Global Forum On Transparency and Exchange of Information For Tax Purposes Peer Reviews

GLOBAL FORUM ON TRANSPARENCY AND EXCHANGE
OF INFORMATION FOR TAX PURPOSES

Peer Review Report
Phase 2
Implementation of the Standard
in Practice
Global Forum on Transparency and Exchange of Information
for Tax Purposes
PEER REVIEWS, PHASE 2: MONTSERRAT
This report contains a Phase 2: Implementation of the Standards in Practice review, as well
as revised version of the Phase 1: Legal and Regulatory Framework review already released
for this country.
The Global Forum on Transparency and Exchange of Information for Tax Purposes is the
multilateral framework within which work in the area of tax transparency and exchange of
information is carried out by over 120 jurisdictions which participate in the work of the
Global Forum on an equal footing.
The Global Forum is charged with in-depth monitoring and peer review of the implementation
of the standards of transparency and exchange of information for tax purposes. These
standards are primarily reected in the 2002 OECD Model Agreement on Exchange of
Information on Tax Matters and its commentary, and in Article 26 of the OECD Model Tax
Convention on Income and on Capital and its commentary as updated in 2004, which has
been incorporated in the UN Model Tax Convention.
The standards provide for international exchange on request of foreseeably relevant
information for the administration or enforcement of the domestic tax laws of a requesting
party. Fishing expeditions are not authorised, but all foreseeably relevant information must
be provided, including bank information and information held by duciaries, regardless of the
existence of a domestic tax interest or the application of a dual criminality standard.
All members of the Global Forum, as well as jurisdictions identied by the Global Forum as
relevant to its work, are being reviewed. This process is undertaken in two phases. Phase 1
reviews assess the quality of a jurisdictions legal and regulatory framework for the exchange
of information, while Phase 2 reviews look at the practical implementation of that framework.
Some Global Forum members are undergoing combined Phase 1 plus Phase 2 reviews.
The ultimate goal is to help jurisdictions to effectively implement the international standards
of transparency and exchange of information for tax purposes.
All review reports are published once approved by the Global Forum and they thus represent
agreed Global Forum reports.
For more information on the work of the Global Forum on Transparency and Exchange of
Information for Tax Purposes, and for copies of the published review reports, please visit
www.oecd.org/tax/transparency and www.eoi-tax.org.
MONTSERRAT
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Consult this publication on line at http://dx.doi.org/10.1787/9789264217768-en.
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ISBN 978-92-64-21777-5
23 2014 22 1 P
9HSTCQE*cbhhhf+
Global Forum
on Transparency
and Exchange
of Information for Tax
Purposes Peer Reviews:
Montserrat 2014
PHASE 2:
IMPLEMENTATION OF THE STANDARD IN PRACTICE
August 2014
(reflecting the legal and regulatory framework
as at May 2014)
This work is published on the responsibility of the Secretary-General of the OECD.
The opinions expressed and arguments employed herein do not necessarily reflect
the official views of the OECD or of the governments of its member countries or
those of the Global Forum on Transparency and Exchange of Information for Tax
Purposes.
This document and any map included herein are without prejudice to the status of
or sovereignty over any territory, to the delimitation of international frontiers and
boundaries and to the name of any territory, city or area.
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Series: Global Forum on Transparency and Exchange of Information for Tax Purposes Peer Reviews
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ISSN 2219-469X (online)
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PEER REVIEW REPORT PHASE 2 MONTSERRAT OECD 2014
TABLE OF CONTENTS 3
Table of Contents
About the Global Forum. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Executive Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Information and methodology used for the peer review of Montserrat . . . . . . . . . 9
Overview of Montserrat . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Recent developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Compliance with the Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
A. Availability of Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
A.1. Ownership and identity information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
A.2. Accounting records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
A.3. Banking information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
B. Access to Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
B.1. Competent Authoritys ability to obtain and provide information . . . . . . . . 48
B.2. Notification requirements and rights and safeguards. . . . . . . . . . . . . . . . . . 56
C. Exchanging Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
C.1. Exchange of information mechanisms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
C.2. Exchange of information mechanisms with all relevant partners . . . . . . . . 67
C.3. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
C.4. Rights and safeguards of taxpayers and third parties. . . . . . . . . . . . . . . . . . 72
C.5. Timeliness of responses to requests for information . . . . . . . . . . . . . . . . . . 73
4 TABLE OF CONTENTS
Summary of Determinations and Factors Underlying Recommendations. . . . 77
Annex 1: Jurisdictions response to the review report . . . . . . . . . . . . . . . . . . . . 81
Annex 2: List of Montserrat exchange of information mechanisms . . . . . . . . . 82
Annex 3: List of laws, regulations and other material . . . . . . . . . . . . . . . . . . . . 87
Annex 4: List of persons interviewed during on-site visit . . . . . . . . . . . . . . . . . 88
ABOUT THE GLOBAL FORUM 5
About the Global Forum
The Global Forum on Transparency and Exchange of Information for
Tax Purposes is the multilateral framework within which work in the area
of tax transparency and exchange of information is carried out by over
120 jurisdictions, which participate in the Global Forum on an equal footing.
The Global Forum is charged with in-depth monitoring and peer
review of the implementation of the international standards of transpar-
ency and exchange of information for tax purposes. These standards are
primarily reflected in the 2002 OECD Model Agreement on Exchange of
Information on Tax Matters and its commentary, and in Article 26 of the
OECD Model Tax Convention on Income and on Capital and its commen-
tary as updated in 2004. The standards have also been incorporated into
the UN Model Tax Convention.
The standards provide for international exchange on request of fore-
seeably relevant information for the administration or enforcement of the
domestic tax laws of a requesting party. Fishing expeditions are not authorised
but all foreseeably relevant information must be provided, including bank
information and information held by fiduciaries, regardless of the existence
of a domestic tax interest or the application of a dual criminality standard.
All members of the Global Forum, as well as jurisdictions identified by
the Global Forum as relevant to its work, are being reviewed. This process is
undertaken in two phases. Phase 1 reviews assess the quality of a jurisdic-
tions legal and regulatory framework for the exchange of information, while
Phase 2 reviews look at the practical implementation of that framework. Some
Global Forum members are undergoing combined Phase 1 and Phase 2
reviews. The Global Forum has also put in place a process for supplementary
reports to follow-up on recommendations, as well as for the ongoing monitor-
ing of jurisdictions following the conclusion of a review. The ultimate goal is
to help jurisdictions to effectively implement the international standards of
transparency and exchange of information for tax purposes.
All review reports are published once approved by the Global Forum
and they thus represent agreed Global Forum reports.
For more information on the work of the Global Forum on Transparency
and Exchange of Information for Tax Purposes, and for copies of the pub-
lished review reports, please refer to www.oecd.org/tax/transparency and
www.eoi-tax.org.
EXECUTIVE SUMMARY 7
Executive Summary
1. This report summarises the legal and regulatory framework for
transparency and exchange of information in Montserrat, together with the
practical implementation of that framework. The international standard which
is set out in the Global Forums Terms of Reference to Monitor and Review
Progress Towards Transparency and Exchange of Information, is concerned
with the availability of relevant information within a jurisdiction, the com-
petent authoritys ability to gain access to that information, and in turn,
whether that information can be effectively exchanged on a timely basis with
its exchange of information partners.
2. Montserrat is an Overseas Territory of the United Kingdom situ-
ated in the Lesser Antilles in the Southern part of the Caribbean. Montserrat
only has approximately 5 000 inhabitants and is still recovering from severe
volcanic eruptions in the 1990s that destroyed the capital, airport and sea-
port, and left 60% of the territory in an exclusion zone. Montserrat has some
financial activities, including an infrastructure for offshore activities, even
though this activity is not well developed. The Government of Montserrat
committed to respect the principles of transparency and exchange of infor-
mation on 27 February 2002 and has been involved with the Global Forum
since that time.
3. In respect of ownership and identity information, Montserrats laws
generally provide for the effective retention and maintenance of identity and
ownership information for most companies and partnerships, in line with
the terms of reference. As to bank information, the anti-money laundering
rules generally impose appropriate obligations to ensure the maintenance of
relevant records.
4. The obligations imposed in respect of accounting information are
in line with the Terms of Reference. Montserrats laws provide for adequate
records in respect of accounts in all cases. In addition, Montserrats laws also
provide for the keeping of underlying documentation by all relevant entities.
5. In respect of access to information, Montserrats competent author-
ity is invested with broad access powers to gather relevant information for
8 EXECUTIVE SUMMARY
exchange of information purposes under the Tax Information Exchange Act,
2010. These powers are exercised primarily by issuing notices to require the
production of relevant information and are complemented by powers, which
are overseen by a court, to search premises and seize information as well as
to compel oral testimony. Secrecy provisions in domestic laws are overridden
where information is required for EOI purposes, and a domestic tax interest
requirement is excluded.
6. Montserrat committed to the standard of transparency and exchange
of information for tax purposes in 2002, and its network of agreements
started to develop in 2009. Following the extension of the Multilateral
Convention on Mutual Administrative Assistance in Tax Matters to
Montserrat in June 2013 it will have 89 EOI relationships (with 76 jurisdic-
tions) to the standard when it has completed its domestic procedures. The
DTC with Switzerland is not to the international standard. Montserrat and
Switzerland are in the process of negotiating a TIEA and it has been agreed
that once this is done the DTC will not apply to the EOI relationship between
Switzerland and Montserrat.
7. Montserrats ability to effectively exchange information was not
comprehensively tested as it received only one EOI request during the review
period. However, in that case, the requesting jurisdiction was satisfied with
Montserrats response.
8. Montserrat has been assigned a rating for each of the 10 essential ele-
ments as well as an overall rating. The ratings for the essential elements are
based on the analysis in the text of the report, taking into account the Phase 1
determinations and any recommendations made in respect of Montserrats
legal and regulatory framework and the effectiveness of its exchange of
information in practice. On this basis, Montserrat has been assigned the fol-
lowing ratings: Compliant for elements B.1, B.2, C.1, C.2, C.3 and C.4 and
Largely Compliant for elements A.1, A.2, A.3 and C.5. In view of the ratings
for each of the essential elements taken in their entirety, the overall rating for
Montserrat is Largely Compliant.
9. A follow up report on the steps undertaken by Montserrat to answer
the recommendations made in this report should be provided to the PRG
within twelve months after the adoption of this report.
INTRODUCTION 9
Introduction
Information and methodology used for the peer review of Montserrat
10. The assessment of the legal and regulatory framework of Montserrat
and the practical implementation of this framework was based on the inter-
national standards for transparency and exchange of information as described
in the Global Forums Terms of Reference to Monitor and Review Progress
Towards Transparency and Exchange of Information For Tax Purposes, and
was prepared using the Global Forums Methodology for Peer Reviews and
Non-Member Reviews. The assessment was based on the laws, regulations,
and exchange of information mechanisms in force or effect as of March 2012,
Montserrats responses to the Phase 1 questionnaire and supplementary ques-
tions, other materials supplied by Montserrat, and information supplied by
partner jurisdictions.
