latin America and Caribbean countries such as Columbia (53rd), Mexico (56th), Jamaica (63rd), Trinidad and Tobago (80th), Argentina (113th) and Brazil (125th).The combination of well-regulated financial services, a strong legal and democratic environment, world-class communications, an English-speaking and skilled workforce, and strong professional resources offer a positive environment for electronic commerce (e-commerce), information technology and international business services.
Antigua provides ideal support for Internet-driven business opportunities that demand more sophisticated financial services. The Antigua and Barbuda Investment Authority has been established by the government to assist the investment process, and to identify related incentives for certain investment categories. Modern services include Internet banking, telephone banking, wire transfers in major currencies, corporate and trust administration, pension and fund management, payroll services, e-commerce facilities that allow online sales of international services and products, and the operation of multifunctional stored value debit cards. These are powerful financial tools that enable business people to compete in an international and open market environment.
The remarkable growth of the Internet is impacting economies around the world, and Antigua is no exception. As an independent nation, it is well positioned to attract international business for e-commerce. The government has passed the Electronic Transactions Act to govern e-commerce and to control abuse of electronic systems, and protect the safety of online activity. The government is also committed to operating as an ‘e-government’ and has positioned Antigua and Barbuda to become a leading Caribbean IT centre.
Safe Depository Environment
As established markets continue to be hurt by the sub-prime crisis and credit crunch, an increasing number of western investors are looking south to the Caribbean in an attempt to repair their bruised and battered finances. Antiguan banks have had zero or little exposure to the global crisis, as they had no involvement in providing or purchasing sub-prime mortgages.
On the contrary, the Caribbean banks have consistently practised prudent banking standards by being conservative in their lending guidelines, closely monitored by their respective regulatory authorities. Apart from exposure on operating accounts through correspondent bank relationships in the US, which has now been secured by the Federal Deposit Insurance Corporation (FDIC)’s Temporary Liquidity Guarantee Program by providing full coverage of non-interest bearing deposit transaction accounts, regardless of dollar amount, our Caribbean banks are probably the safest depository opportunity at this time.
Many of the international financial services in the jurisdiction have built a solid track record of servicing their international clients by developing technology-driven financial services to support e-commerce, payment systems, and wealth management portfolios.
In today’s global village, geographic focus is less relevant to clients with an increasingly international perspective, as modern technology can deliver a consistently high standard of service for customers to conduct secure banking business regardless of physical presence. International businesses that require banking facilities to support e-commerce will find it convenient and advantageous to transfer their e-business to Antigua.
Antigua has become attractive to international investors seeking wealth management services and wishing to balance their portfolios with strong fixed income returns, property investment, or permanent residency. Several Antiguan financial institutions will offer Certificates of Deposit at significantly higher rates than those offered in key financial centres such as London, New York, and Switzerland. These certificates, through which the principal deposit is never at risk, are bank products and can be established in major currencies such as US dollars, euros, and pounds sterling.
Increasingly, investors have been purchasing properties in Antigua and the Caribbean as holiday or second homes, with several major real estate developments enjoying a significant response from international investors. There are various reasons for this, not least because this qualifies the investors for permanent residency and, in the case of the Commonwealth of Dominica, even economic citizenship; and because they can avail themselves of the services of any of the major local accounting firms such as PricewaterhouseCoopers, Pannell Kerr Forster, and KPMG for tax planning arrangements. The international banks have also been supportive of investors pursuing local real estate and tourism projects.
A Safe Financial Centre
Antigua’s international financial centre is committed to maintaining its position as a leading Caribbean jurisdiction and safe financial centre. Its regulatory environment of depository institutions meets the requirements of international standards in lending its support to modern businesses; and all the more so as it redefines its role amidst the financial crisis in the US and Europe and the global demands for international banking relationships and financial solutions. The combination of well-regulated financial service providers, and the ability to offer modern financial services in a stable and tax-neutral environment makes Antigua and Barbuda a premier location for global business.
Brian Stuart-Young, Chairman and CEO, Global Bank of Commerce, Ltd, Antigua