11. The Phase 2 assessment of Montserrat was based on informa-
tion available to the assessment team including the laws, regulations, and
exchange of information arrangements in force or effect as at 23 May 2014,
on Montserrats responses to the Phase 2 questionnaire and supplementary
questions, information supplied by partner jurisdictions, other relevant
sources as well as information collected during the on-site visit to the pre-
sent de-facto capital, Brades, in December 2013. During the on-site visit,
the assessment team met with officials and representatives of the relevant
government agencies, including the Ministry of Finance, the registration
and anti-money laundering authorities. The three year review period for the
Phase 2 review extended from 1 January 2010 to 31 December 2012.
12. The Terms of Reference break down the standards of transparency
and exchange of information into 10 essential elements and 31 enumer-
ated aspects under three broad categories: (A) availability of information,
(B) access to information, and (C) exchange of information. This review
assesses Montserrats legal and regulatory framework against these elements
and each of the enumerated aspects. In respect of each essential element a
determination is made that either: (i) the element is in place, (ii) the element
10 INTRODUCTION
is in place but certain aspects of the legal implementation of the element
need improvement, or (iii) the element is not in place. These determinations
are accompanied by recommendations for improvement where relevant. In
addition, to reflect the Phase 2 component, recommendations are made con-
cerning Montserrats practical application of each of the essential elements
and a rating of either: (i) compliant, (ii) largely compliant, (iii) partially com-
pliant, or (iv) non-compliant is assigned to each element. An overall rating
is also assigned to reflect Montserrats overall level of compliance with the
standards.
13. The Phase 1 assessment was conducted by an assessment team,
which consisted of three expert assessors and two representatives of the
Global Forum Secretariat: Mr. Rob Gray, Director of Income Tax, Guernsey;
Messrs. Ioannis Anastasiou and Iossif Fovakis, Tax Officials of the Ministry
of Finance of Greece; Ms. Gwenalle Le Coustumer and Mr. Bernd Person
from the Global Forum Secretariat.
14. The Phase 2 assessment was conducted by a team consisting of two
expert assessors and one representative of the Global Forum Secretariat:
Mr. Rob Gray, Director of Income Tax, Guernsey, Ms. Silke Voss, from the
Federal Ministry of Finance of Germany and Mr. Bhaskar Goswami from
the Secretariat to the Global Forum. The team evaluated the implementation
and effectiveness of Montserrats legal and regulatory framework for trans-
parency and exchange of information and its relevant information exchange
mechanisms.
Overview of Montserrat
15. Montserrat is a Caribbean island of 40 square miles (102 square km)
and has a population of currently around 5 000 inhabitants. Montserrat is part
of the Overseas Territories of the United Kingdom. It is also a member of the
Organisation of Eastern Caribbean States (OECS), with seven other members
with which it shares its currency the East Caribbean dollar (XCD) pegged
to the United States dollar (XCD 2.70 for USD 1).
16. Severe volcanic activity, which began in July 1995, has had a strong
negative impact on Montserrats demography and economy. A catastrophic
eruption in June 1997 destroyed the capital, as well as the airport and seaport.
Two-thirds of the 12 000 inhabitants fled the island and the capital city had
to be relocated to other parts of the island. Today, the volcano remains inter-
mittently active and a new capital and seaport are planned. With 60% of the
territory in an exclusion zone, the agriculture sector is affected by the lack of
suitable land for farming.
INTRODUCTION 11
17. The need to rebuild the economy is explained by the fact that the
economy of Montserrat is dominated by public sector led investments and
projects. Government services represent 36.23% of the GDP of Montserrat,
followed by the Real Estate & Housing Sector (12.51%), financial sector
(11.07% of the GDP) and the construction sector (6.18%). Further, Montserrat
has been active in promoting tourism. The mining of volcanic sands is
the main export industry of Montserrat. The island also exports meat cuts
(mutton and beef), bottled water, cigarettes, along with other miscellaneous
products that include honey and cashew nuts and soap products manufac-
tured as by-products of the volcanic eruption, but exports are limited by
transport and access problems. The loss of economic infrastructure as a
result of the dramatic impact of the volcanic eruption still necessitates the
contribution of the UK Department for International Development of 63%
of the budget of Montserrat in 2013-14. The European Union also provided
grants to Montserrat. The projected GDP for 2014 is XCD 161.52 million
(USD 59.45 million). The proportion of financing from the UK is expected to
progressively decline in future years as Montserrat makes progress on initia-
tives to restore self-sufficiency.
Legal System
18. Montserrat is a British Overseas Territory with a large measure of
internal self-government, particularly since the entry into force of the new
Constitution in 2011. Montserrats Head of State is Queen Elizabeth II.
The Constitution establishes the offices of Governor, who is appointed by
the Queen and is Her representative in Montserrat, and Deputy Governor,
who must be a Montserratian. The Governor has certain responsibilities
which include oversight for external affairs, defence, internal security, the
administration of the Courts, the financial services sector, elections and
disaster management. The Governor heads the Legislative Assembly, which
includes the Premier, the Financial Secretary, the Attorney-General and three
Ministers. The Constitution establishes enforceable fundamental rights and
freedoms of the individual closely based on those in the European Convention
on Human Rights. A number of laws have been amended or replaced to align
them with the new Constitution.
19. Montserrat has a unicameral Legislative Council of 11 seats. Nine mem-
bers are elected by direct popular vote for a five year term; the Attorney General
and financial secretary sit as ex-officio members.
20. Montserrat has a legal system based on UK common law. The judi-
cial system comprises the Magistrates court, the High Court, and the Eastern
Caribbean Supreme Court of Appeal with the ultimate right of appeal to the
Judicial Committee of the Privy Council in the United Kingdom.
12 INTRODUCTION
Taxes
21. The majority of Montserrats tax revenue comes from indirect taxa-
tion which includes consumption tax, import duty, stamp tax and hotel and
guest tax. Direct taxes are levied on corporate income, business income and
the income of resident and non-resident individuals. Residents of Montserrat
are taxed on their personal income while non-residents are subject to a
withholding tax on certain payments of Montserrat source income. The tax
revenues of Montserrat, as the economy, have suffered from the volcanic
eruptions of the 1990s, and Montserrats budget is subsidised by substantial
contributions made by the UK government and EU grants.
22. Montserrat residents are taxed on their world-wide income (subject
to the application of a DTC and considering the Commonwealth tax relief).
Since 1999, Montserrat has adjusted the tax rates of income tax for tax years
commencing on or after 1 January 2005 and 1 January 2012. Montserrat
has reduced the tax rates overall, but especially in relation to those on lower
incomes. Currently progressive tax rates scale from 5 to 40%.
1
Commercial laws and financial sector
23. As noted above, the legal system of Montserrat is based on the British
legal system (English common law) and statute law. The commercial entities
can be classified as companies and partnerships. Montserrat also recognises
trusts.
24. Montserrat has the smallest financial sector of any of the United
Kingdom Overseas Territories. In spite of this, there are different types of
financial institutions licensed or registered to carry out business in Montserrat,
including international business.
25. The volcanic eruptions effectively suspended the financial sector
activities and supervision. The whole supervisory process resumed with the
creation of the Financial Services Commission in 2001. The FSC then put
in place supervisory arrangements for the offshore business sector. Today,
financial service providers include domestic banks, international banks, trust
companies, insurance companies, mutual funds, corporate service providers,
company managers, international business companies, and money transmitter
services. Whereas, 15 offshore banks were operating in 2000, only 4 interna-
tional banks remain in 2012. The total assets deposited in international banks
amounted to USD 985 976 524 in 2013.
26. There are two domestic banks licensed under the Banking Act (BA) to
conduct domestic and international banking with residents and non-residents.
1. Income and Corporation Tax (Amendment) Bill) 2011, Schedule 2 (section 36)
INTRODUCTION 13
One is an indigenous bank (Bank of Montserrat) and the other is a branch of a
Canadian group (Royal Bank of Canada). The total assets deposited in domes-
tic banks amounted to USD 140 856 670 in 2013.
International exchange of information for tax purposes
27. The Government of Montserrat committed to respect the principles
of transparency and exchange of information on 27 February 2002 and has
been involved with the Global Forum since that time. Montserrat, under the
terms of its Entrustment from the United Kingdom, has the right to negotiate,
conclude and perform tax information exchange agreements with specific
jurisdictions. As a result, Montserrat has entered into such bilateral EOI
arrangements, under TIEAs or DTCs, with 14 jurisdictions to date.
Recent developments
28. At the request of Montserrat, in June 2013 the UK made a declara-
tion extending the territorial application of its signature to the Multilateral
Convention on Mutual Administrative Assistance in Tax Matters to cover
Montserrat from October 2013.
COMPLIANCE WITH THE STANDARDS: AVAILABILITY OF INFORMATION 15
Compliance with the Standards
A. Availability of Information
Overview
29. Effective exchange of information requires the availability of reliable
information. In particular, it requires information on the identity of owners
and other stakeholders as well as information on the transactions carried
out by entities and other organisational structures. Such information may
be kept for tax, regulatory, commercial or other reasons. If such informa-
tion is not kept or the information is not maintained for a reasonable period
of time, a jurisdictions competent authority may not be able to obtain and
provide it when requested. This section of the report describes and assesses
Montserrats legal and regulatory framework on availability of information
and the implementation of that framework in practice.
30. In respect of ownership and identity information, Montserrats laws
generally provide for the effective retention and maintenance of identity and
ownership information for companies (including external companies) and
partnerships, in line with the terms of reference, and penalties are generally
available to enforce these obligations. Ownership information in respect of
trusts and foundations is also available under the relevant laws of Montserrat.
31. The obligations imposed in respect of accounting information are
in line with the Terms of Reference and therefore element A.2 is in place.
Montserrats laws provide for adequate records in respect of accounts in all
cases. Montserrats laws also provide for the retention of underlying docu-
mentation or retention of documents for a minimum of 5 years for any entity
16 COMPLIANCE WITH THE STANDARDS: AVAILABILITY OF INFORMATION
32. Banks are covered institutions for anti-money laundering purposes
and therefore required to keep adequate records and related financial and
transactional information in line with the Terms of Reference. Element A.3
is considered to be in place.
A.1. Ownership and identity information
Jurisdictions should ensure that ownership and identity information for all relevant
entities and arrangements is available to their competent authorities.
33. The relevant entities in Montserrat are companies (ToR A.1.1), some
of which may issue bearer shares (ToR A.1.2), partnerships (Tor A.1.3), trusts
(ToR A.1.4) and foundations (ToR A.1.5).
Companies (ToR
2
A.1.1)
Type of Companies in Montserrat
34. Companies may be classified as ordinary (domestic), external (for-
eign) or international companies (IBCs). The laws of Montserrat also provide
for limited liability companies (LLCs). As of December 2013, there were 258
ordinary companies, 14 external companies, 7 IBCs and 3 LLCs registered
in Montserrat.
Ordinary Companies
35. Companies in Montserrat are statutorily regulated by the Companies
Act. Companies can issue shares and may be either private or public. The
shareholders are not liable for any liability, act or default of the company
(Companies Act, s. 56). Companies without share capital (or non-profit com-
panies) can also be incorporated subject to the approval of the Governor. In
order to carry on a business, a company can conduct its affairs and exercise
its powers anywhere, including in any jurisdiction outside Montserrat (to the
extent the laws of Montserrat and of the other jurisdiction permit) but should
have a registered office in Montserrat (ss. 17 and 175).
External (foreign) Companies
36. External companies can also carry on business within Montserrat,
where the business (i) is regularly transacted from an office in Montserrat
established or used for that purpose, (ii) establishes or uses a share transfer
2. Terms of Reference to Monitor and Review Progress towards Transparency and
Exchange of Information
or share registration office, or (iii) if the company owns, possesses or uses
assets situated in Montserrat for business purposes (Companies Act, ss. 338
and 543). The notion of external company is defined as covering a firm
or other body of persons formed under the laws of a jurisdiction other than
Montserrat. This therefore includes foreign companies and partnerships.
Based on UK case law, external companies are considered as tax residents
where their place of effective management and control is in Montserrat.
The Montserratian authorities indicate that these foreign entities are usually
international banks and insurance companies carrying on business within
Montserrat and which tend to be public limited liability companies, whose
shares are listed on a foreign stock exchange.
International Business Companies (IBC)
37. IBCs were introduced by the International Business Companies Act
in 1986. An IBC is formed under the IBC Act and is not permitted to carry
on business activities with persons resident in Montserrat, nor can it own an
interest in real property in Montserrat other than a lease for use as an office
(in particular it may not accept banking deposits and contracts of insurance
from persons resident in Montserrat). However, an IBC can maintain profes-
sional contact with service providers in Montserrat, prepare and maintain
books and records within Montserrat, and hold shares, debt obligations or
other securities in another IBC or an ordinary company incorporated under
the Companies Act (s. 5).
38. An IBC is exempt from all the provisions of the Income Tax Act, the
Exchange Control Act, the Foreign Currency Levy Act and the Stamp Act
for 25 years from the date of its formation (Income and Corporation Tax Act,
s. 12 and IBC Act, s. 111). In addition, all dividends, interest, rents, royalties,
compensations and other amounts paid by an IBC to persons who are not resi-
dent in Montserrat, and capital gains realised by such persons in respect of
the sale of shares of an IBC, are similarly exempted (Income and Corporation
Tax Act, s. 12 and IBC Act, s. 111).
Limited Liability Companies (LLC)
39. LLCs are formed and governed under the Limited Liability Company
Act, and can carry on any business, purpose or activity that is not prohibited
by the laws of Montserrat. An LLC provides for the exclusion of any personal
liability for managers and members regarding the debts, obligations and
liability of the entity, including towards third parties (s. 22). Members can
contribute to the LLC in cash, property or services rendered (or a promis-
sory note to do so, s. 33). An LLC which does not conduct any business in
Montserrat is exempt from any corporate tax, income tax, withholding tax or
other like taxes based on income originating outside Montserrat; dividends
or distributions to non-residents are equally exempt from taxes in Montserrat
(s. 71).
Ownership information held by government authorities
40. Companies in Montserrat must provide some ownership and iden-
tity information to governmental authorities in a variety of circumstances,
particularly in the context of registration (and must maintain ownership
information themselves, see below).
Ordinary Companies
41. All ordinary companies must at all times have a registered office in
Montserrat (Companies Act, s. 175) and be registered with the Registrar of
Companies. They must give the Registrar notice of the registered address
and set out the names of every incorporator, and, if any, the classes and any
maximum number of shares the company is authorised to issue (ss. 4 and 5).
Ordinary companies must file an annual return, which includes the names,
addresses and number of shares of the members (s. 194 and Form 24A sched-
uled to the act). All companies need to have an attorney (under the Company
Regulations, 2010) who will assist in the process of company formation and
other acts. The attorney has to certify that all information provided is correct.
42. The Register of Companies contains the name of all companies
that are incorporated or registered under the Companies Act and have not
subsequently been struck off (s. 494), and anyone can examine any docu-
ment required to be sent to the Registrar, upon payment of a fee (s. 495). The
Registrar needs not produce any document after six years from the date it
received it (s. 507).
43. The tax administration does not maintain similar information on
companies. Every person (including a body of persons) who receives income
(including overseas income) must deliver to the Comptroller of Inland
Revenue an annual return of the whole of his/her income from every source
whatever for the basic year (Income and Corporation Tax Act, s. 51). However
the annual tax return does not require companies to disclose their ownership
structure.
44. In practice, all ordinary companies must file an application with
the Registrar of Companies. This application is made manually. At the time
of incorporation, the applicant company is required to fill out an applica-
tion form that includes the name of the company, the number of shares that
it is authorised to issue, the number and names of the directors, the nature
of business, the restriction on business (if any) and the restriction on share
transfers (if any). The company is also required to provide details of the
shareholders.
45. The Registrars office will check whether all the details are complete.
Once the documents are found to be in order, a certificate of incorporation
along with a unique number is granted to the company. The entire process
normally takes two working days. The Registrars office does not verify the
details that are submitted by the company. The incorporator of the company
must submit with the articles of incorporation a statutory declaration from an
attorney at law stating the incorporator/s is not less than 18 years of age, is
not of unsound mind, and does not have the status of a bankrupt.
46. Ordinary companies are obliged to file an annual return with the
Registrar wherein they must report any change in the corporate structure,
change of directors, change of address or changes/increase in share capital
and changes in shareholding. This is also done manually in a prescribed form.
47. In Montserrat, there is one Registrar of Companies located in Brades.
The other officials working with the Registrar are the Registrars assistant,
the senior registry clerk and a clerical assistant. The companies register has
been maintained in electronic form since 2012 and all the documents sub-
mitted by companies are retained in physical form. The details for a given
company, that are maintained electronically by the Registrar include the name
and number of the company, the names of the directors, the names of the
shareholders, number of active directors, the status and date of incorporation
and the annual returns filed by the company.
48. The maintenance of the companies register in electronic form
makes retrieval of information very easy. There are no legal and procedural
impediments for the Registrar to provide any kind of information to the com-
petent authority, when the occasion arises. In the three year review period;
Montserrat has not received any EOI request requesting information main-
tained by the Registrar.
49. Apart from maintaining the documents filed by the companies, it is
also the duty of the Registrar to ensure that companies fulfil their obligations
of filing annual returns. This is reviewed annually and a notice is sent to
any company which has not filed its annual return. Practical experience has
shown that 70% of companies file their annual returns on time. Companies
that are in default are liable to a penalty of XCD 25 per day (USD 9.26).
Every director and officer of the company in default is also guilty of an
offence and can be fined. Montserrat has reported that between 2006 and
2012, penalties were levied amounting to approximately XCD 50 000
(USD 18 500). Montserrat has also reported that between January 2013 and
December 2013, penalties have been levied on 63 companies, amounting to
XCD 57 063 (USD 21 134).
External (Foreign) Companies
50. External companies (and partnerships) must also register with the
Registrar of Companies to carry on business in Montserrat (Companies
Act, ss. 340-341). The application must indicate the companys name, the
jurisdiction within which it is incorporated, the particulars of its corporate
instruments, the address of its registered or head office outside Montserrat,
the address of the principal office in Montserrat and all names, addresses
and occupations of the directors of the company (s. 344). The Miscellaneous
Amendments (Financial Services) Act, 2013 provides that an external com-
pany must, at the time of registration, file with the Registrar, the name and
address of each shareholder and the class and number of shares held by each
shareholder.
51. This Act also introduced regulations that require external companies
to file annual returns that contain the name, address and the class and number
of shares held by each shareholder.
52. The procedure for registration of external companies is the same
as described in the case of ordinary companies. External companies incor-
porated in other jurisdictions must provide certified documents of their
incorporated status. External companies also need to have a registered agent
in Montserrat. The registered agent is subject to AML and has to perform
CDD. The supervision of the registered agent will be discussed later in the
section dealing with anti-money laundering laws.
53. An external company must also file with the Registrar a fully
executed power of attorney (in prescribed form) that will empower a lawyer,
resident in Montserrat, to act as attorney for the company for the purpose of
receiving all lawful notices. No external company can carry out business,
legally, in Montserrat unless it has complied with all these requirements.
54. There are now a very small number (14) of external companies left
registered in Montserrat. However, Montserrat has reported that they have not
come across a case of non-compliance by an external company.
55. There are no legal or practical impediments to the Registrar pro-
viding information on external companies to the competent authority. The
registrar will maintain information on external companies in the same
manner as it does for ordinary companies. In the three year review period
there have been no requests for information received by Montserrat, relating
to external companies.
56. An IBC must be registered with the Registrar of Offshore
Companies, and submit thereto its Memorandum and Articles of Association
(ss. 12-14). The Memorandum must in particular indicate the capital of the
entity, whether the issued shares are registered or bearer shares, and its regis-
tered office and licensed registered agent in Montserrat. It must be signed by
the subscriber(s) of the IBC and any amendment to the Memorandum must be
sent to the Registrar (s. 16). It does not appear that the registration documents
include information on the respective shares of each shareholder; however,
this information is maintained by the company itself (see below). IBCs cre-
ated less than 25 years ago do not fill in an annual tax return, as they are
exempt from the application of the Income and Corporation Tax Act.
57. As per section 8 of the Company Management Act, all IBCs must
have a registered agent who is located in Montserrat. The IBC must also
have a registered office in Montserrat. The registered agent is licensed by the
Financial Services Commission (FSC) of Montserrat. IBCs need not file an
annual return. But they have to pay an annual fee to the Registrar.
58. There are only seven IBCs currently registered in Montserrat. The
office of the Registrar of Offshore Companies consists of the Registrar and a
Financial Officer. The procedure for registering an IBC is the same as in the
case of a domestic company save that a statutory declaration from the regis-
tered agent is not required here. Nevertheless, the registered agent is subject
to the anti-money laundering laws and he/she would be obliged to carry out
CDD when helping to set up an IBC. The IBC need not provide shareholder
information to the Registrar. This information has to be kept at the registered
office of the IBC, however.
59. Where an IBC does not pay its annual fee, the Registrar issues it with
a notice. Failure to pay the annual fee could invite a penalty of USD 100. For
a continuing default, an IBC could also be struck off the register. Montserrat
has reported that during the review period four IBCs were struck off for not
paying their annual fees and penalties of USD 2 800 were levied.
60. Given the practices that support the legal obligations in this regard,
information on IBCs will be available with the registered agent. The
Registrar, on a request from the competent authority, can obtain the informa-
tion from the registered agent, who will be obliged to maintain all ownership
and identity information on the IBC, as part of the CDD that he has to carry
out. The Registrar does not undertake any regulatory or enforcement func-
tions in this regard. Regulation is carried out at the level of the FSC in respect
of the registered agent. In the three year review period there have been no
requests for information received by Montserrat, relating to IBCs.
61. An LLC is formed by filing articles of formation with the Registrar
of Companies. The application must contain: the name, purpose and duration
of the LLC; the address of the registered office in Montserrat and the name
and address of its agent there; and the names and addresses of the members
and, if any, of the manager chosen and vested by the members (LLC Act, ss. 7
and 28). It does not appear that the registration documents include informa-
tion on the shares/interest of each incorporator of the LLC. Similarly, the law
does not require that the Registrar receives information on subsequent mem-
bers. Ownership information is maintained by the company itself (see below).
62. The procedure for registration of LLCs is the same as that for ordi-
nary companies. There are currently three LLCs registered in Montserrat. As
in the case of external companies, LLCs also need to have a registered agent
in Montserrat and a registered office within Montserrat (as per schedule 1,
section 12 of the Company Management Act). The registered agent, being
covered by the AML regulations, will necessarily carry out CDD and will
hold ownership information on the LLC as a consequence.
63. In the three year review period, there have been no requests received
regarding LLCs but there are no legal or practical impediments to the com-
petent authority obtaining information on an LLC.
Information held by the companies
Ordinary Companies
64. An ordinary company must maintain a register of all relevant data
on all members, including their name and latest known address, the date of
entering or ceasing to be a member in the company, and a statement of the
shares held by each member (Companies Act, ss. 177(1) and 177(2)). An ordi-
nary company that grants conversion privileges, options or rights to acquire
shares of the company must also maintain a register showing the name and
latest known address of each person to whom such rights have been granted
(s. 177(6)).
65. Prior to 2013, not all shareholders were members of the company.
Section 371 of the Companies Act defines members as an incorporator of
the company and any other person who agrees to become a member of the
company and whose name is entered in the companys register of members.
Shareholders who were not members of the company were persons in whose
favour a transfer of shares had been executed but whose names have not been
entered in the register of members of the company (s. 105(1)). A company
was not bound or entitled to recognise these transferees until the transfer was
registered (s. 195(6), except for the determination of beneficial ownership).
However, this provision appeared to be targeted at relieving the company
of any liability that resulted from treating the transferor of an unregistered
transfer as the current shareholder and it was difficult to read it as creating an
obligation to register the transfer.
66. The Miscellaneous Amendments (Financial Services) Act, 2013 (in
force from August 2013) now provides that every holder of a share or deben-
ture shall present the share or debenture to the company for registration,
within 30 days of the transfer. The Act also requires the transferor to register
the transfer within 10 days of the transfer.
67. On receipt of this information, the company shall enter the name
of the transferee in its register of members. Contravention of the duty by
the transferor or transferee, makes them liable to a fine of XCD 5 000. This
provision effectively should ensure that all shareholders will be entered in
the companys register. Montserrat states that these provisions also apply to
existing shareholders as at August 2013 who were not members. These share-
holders would have had to present their shares to the company, if they want
to exercise their rights in respect of the shares. Section 199 of the Companies
Act has been amended to provide for this.
68. In addition to the register of members, public companies must keep a
register of their substantial shareholders (s. 177(4) in conjunction with ss. 181
to 185). A person has a substantial shareholding if he/she holds by him/herself
or by his/her nominee shares which entitle him/her to exercise at least 10% of
the unrestricted voting rights at any general meeting of shareholders. Every
substantial shareholder has the duty to inform the company of his/her name
and address and must provide all particulars of the shares held by him/her
or his/her nominee (naming the nominee) within 14 days after that person
becomes aware that he/she is a substantial shareholder or ceased to be so
(s. 181(1)). Failure to give such notice to the company is an offence (s. 185).
The Registrar of Companies can at any time require the company to furnish
a copy of this register (s. 181(2)). The registers may be kept at the registered
office or some other designated place in Montserrat (s. 177(7)).
69. It has been mentioned earlier that no EOI requests were received
regarding companies during the review period. Hence, the system has not
been tested in practice. However, there are no legal or practical impediments
in Montserrats ability to effectively obtain and exchange such information.
The Registrar of Companies is empowered to check whether the companies
are maintaining the information that they are expected to keep. In the case of
ordinary companies, all relevant information is submitted to the Registrar of
Companies in the annual report. During the review period, the Registrar did
not carry out any such checks on companies, but Montserrat has reported that
they are in the process of developing a plan for periodic checks.
70. The Montserratian authorities have found that the compliance levels
of companies are satisfactory.
External (foreign) companies
71. The Miscellaneous Amendments (Financial Services) Act, 2013
provides that an external company must, at the time of registration, file with
the Registrar, the name and address of each shareholder and the class and
number of shares held by each shareholder. This Act also introduced regula-
tions that require external companies to file annual returns that contain the
name, address and the class and number of shares held by each shareholder.
72. These amendments ensure that the external company will hold this
information as it must submit these details to the Registrar. The failure to
follow these requirements will make the company liable to a penalty of
XCD 5 000 (USD 1 850). The Registrar also has the power of inspection as in
the case of ordinary companies.
73. An IBC must maintain one or more share register(s), a copy of which
is kept at its registered office, showing the name and addresses of the persons
who hold registered shares in the company, specifying the number of each
class and series of registered shares held by each person, the dates on which
a person entered into the share register and ceases to be a member (IBC Act,
s. 28(1)).
74. The transfer of registered shares is usually done by written instru-
ment signed by the transferor and containing the name and address of the
transferee, who will be treated as a member once his/her name is entered
in the share register. In the absence of a written instrument of transfer, the
director of the IBC may accept such evidence of a transfer as they consider
appropriate (s. 30).
75. The Registrar of Offshore Companies can carry out checks on the
IBCs to ensure that they maintain this information. This is relevant because
IBCs need not file an annual return with the Registrar. The power of the
Registrar to carry out this check and penalties for non-compliance should
ensure that the IBCs maintain the information.
76. There are only seven IBCs left in Montserrat, and the authorities have
reported that they have not come across an instance when an IBC was found
to be in breach of its obligations. While the Registrar has not carried out any
physical checks on the IBCs, the annual compliance statements that are sub-
mitted by the registered agents have been monitored.
77. An LLC must maintain a list of the name, last known business activ-
ity, residence or mailing address of each member, holder of an economic
interest and manager, and keep the records for five years (LLC Act 2010,
ss. 24(1) and 24A). The admission as member must be performed in accord-
ance with the LLC agreement or otherwise upon the consent of all members.
If the members do not consent to the transfer of interest (called assignment
of interest), the assignment remains valid (and must be registered) but the
assignee/ holder of an economic interest has no right to participate in the
management of the business of the LLC; although he/she is entitled to share
in the profits and losses therein (s. 45).
78. As in the case of other companies, the annual return that has to be
filed by the LLC with the Registrar of Companies is the primary tool to
ensure that the LLC maintains this information. The Registrar also has the
power of inspection as in the case of ordinary companies and IBCs
79. There are only three LLCs left in Montserrat now but and Montserratian
authorities have not reported any instance where an LLC was found to be in
default of its obligations.
Ownership Information held by nominees and service providers
80. Persons acting as registered agents for IBCs or acting as director,
manager or officer or nominee shareholders of domestic companies and
foreign companies must be licensed under the Company Management Act.
Further, pursuant to the AML Regulations persons carrying on a regulated
business or who by way of business provide services such as acting as a sec-
retary of a company, or providing a registered office are considered as service
providers.
81. Any person acting as a service provider by way of business or who
holds a licence under the Company Management Act is subject to the AML
Regulations, 2010 including customer due diligence measures. A person who
performs the mentioned businesses without a licence is liable to a fine not
exceeding XCD 25 000 (USD 9 260) and/or to imprisonment up to one year.
82. A service provider (including a nominee) must apply customer due
diligence measures before it establishes a business relationship or carries
out an occasional transaction. The measures must also be applied to exist-
ing customers on a risk assessment basis: the service provider must obtain
identification information when there is a change in the identification infor-
mation of a customer, beneficial ownership of a customer, or third parties for
whom the customer is acting (AML/CFT Regulations, s. 5). A contravention
of this obligation entails liability to a fine up to XCD 100 000 (USD 37 037).
Records must be kept of the identity information obtained and supporting
documents for 5 years (ss. 13 and 14). The Dictionary under Schedule 1
to the Regulations clarifies that beneficial owner includes an individual
who is an ultimate beneficial owner of the legal person, partnership or
arrangement (including trust) as well as an individual who exercises ultimate
control over the management of the legal person, partnership or arrangement,
whether alone or jointly with any other person(s).
83. The AML/CFT Code provides rules for the implementation of the
Regulations and specifies that when the customer, the identity of which must
be verified, is a legal entity, the service provider must obtain the name and
date of incorporation of the entity, any official identifying number, name and
address of the registered agent (if any), mailing address and principal place
of business of the entity, and identification of the individuals who are the
ultimate holders of 20% 10% or more of the entity (unless the entity presents
a low AML/CFT risk) (rules 16 to 18).
84. In practice the anti-money laundering laws are the mainstay of the
regulatory framework in Montserrat. There are 49 licensed service providers
in Montserrat, with non-profit organisations making up the largest group, at
19. They are followed by nine designated non-finance businesses and profes-
sions (DNFBP), seven insurance companies, four international banks and
two domestic banks. Other than these, the other licensees include company
managers (4), IBCs (7), money service business (2), one trust company, one
co-operative society and one building society.
85. The authority which supervises service providers and oversees the
implementation of the anti-money laundering laws in Montserrat is the
Financial Services Commission (FSC). Nine persons are working in the
FSC of which, three persons work in the AML supervision division. Any
person, who wishes to act as a service provider, must obtain a licence from
the FSC. The application must be in writing and signed either by the appli-
cant or by a person acting on behalf of the applicant. The application must be
accompanied by the constitution/memorandum/articles of association (where
applicable), audited accounts for the previous year, the service providers
revenue and expenditure for the previous year and biographical details of the
directors and controllers.
86. The FSC checks the veracity of the details filed by the applicants
against the electronic databases that it has, World-Check and through the
police and also the supervisory authorities in the applicants country of origin
(where applicable). Only when the FSC is satisfied that the applicant is fit and
proper and satisfies the requirements of the AML/CFT regulations, does it
grant the license.
87. Even after the license is granted, the FSC carries out periodic checks
on the licensees through off-site and on-site inspections. Off-site reviews
are done quarterly for prudential oversight and annually for review of
AML/CFT issues. The on-site inspections consist of (i) interviews with the
institutions representatives (ii) review of quarterly and annual financial state-
ments (iii) review of parent companys audited accounts (where applicable)
(iv) review of a sample of depositors accounts (v) review of a sample of loans
and investments (vi) review of corporate governance practices and (vii) review
of compliance with AML/CFT policies.
88. In the case of company managers (registered agents), the FSC
oversees their duties of carrying out CDD on their clients. The company
managers, when assisting in the process of company formation, collect details
that include (i) the full name and trading name of the legal entity (ii) the date
of incorporation/formation (iii) the official identification number (iv) the
address of the registered office (v) the names of the directors and (vi) the
identity documents (copy of passport) of directors and individuals who are
ultimate holders of 10% or more of the legal entity. Apart from the copy of
the passport, the other proofs of identity that need to be collected are copies
of national identity document, social security document and utility bills. The
company manager must keep these documents for a period of not less than
five years.
89. As mentioned earlier, during the on-site visits carried out by the FSC
checks are made on whether the company managers have complied with
all these requirements. Service providers are required to conduct enhanced
CDD where reliance is placed on third parties, including foreign third parties.
During the three year review period, two on-site inspections were carried out.
90. In these inspections, the FSC noted that (i) the service providers had
not obtained all information required in establishing a business relationship
(ii) there was a failure to take into account the internal auditors recom-
mendations (iii) information regarding source of funds was not obtained and
(iv) proof of customers residence was not obtained. In all these cases the FSC
wrote to the licensee asking it to ensure that the shortcomings were taken
care of. The licensee complied with the instructions of the FSC in all cases.
The FSC has now developed a programme of on-site inspections that will
ensure that every licensee is inspected once in three years.
91. The FSC has the power to levy penalties and can also revoke the
license. However, no such action was taken in the review period. The FSC
has reported that the general compliance level with regard to anti-money
laundering laws is considered to be satisfactory. However, it is recommended
that Montserrat should make its supervisory system even more dissuasive,
and also consider applying sanctions.
92. Another part of the regulatory framework of the anti-money launder-
ing regime lies with the Financial Crime and Analysis Unit (FCAU). The
FCAU is part of the Montserrat police and has four persons working in it. It
receives Suspicious Activity Reports (SARs) from reporting entities such as
banks and money service businesses. During the review period the FCAU
received 63 SARs. After investigations, in two cases prosecutions ended in
conviction.
93. The FCAU also exchanges information with other jurisdictions
through mutual arrangements (other than DTCs/TIEAs). The countries to
whom Montserrat has provided information are Panama, St. Vincent and
the Grenadines, Guatemala, St. Kitts and Nevis and Antigua and Barbuda.
The information provided included banking information. The Montserratian
authorities indicated that the requesting agency/jurisdiction was satisfied with
the information provided by Montserrat, although this could not be tested
by the assessment team. This demonstrates that Montserrat is in a position
to obtain and exchange information, including banking information. This
is because the Montserrat competent authority has similar access powers to
those available to the FCAU. Montserrat has reported that 19 pieces of infor-
mation were exchanged over the period. 10 were made by the FCAU to other
FIUs and 9 were received from other FIUs to the FCAU.
Bearer shares (ToR A.1.2)
94. A bearer share is a share in the capital of a company represented by a
certificate that does not record the owners name and which is transferable by
the mere delivery of the certificate. Where a jurisdiction permits the issuance
of bearer shares, it should have appropriate mechanisms in place that allow
the owners of such shares to be identified. One possibility among others is a
custodial arrangement with a recognised custodian or other similar arrange-
ment to immobilise such shares.
95. In Montserrat, ordinary companies are expressly not permitted to
issue bearer shares or bearer share certificates (Companies Act, s. 29(2)).
On the other hand, IBCs can issue bearer shares, but since 2002 these shares
must be immobilised. The law amended the IBC Act to insert provisions on
the immobilisation of bearer shares prescribed that IBCs had to ensure that
their bearer shares were deposited with a custodian within 12 months of the
entry into force of the amending law (or 24 months with the FSC approval).
Remaining bearer shares became null and void thereafter, unless restored by
the Court in the next three years (IBC Act, s. 37B), i.e. at the latest in 2008.
The Memorandum of Association of an IBC must indicate the number of
initial bearer shares (s. 12) and the share register(s) of the IBC must specify
the total number of each class and series of bearer shares and, for each
certificate, its identifying number, its date of issuance, and the name of its
custodian (s. 28(1)). Montserrat reports that only four of these IBCs are active.
None have issued bearer shares (see below).
96. Since 2002, bearer shares can only be issued to a custodian licensed
by the FSC to this effect, and who must also be licensed either under the
Company Management Act or the Banking Act (IBC Act, s. 37A). As of
December 2013, three entities are licensed to act as custodians of bearer
shares in Montserrat. The FSC may issue a licence when satisfied that the
applicant is a fit and proper person and is qualified to carry on the business
of company manager (Company Management Act, s. 5). There is no specific
requirement that a licensee must be a resident of Montserrat, however, the
Company Management Act contemplates that the licensee is conducting busi-
ness in Montserrat (Company Management Act, s. 4).
97. The transfer of bearer shares can only occur between custodians,
unless the shares are to be redeemed by the company or converted into reg-
istered shares, and a person that holds a beneficial interest in those bearer
shares cannot transfer or deal in the interest in those shares without the
approval of the custodian (s. 37(A)(4)). If bearer shares were delivered to per-
sons other than a licensed custodian, the recipient of the bearer shares would
have to forward the shares to a custodian within 60 days, or the shares would
be null and void.
98. Where there is a change of custodian (s. 38(B)(6) and (7)) the custo-
dian is obliged to inform the beneficial owners of the bearer shares when he/
she is unable to act as custodian.
99. A breach of these rules constitutes an offence. A company that issues
bearer shares to a non-custodian, as well as every responsible director and
officer, is liable to a fine of USD 10 000. The custodian who contravenes
the rules is liable to a fine of USD 25 000 and the shareholder to a fine of
USD 10 000 (s. 37A).
100. Finally, as any person licensed under the Company Management Act
or the Banking Act, a custodian is a service provider subject to the AML/CFT
rules, and must apply customer due diligence measures. Consequently, there
is a requirement to identify and maintain information on the person on whose
behalf they hold the bearer share (see discussion above regarding nominees).
101. Bearer shares must always be held by licensed custodians in Montserrat.
The company that has issued the bearer share is required to maintain in its share
register the identity of the custodian of the share. The custodian is subject to
AML customer due diligence rules and so is required to know the identity of the
person on whose behalf it is holding the share. Consequently, information on the
owners of bearer shares will be known.
102. In practice, there is no instance of bearer shares having been issued
in Montserrat, three entities were issued licenses under the Company
Management Act which authorise them to act as custodians of bearer shares.
Therefore, this issue does not exist in practice in Montserrat.
Partnerships (ToR A.1.3)
103. Partnerships in Montserrat can be either general or limited:
A General Partnership is defined as the relationship which subsists
between several persons carrying on a business in common with a
view to profit. These entities are governed by the Partnership Act,
supplemented by the rules of equity and common law, unless the
entity is registered or incorporated under another act, such as the
Companies Act (Partnership Act, s. 3). All partners are jointly liable
for all debts and obligations of the general partnership, and are jointly
and severally liable for any wrongdoing (ss. 11-14). The general part-
nership is the simplest form of entity: it can (but has no obligation to)
be created by a deed.
A Limited Partnership (LP) is defined as an entity comprised of
one or more general partners who are liable for all debts and obli-
gations of the partnership, and one or more limited partners who
made a capital or property contribution at the time of entering the
partnership and who are not liable for any debts or obligations of the
entity, but cannot take part in the management of the LP (Limited
Partnership Act, ss. 4 and 6). Partners (general or limited) of an LP
can be individuals and legal entities, including foreign ones, but
at least one general partner must be resident in Montserrat (or, if a
company, be incorporated or registered under the Companies Act;
s. 4). An LP must have a registered office in Montserrat (s. 5A(1)).
LPs are governed by the Limited Partnership Act, supplemented by
the Partnership Act and the rules of equity and common law (s. 3).
104. A general partnership or limited partnership that carries on trade or
business cannot have more than 20 members. Above this threshold, the entity
must be incorporated as a company under the Companies Act (Companies
Act, s. 3).
105. The Montserratian authorities indicate that as of March December
2013 there is no record of any entities being registered under the Limited
Partnerships Act. General partnerships are registered under the Registration
of Business Names Act. Montserrat has reported that as at December 2013
there were 290 entities registered
106. Foreign partnerships can also carry on activities in Montserrat,
in which case they are covered by the concept of external company (see
Companies above).
Ownership and identity information held by the public authorities
107. Ownership and identity information on general and limited partner-
ships is held by the tax authorities of Montserrat, and to a lesser extent, by
the Registrar of the High Court (for general partnerships) and the Registrar
of Companies (for limited partnerships).
108. General and limited partnerships are not subject to tax under the
Income and Corporation Tax Act partners are but they nonetheless must
submit a return of their income to the tax administration of Montserrat. This
annual return includes the names and addresses of the general and limited
partners in the firm together with the amount of the share of the income to
which each partner was entitled for that year (s. 24). In addition, the partners
must also each declare their respective share of the income of the partner-
ship in their own return of income (s. 24). Where no partner is resident in
Montserrat, the return must be made and delivered by the attorney, agent,
manager or factor of the firm resident in Montserrat. The tax administration
therefore maintains full ownership information.
109. An LP that does not do business in Montserrat (other than so far as
may be necessary for the carrying on of the business of that limited partner-
ship outside Montserrat) can be exempted from tax for 25 years on the assets
and income originating outside the island. Profits distributed to persons who
are not residents or citizens of Montserrat are similarly tax exempted (LP Act,
ss. 17-19). Section 51 of the Income and Corporation Tax Act was amended
on 1 January 2012, so that the obligation to fill in a tax return applies to
any person who receives an income, and no longer only to persons who are
chargeable with tax. This now includes exempted LPs.
110. An LP must also be registered with the Registrar of Companies (or is
otherwise considered a general partnership) and provide the following data:
the name of the firm and the general nature of its business; the term for which
the LP is entered into (or, if for an unlimited duration, a statement to that
effect), and the date of its commencement; the address of the registered office
in Montserrat and the name and address of the registered agent; and the full
name and address of each general partner (and the certificate of incorpora-
tion or registration of corporate general partners) (LP Act, s. 7). The registrar
must be informed of any changes to the composition of the LP, and receive an
annual return from the general partners certifying that the LP has complied
with the requirements to notify any change (ss. 8(1) and 9). The law does
not require that the registration documents contain information on limited
partners or on the repartition of shares between partners, but this information
is maintained by the LP itself (see below).
111. Partnerships carrying on a business in Montserrat must be registered
in the Register of Business Names. To obtain this registration for a general
partnership, the applicant has to provide proof of identity (copy of passport)
of all partners. In the case of non-resident partners, a clearance certificate is
obtained from the police. Applicants for Police Clearance Certificate com-
plete a form with their identification details and the period of time residing
in the jurisdiction. The police check their records to ascertain whether they
have committed any offences during the period of residency. Once satisfied,
the police issue the clearance certificate. The other details that need to be pro-
vided to the Registrar are details of the type of business sought to be carried
out and the address of the business. This procedure has been laid down in
the Schedule to the Register of Business Names Act. In the event that anyone
wishes to register a limited partnership, the process is the same (an LP must
also be registered with the Registrar of Companies. That procedure has been
discussed in the section on companies).
112. The supervision of the Register of Business Names is now with the
FSC (since August 2013). The FSC maintains all the details that have been
filed by the general partnerships, registered so far. Starting from 2014, all
partnerships are required to file an annual return, as in the case of compa-
nies. The FSC proposes to set up a system of oversight based on the annual
returns filed by the partnerships. This would include a systematic review of
the annual returns filed to ensure that this obligation is met by all partner-
ships. This will also help in selecting cases for further review or audit.
113. Montserrat did not receive any requests related to partnerships during
the review period. However there are no legal or process impediments to
Montserrat obtaining and providing information on partnerships.
Information held by the Partnership or Partners
114. The General Partnership Act does not specify whether or to which
extent any ownership and identity information must be available, but none-
theless indicates that no person may be introduced as a partner without the
consent of all existing partners (subject to any agreement, s. 25(g)). In addi-
tion, the partners are obliged to render true accounts and full information of
all things affecting the partnership to any partners (s. 29). Any partner of a
general partnership should therefore know the identity and share in the part-
nership of the other partners, but in any event the tax administration has full
ownership information.
115. The Limited Partnership Act requires that the general partner(s) of
an LP maintain at the registered office of the entity a register which contains
the name, address and contribution of each general or limited partner, and
the amount and date of any payment representing a return of any part of the
contribution of any partner. The register must be updated within 21 days of
any change (s. 10).
116. During the review period, there was no mechanism to check whether
the partnerships were maintaining this information. However, as mentioned
above, the Register of Business Names is now administered by the FSC.
A requirement to file an annual report has also been created. Now that
Montserrat has created this practical mechanism, it should monitor this to
ensure that all partnerships keep the information that they are legally obliged
to.
Information held by service providers
117. An LP must have at all times a registered office and a registered
agent in Montserrat, provided by a person who holds a licence under the
Companies Management Act. This means that the registered agent has to
fulfil the requirements stated by the FSC and the AML/CFT Code (LP Act,
ss. 5A and 5B), including the customer due diligence obligations described
above under Companies.
118. The responsibilities of the registered agent have been described in the
preceding paragraphs dealing with the anti-money laundering laws. The same
is relevant here. The registered agent is supervised by the FSC. There are no
LPs registered in Montserrat to date.
Trusts (ToR A.1.4)
119. The Trusts Act governs the creation and administration of trusts,
and is based on the principles of English trust law: the rules of equity and
common law apply to trusts, except in so far as they are inconsistent with the
express provisions of the Act (s. 56). The Act defines a trust as a legal rela-
tionship created when assets have been placed under the control of a trustee
for the benefit of a beneficiary or for a specified purpose. A trust can be cre-
ated by oral declaration, or in written form (all exempted trusts in particular),
by conduct, or by operation of law (s. 5). The Act permits the creation of
purpose trusts (whether charitable or not). A trustee may at his/her option
register the trust instrument or will, and as of March 2012, there is only one
registered trust in Montserrat.
120. Any person under the law of Montserrat who has the capacity to own
or transfer property may be the settlor or trustee of a trust (ss. 11 and 28).
The settlor may also be a trustee, beneficiary or protector of the trust (s. 28)
and the trustee may be a beneficiary (s. 17). If a trustee is not a resident in
Montserrat, a beneficiary may apply to the High Court for the appointment
of an additional trustee who is resident in Montserrat (s. 14), but this is not
mandatory.
121. The trustee owes a fiduciary duty to the beneficiaries (s. 31), and has
a duty to provide full and accurate information as to the state and amount of
the trust property and the conduct of the trust administration to the court,
trust settlor or protector, and any beneficiary of the trust who is of full age
and capacity (s. 32). A trustee, therefore, has a duty to know the identity of
the settlor or any beneficiaries.
122. In addition to the provisions of the Trust Act, the profession of trus-
tee is also governed by the International Banking and Trust Companies Act
(IBCT Act), pursuant to which a person shall carry out trust business in or
from within Montserrat only if he/she holds a valid licence issued by the
Financial Services Commission. This broadly covers all persons that carry
on the business of acting as a trustee (IBCT Act, ss. 14 and 2)). A licensee
must have a principal office in Montserrat being a place of business and must
also have two authorised agents, that must be either an individual resident in
Montserrat and authorised under the Company Management Act or a general
trust company licensed under the IBCT Act.
123. Licensed trust companies are also service providers subject to the
obligations under the AML/CFT regime (AML/CFT Regulation, Dictionary,
rule 10), and the AML/CFT Code (s. 19(1)) requires service providers to
identify client trusts with the name and any official identification number of
the trust; and identification information on each trustee, settlor, protector or
enforcer of the trust. Up to 2013, beneficiaries with a vested right only had
to be identified only where the service provider determined that any busi-
ness relationship or occasional transaction concerning the trust presented a
higher risk of money laundering or terrorist financing. The Miscellaneous
Amendments (Financial Services) Act, 2013 has amended section 31 of the
Trusts Act to provide that a trustee must maintain identity on all beneficiar-
ies of a trust.
124. Finally, as for companies and partnerships, the trustee of a trust
that receives an income (including overseas income) must deliver to the
Comptroller of Inland Revenue an annual return of the whole of his/
her income from every source whatever for the basic year (Income and
Corporation Tax Act, ss. 25 and 51). When the settlor, who may be a benefi-
ciary, retains the power to decide on the beneficiary of the trust, this person
remains liable to be taxed on the income derived from the trust (s. 31). When
the trust first registers, it should provide its deed to the tax administration
(pursuant to the Business Tax Guide). The annual tax return requires that the
names, addresses and share of assessable income of all partners, joint owners,
etc. be reported, but does not specifically require that the identity of the sett-
lor, trustees and beneficiaries of a trust be included.
125. Montserrat follows English Common law. Common law places obli-
gations on trustees to have full knowledge of all the trust documents, to act
in the best interests of the beneficiaries and to only distribute assets to the
right persons
3
. These obligations implicitly require all trustees to identify the
beneficiaries of the trust since this is the only way the trustee can carry out
his/her duties properly. If the trustees fail to meet their common law obliga-
tions they are liable to being sued. No obligation other than these common
law fiduciary duties appear to lie on non-professional trustees. Even though
that gap is potentially narrow, covering only persons acting without remu-
neration, Montserrat should monitor this gap to ensure that it does not in any
way hamper the effective exchange of information in tax matters. Finally,
it is conceivable that a trust could be created under the laws of Montserrat
and have no other connection with Montserrat. In that event there may be no
information about the trust available in Montserrat.
126. As mentioned above, trust companies are licensed under the IBCT
Act. The application for a license must be accompanied by a business plan,
a statement of assets and liabilities of the trust company, details of the
shareholders, directors, managers and senior officers of the applicant. The
application is made to the FSC and the FSC follows the same procedure that
has been described in the section on companies. Only after the FSC is satis-
fied that the applicant is fit and proper in all ways, is the license granted to
the applicant trust company.
127. The trust company is then subject to the supervision of the FSC as
has been described in the section of this report dealing with anti-money laun-
dering laws. The trust company has to file an annual return with the FSC as
in the case of other companies. Only one company is currently licensed to act
as a trust company.
128. All persons providing trust services need to be licensed by the FSC.
129. Montserrat has not received any requests regarding trusts during
the review period. As a consequence, it was not possible for the assessment
team to review the effectiveness of the law in ensuring the availability of
ownership information in the situation of trusts, particularly those with non-
professional trustees. However, there are no legal or process impediments in
Montserrat providing information on trusts. A License has been granted to
one trust company.
3. Knight v Knight (1849) 3 Beav 148
Foreign trusts
130. Montserrat passed an act enabling the United Kingdom to ratify the
Hague Convention on the Law Applicable to Trusts and on their Recognition,
on behalf of Montserrat. The provisions of the Convention therefore have
the force of law in Montserrat. A person resident in Montserrat can act as a
trustee, protector, or administrator of a foreign trust or otherwise in a fiduci-
ary capacity related to a trust governed under foreign law. The AML/CFT
Regulations and Code described above apply correspondingly to professional
trustees of foreign trusts, since the IBCT Act does not discriminate between
trustees of Montserratian and foreign trusts. Foreign trusts are also covered
by the amendments to the Trust Act, referred to above.
131. The Trust Act also recognises that a settlor may create a trust of a
type recognised by the law or rules of his/her religion or nationality or which
is customarily used by his/her community, provided that there is a recital to
that affect in the instrument creating the trust. In addition, the trust must be
of a type approved by the Governor (Trust Act, s. 29).
Foundations (ToR A.1.5)
132. The concept of private foundation does not exist under the laws of
Montserrat.
Other entities and arrangements
133. A co-operative society created under the Co-operative Societies Act
is a self-help, collectively owned and democratically controlled business enter-
prise registered under this Act, which consists of a group of people that provide
socially desirable and economically beneficial services to its participating
members on a joint action and not-for-profit basis. Co-operative Societies are
prescribed service providers under the AML/CFT Regulations 2010 and reg-
istered with the FSC, which ensures the availability of ownership information
(see above Ownership Information held by nominees and service providers).
134. Montserrat has not received any requests regarding co-operative
societies during the review period. However, there are no legal or process
impediments to obtaining and providing information regarding co-operatives.
Enforcement provisions to ensure availability of information
(ToR A.1.6)
135. Montserrat should have in place effective enforcement provisions to
ensure the availability of ownership and identity information, one possibil-
ity among others being sufficiently strong compulsory powers to access the
information. This subsection of the report assesses whether the provisions
requiring the availability of information with the public authorities or within
the entities reviewed in section A.1 are enforceable and failures are punish-
able. Questions linked to access are dealt with in Part B.
136. Pursuant to the Companies Act, a company, and every director
and officer who does not submit the annual return showing its ownership
structure to the Registrar of Companies is guilty of an offence and liable on
summary conviction to a fine of XCD 5 000 (USD 1 850, ss. 194 and 533). In
addition, a natural person and/or director who knowingly makes or assists in
making a report, return, notice or other document that is required to be sent
to the Registrar that contains an untrue statement of a material fact; or omits
to state a material fact required is guilty of an offence and liable on summary
conviction to a fine of XCD 5 000 and/or to imprisonment for a term of up to
three years (s. 530). If an external company fails to comply with its registra-
tion duties, neglects or refuses to make an annual return, it may be stricken
off the Register of Companies, which prevents the foreign entity from carry-
ing on any more business in Montserrat (ss. 351 and 356).
137. An IBC that does not (or ceases to) meet the requirements specific to
this type of company is punishable by a fine of USD 100 per day of infringe-
ment (IBC Act, s. 6). In addition, a contravention of the obligations on the
maintenance of a share register is punishable by a fine of USD 25 per day
(s. 28(6)), and a member can also apply to the court for an order of rectifica-
tion and damages (s. 29). In addition as noted above under subsection A.1.2 of
the report, offences related to bearer shares and their transfer are punishable
by fines between USD 10 000 and 25 000.
138. If a service provider fails to comply with the requirements to identify
its customers, he/she is punishable by a fine not exceeding XCD 100 000 on
summary conviction (AML/CFT Regulation, s. 5).
139. Pursuant to the LLC Act (s. 24A), an LLC that contravenes its obliga-
tion to maintain a list of members and holders of economic interest is liable
on summary conviction to a fine of USD 50 000. A person who knowingly
makes untrue or misleading statements is liable to a fine of USD 100 000 and
to imprisonment for a term of 5 years.
140. The International Banking and Trust Companies Act provides that a
person that carries on trust business without a licence is subject upon sum-
mary conviction to a fine of USD 25 000 and/or to a term of imprisonment of
2 years (s. 14). A contravention of the obligation to identify customers entails
liability to a fine up to USD 100 000 under the AMC/CFT Regulations (s. 5).
141. Every partner of a general partnership (with a business name other
than the list of all partners) that does not register with the Registrar is
liable to a fine of XCD 25 (USD 10) for every day during which the default
continues; and the rights of the defaulter under any contract made is not
enforceable by legal proceedings (Registration of Business Names Act,
ss. 9-10). Persons who knowingly make a false statement are liable to a fine of
XCD 100 (USD 37) and/or imprisonment for 3 months (s. 11). The Registrar
may also require any person to furnish such particulars as he/she thinks nec-
essary to ascertain whether a registration or modification should be made,
upon sanctions (s. 12).
142. Under the LP Act, the absence of registration of the LP deprives the
entity of its limited nature and all partners are considered to be general part-
ners (s. 7(5)). The non registration of a change to the registered particulars is
subject to a fine of USD 250 for every day during which the offence contin-
ues (s. 21). In addition, a person who provides the registered office to an LP
or acts as a registered agent without having a valid licence is liable a fine of
USD 25 000 and/or to a term of imprisonment of one year, and the general
partners to a fine of USD 10 000 (ss. 5A and 5B).
143. The Income and Corporation Tax Act also provides for sanctions
that would be relevant in particular for partnerships that do not disclose their
ownership structure in their annual return. First, a person who fails to deliver
a true and correct tax return must pay a fine of XCD 10 per month of delay
(USD 3.7 or EUR 2.9).
4
Second, any person who wilfully fails to comply
with his/her obligation to deliver a true and correct tax return is guilty of an
offence (s. 51). The Act further provides that any person who without reason-
able excuse (whether or not liability to tax is involved) does not render any
return is guilty of an offence and liable on summary conviction to a penalty
not exceeding XCD 2 000 (USD 741 or EUR 576), and, in default of payment
to imprisonment up to 4 months, and after judgement has been given for that
penalty to a further penalty of XCD 100 (USD 37 or EUR 29) for every day
during which the offence continues. Making a false or incomplete declaration
is punishable by a fine up to XCD 4 000 (USD 1 481 or EUR 1 152), and in
default of payment to imprisonment up to 8 months, and doing so knowingly
is publishable by a fine up to XCD 20 000 (USD 7 407 or EUR 5 758) or
imprisonment up to 12 months (ss. 85-87).
144. Montserrat has reported that there was no occasion where it con-
sidered it necessary to levy any such penalties during the three year review
period.
4. The East Caribbean dollar (XCD) pegged to the United States dollar (XCD 2.70
for USD 1). As of 10 may 2012, USD 1 = EUR 0.77.
Determination and factors underlying recommendations
Phase 1 Determination
The element is in place.
Phase 2 rating
Largely Compliant
Factors underlying
recommendations Recommendations
New provisions were introduced in
August 2013 to ensure availability
of ownership information on all
shareholders of companies (domestic
and foreign) and in respect of
beneficiaries of trusts. In view of the
short period between the introduction
of the new provisions and the end
of the period under review, the
enforcement of the new provisions
could not be assessed.
Montserrat should monitor the
operation of the new provisions on the
availability of ownership information
for all shareholders of companies
(domestic and foreign) and all
beneficiaries of trusts in Montserrat.
In situations where deficiencies in
complying with AML obligations are
detected by the FSC, the person
concerned is asked to address the
situation. If these deficiencies are
addressed in the timeframe granted
by the FSC, sanctions are not applied.
When significant breaches of AML
obligations are discovered, even if the
gaps are addressed by the person
concerned, the FSC should consider
applying sanctions.
A.2. Accounting records
Jurisdictions should ensure that reliable accounting records are kept for all
relevant entities and arrangements.
General requirements (ToR A.2.1)
145. The Terms of Reference sets out the standards for the maintenance
of reliable accounting records and the necessary accounting record retention
period. It provides that reliable accounting records should be kept for all rel-
evant entities and arrangements. To be reliable, accounting records should;
(i) correctly explain all transactions, (ii) enable the financial position of the
entity or arrangement to be determined with reasonable accuracy at any time;
and (iii) allow financial statements to be prepared. Accounting records should
further include underlying documentation, such as invoices, contracts, etc.
Accounting records need to be kept for a minimum of five years.
146. The Income and Corporation Tax Act obliges any person that is
engaged in any trade, business or profession to keep proper books of account
in English sufficient to record all transactions (s. 21). This obligation covers
ordinary companies, non exempted limited liability companies, external
(foreign) companies, general partnerships and non-exempted limited partner-
ships, trustees and IBCs created more than 25 years ago. IBCs created less
than 25 years ago are exempted from the application of the ICTA. Exempted
LLCs and exempted LPs are exempted from taxes for 25 years. Until 2013,
it was unclear whether this exempted them from the other obligations of the
ICTA such as the obligations to submit an annual tax return and keep books
of accounts. In addition, only entities that are engaged in trade, business
or any profession are covered by this record keeping obligation. According
to the Montserratian authorities, entities engaged in passive investment
activities are considered as being covered by this obligation, on the basis
that the long term profit motive would constitute a business activity. The
Miscellaneous Amendments (Financial Service) Act 2013 revised section 21
of the ICTA to require all persons engaged in any trade, business or profes-
sion to keep, in English, proper books of account.
147. Any person who fails to comply with this obligation is guilty of an
offence and liable to a penalty not exceeding XCD 2 000 (USD 741) and in
default 4 months imprisonment, and after judgment has been given for that
penalty to a further penalty of XCD 100 (USD 37) for every day during
which the obligations are not complied with (s. 85). Any person who without
reasonable excuse (whether or not liability to tax is involved) does not render
any return or does not otherwise comply with the law, is guilty of an offence
and liable on summary conviction to a penalty not exceeding XCD 2 000
(USD 741), and, in default of payment to imprisonment up to 4 months,
and after judgement has been given for that penalty to a further penalty
of XCD 100 for every day during which the offence continues (USD 37).
Making a false or incomplete declaration is punishable by a fine up to
XCD 4 000 (USD 1 481), and in default of payment to imprisonment up to
8 months, and doing so knowingly is punishable by a fine up to XCD 20 000
(USD 7 407) or imprisonment up to 12 months (ss. 85-87).
148. In addition, the Acts that govern the different entities in Montserrat
include separate provisions on accounting standards.
149. All Ordinary Companies must keep accounting records that are
sufficient to record and explain the transactions of the company, that at any
time enable the financial position of the company to be determined with
reasonable accuracy, and that are sufficient to enable financial statements to
be prepared and audited (Companies Act, s. 148A). The accounting records
must contain all entries from day to day of all sums of money received and
expended by the company, details of all sales and purchases and a record
of the assets and liabilities. A company in Montserrat that consolidates the
income from subsidiaries in its financial statements is obliged to keep at
its registered office a copy of the financial statements of each subsidiary
(s. 151(1)). In the case of a public company or of a private company the gross
income of which exceeds XCD 4 millions or the assets exceed XCD 2 mil-
lions (respectively USD 1.5 and 0.7 million), copies of annual financial
statements must be sent to the Registrar of Companies (s. 154). By failing to
comply with the obligations of s. 148A a company and every officer of a com-
pany affected is guilty of an offence and is subject to a penalty of XCD 5 000
(USD 1 850, s. 533).
150. An IBC must keep, at its registered office or elsewhere, accounting
records that are sufficient to record and explain the transactions of the com-
pany and that at any time enable the financial position of the company to be
determined with reasonable accuracy. A company that fails to keep account-
ing records or the minutes of meetings or copies of all resolutions is liable
to a penalty of USD 25 for each day or part thereof which the contravention
continues (IBC Act, s. 66). This applies whether or not the IBC was created
less than 25 years ago.
151. Pursuant to the LLC Act, an LLC must maintain records relating to
true and full information regarding the status of the business and its financial
condition (s. 24(1)(a)).The Miscellaneous Amendments (Financial Services)
Act 2013 has amended section 34-A of the LLC Act to provide that all LLCs
shall keep reliable accounting records including underlying documenta-
tion that (a) are sufficient to explain the transactions of the LLC (b) will
at any time enable the financial position of the LLC to be determined with
reasonable accuracy and (c) allow financial statements to be prepared and
audited. The amended provisions further provide that the accounting records
must contain (a) entries from day to day of all sums of money received
and expended by the LLC and the matters in respect of which receipt and
expenditure takes place and (b) the record of the assets and liabilities of the
LLC. It is clarified that underlying documentation refers to any documents
that serve as evidence of a transaction and includes invoices, cash receipts,
cheques and contracts. The LLC must keep these records for seven years. If
a LLC does not comply with these obligations, it is liable for a summary fine
of USD 5 000.
152. The Partnership Act provides generally that the partners have to
render true accounts and full information of all things affecting the part-
nership to any partner or his/her agents (s. 29). The LP Act provides more
specifically that an LP must keep accounting records sufficient to explain
all transactions and enable the financial position to be determined with
reasonable accuracy, at any time. In the case of failure to comply, each gen-
eral partner commits an offence and is liable to a fine of USD 10 000 (s. 9A).
The Income and Corporation Tax Act also includes specific rules that apply
to a partnership: all partnerships must prepare a return of the income of
the entity, supported by a statement of accounts, including a balance sheet
(s. 24). This is in addition to the above-mentioned requirement for any person
engaged in any trade or business (including general partners) to keep proper
books of account sufficient to record all transactions necessary in order to
ascertain the gains and profits made or the loss incurred in each such busi-
ness (s. 21 of the Income and Corporation Tax Act).
153. Trustees are required by the Trust Act to keep accurate accounts
and records of their trusteeship (s. 31(7)). However, the phrasing in the Trust
Act does not explicitly indicate if the records and accounts must correctly
explain all transactions, and allow financial statements to be prepared. Still,
a trustee is subject to the Income and Corporation Tax Act and will there-
fore be assessed to tax in respect of the income derived from the property
he/she manages on behalf of a person in like manner and to like amount as
this person would be assessable if he/she had received the income (Income
and Corporation Tax Act, s. 26). As a consequence a trustee is obliged to do
all matters and things required to be done under the Act for the purpose of
assessment and payment of tax (Income and Corporation Tax Act, s. 25(1)).
This includes the obligation to keep proper books of account sufficient to
record all transaction (s. 21).
154. Finally, under the AML/CFT Code service providers (e.g. trustees,
nominee shareholders, secretaries of a company) are required to keep records
that must include sufficient information to enable the reconstruction of indi-
vidual transactions. This means that amongst others all account files and
all business correspondence relating to a business relationship or an occa-
sional transaction must be available (Guidance note to rule 40).
Underlying documents (ToR A.2.2)
155. The Miscellaneous Amendments (Financial Services) Act 2013 has
amended section 21 of the Income and Corporation Tax Act. It now provides
that a person engaged in any trade, business or profession shall keep, in the
English language, proper books of account including underlying documen-
tation. This would cover an IBC or a trust holding assets passively. The
underlying documentation should be sufficient to record all transactions
necessary to ascertain the gains and profits made or the loss incurred in
the trade, business or profession. The books of account have to be kept for
a period of seven years. The definition of underlying documentation is the
same as referred to in the discussion in connection with LLCs above.
5-year retention standard (ToR A.2.3)
156. The Miscellaneous Amendments (Financial Services) Act 2013
has amended the relevant provisions of the Companies Act, the Limited
Partnerships Act, the IBC Act, the LLC Act and the Income and Corporation
Tax Act to provide that all entities governed by these laws must keep account-
ing records (including underlying documentation) for at least seven years.
This is in line with the international standard.
157. In cases where the accounting records of ordinary companies, IBCs
or limited partnerships are kept outside Montserrat, the entities are obliged to
keep at the registered office or at some other designated place in Montserrat a
written record of the place or places outside Montserrat where the accounting
records are kept (Companies Act, s. 148(A)(1); IBC Act, s. 66; LP Act, s. 9A).
158. In practice, the Comptroller of Inland Revenue can seek accounting
records from any person within their jurisdiction in Montserrat. The FSC also
has these powers in respect of its licensees. There are no practical impedi-
ments in this regard.
159. Montserrat did not receive any request concerning accounting infor-
mation during the review period. The practical processes in this regard,
therefore remain untested.
Phase 2 rating
Largely Compliant
Factors underlying
In view of the recent introduction of
legal obligations for relevant entities
to maintain accounting information in
Montserrat the enforcement of these
obligations could not be assessed.
enforcement of the accounting
obligations applying to all relevant
entities.
A.3. Banking information
Banking information should be available for all account-holders.
160. Access to banking information is of interest to the tax administra-
tion when the bank has useful and reliable information about its customers
identity and the nature and amount of financial transactions.
Record-keeping requirements (ToR A.3.1)
161. Banks and financial institutions when acting in the course of a busi-
ness carried on in, or from within, Montserrat, are service providers within
the definition of the AML/CFT Regulations. As service providers banks and
financial institutions must maintain all records relating to each transaction
with their customers in detail and must apply customer due diligence meas-
ures in order to be able to identify a customer or a third party if a customer is
acting for someone else (Schedule 1, Dictionary).
162. According to the AML/CFT Code (s. 36) all records must contain the
following information concerning each transaction:
The name and address of the customer;
The currency and amount of the transaction if the transaction is a
monetary transaction;
The number, name or other identifier for the account if the transac-
tion involves a customer account;
The date of the transaction;
Details of the counterparty including account details;
The nature and details of the transaction.
163. All files must be kept for a minimum period of 5 years (ss. 13-14).
A bank that fails to meet these record keeping requirements commits an
offence and is liable on summary conviction to a fine up to XCD 50 000
(USD 18 520).
164. In addition, a service provider cannot set up or maintain a numbered
account, an anonymous account or an account in a name which it knows, or
has reasonable grounds to suspect, is fictitious, or otherwise it commits an
offence and is liable to a fine up to XCD 100 000 (USD 37 000, AML/CFT
Regulations, s. 11).
165. The supervision of banks is carried out by the FSC and the East
Caribbean Central Bank (ECCB). While the AML supervision is carried out
by the FSC, prudential supervision is the purview of the ECCB. In order to
carry out banking business an application must be submitted to the Ministry
of Finance. This is sent to the ECCB and only upon recommendation of the
ECCB does the Ministry of Finance grant a licence.
166. The ECCB carries out on-going supervision which includes an
assessment of the institutions risk management systems, financial condition
and compliance with all applicable laws. The AML supervision lies with the
FSC. However, as part of its prudential supervision, the ECCB does check
the CDD files of the bank.
167. There are two domestic banks operating on the island. They are the
Royal Bank of Canada and the Bank of Montserrat. There are also four inter-
national banks operating in Montserrat. The domestic banks were inspected by
the FSC in 2009 and 2010 but no inspection of domestic or international banks
has been conducted since then. The FSC is in the process of making a schedule
of regular inspection of all banks. However, in the inspections that have been
carried out so far, the compliance level has been found to be satisfactory. It
is recommended that Montserrat quickly put in place the schedule of regular
inspections of banks so that their compliance can be effectively monitored.
168. During the review period, Montserrat has not received any EOI
request for banking information. However, it has been stated earlier in
the report that the FCAU has received requests from some other jurisdic-
tions under their mutual agreements. The Montserratian authorities have
advised that these requests included some for banking information and that
Montserrat was able to provide the same to the satisfaction of the requesting
authority/jurisdiction. Whilst this could not be verified by the assessment
team, this appears to indicate that Montserrat is in a position to effectively
exchange banking information.
The element is in place
Phase 2 rating
Largely Compliant
Factors underlying
The FSC has not carried out any
inspections of banks since 2010 to
check their compliance levels.
Montserrat should quickly put in place
the schedule of regular inspections of
banks so that their compliance can be
effectively monitored.
COMPLIANCE WITH THE STANDARDS: ACCESS TO INFORMATION 47
B. Access to Information
Overview
169. A variety of information may be needed in a tax enquiry and
jurisdictions should have the authority to obtain all such information. This
includes information held by banks and other financial institutions as well
as information concerning the ownership of companies or the identity of
interest holders in other persons or entities, such as partnerships and trusts,
as well as accounting information in respect of all such entities. This section
of the report examines whether Montserrats legal and regulatory framework
gives to the authorities access powers that cover the right types of persons
and information and whether rights and safeguards would be compatible with
effective exchange of information.
170. Montserrats competent authority, the Comptroller of Inland Revenue,
is given broad access powers under the Tax Information Exchange Act, 2010.
The competent authority can request anyone to provide ownership, iden-
tity, accounting or banking information, whether or not the information is
required to be kept pursuant to a law.
171. Access powers can be exercised in relation to EOI arrangements that
are scheduled to the Tax Information Exchange Act, 2010. To date 11 EOI
arrangements have been scheduled, out of the 14 arrangements signed by
Montserrat (see section C.1 below for more details).
172. Access powers can be exercised by issuing a notice requesting the
production of the information or, where the information is sought in relation
to civil or criminal proceedings in the requesting jurisdiction, depend on
a court order. Search and seizure measures are also available and the non-
compliance with a notice or court order can be sanctioned with fines and
imprisonment.
173. Existing secrecy obligations in Montserrats laws are lifted where
information is sought for EOI purposes. The law also provides for a notifi-
cation right to the subject of a request in some cases, to which no exception
exists, contrary to the prescription of the standard.
48 COMPLIANCE WITH THE STANDARDS: ACCESS TO INFORMATION
174. The access powers of the Montserratian competent authority have
not been significantly tested in practice as Montserrat received only one EOI
request during the review period. However, as pointed out earlier in Part A,
the Montserrat FCAU has answered requests from overseas agencies with
which they have a mutual agreement. The assessment team has been advised
that the information provided included banking information and the request-
ing agency was satisfied with Montserrats response.
B.1. Competent Authoritys ability to obtain and provide information
Competent authorities should have the power to obtain and provide information that is the
subject of a request under an exchange of information arrangement from any person within
their territorial jurisdiction who is in possession or control of such information (irrespective
of any legal obligation on such person to maintain the secrecy of the information).
175. The competent authority to gather and exchange information in
Montserrat is the Comptroller of Inland Revenue. Whereas the same person
has powers to collect information for both domestic and exchange of informa-
tion purposes, different laws apply to domestic and EOI cases. The Income
and Corporation Tax Act governs the access powers of the Montserrat tax
authorities for domestic tax purposes: Pursuant to section 54, the Comptroller
may by notice in writing require any person, their agent or attorney, as well
as the secretary, attorney, manager, agent or other principal officer of any
company to furnish him with information especially accounting records
and tax returns and all connected particulars. Montserrats access powers
for EOI purposes are regulated in the Tax Information Exchange Act Tax
No. 21 of 2010 (TIE Act).
176. The TIE Act applies for the purpose of giving effect to the terms of
a scheduled agreement (s. 3). To be scheduled, an EOI arrangement must
have been the object of an order of the Governor in Council, published in the
official Gazette, setting out the full text of the agreement and inserting in
Part A of the Schedule to the TIE Act: the parties; the effective date; and the
designated competent authority (s. 5(1)). To date eleven EOI instruments have
been scheduled, out of the 14 TIEAs and DTCs signed by Montserrat.
177. The TIE Act also enables information on taxation matters to be
provided to a scheduled country on its request under the scheduled coun-
try requirements (s. 3). The reference to scheduled countries relates to
the ability of the authorities to exchange information on a unilateral basis
where certain conditions are met (the EOI unilateral mechanism is discussed
further, under section C.1 below). Whether the Act applies in respect of a
scheduled agreement or a scheduled country, the access powers are iden-
tical. No countries have been scheduled to date.
178. Section 8 of the Act gives the competent authority (also called the
Tax Information Authority under the TIE Act) the power to do all things
necessary or convenient for the exchange of information on taxation matters
under this Act, the relevant scheduled agreement or the relevant scheduled
country requirements. This includes, in particular, executing requests and
ensuring compliance with scheduled agreements (s. 8(1)(a) and (b)).
179. The TIE Act applies to requests made after the later date between
the entry into force on 6 February 2011 or the date of entry into force of the
relevant EOI instrument, and permits the provision of information on taxation
matters prior to 6 February 2011 (s. 4(2)).
180. The Comptroller of Inland Revenue (CIR) is the competent author-
ity in Montserrat. As of now there are no staff attached to the CIR for EOI
purposes. Montserrat has received only one request so far. This request
was from the UK under the Montserrat UK DTC. The request was dated
December 15, 2011 and was received in the Inland Revenue Department on
February 03, 2012. Montserrat responded by letter dated February 13, 2012
using normal post providing the requested information. An International
Compliance Committee has been constituted that consists of the Financial
Secretary (chair), Deputy Financial Secretary, Director General MCRS, Head
of the Governors Office, CIR, Commissioner of the FSC, the FCAU head and
the Attorney General (AG). The task of this Committee is to ensure that all
matters related to EOI are dealt with in line with the international standard.
181. The members of the International Compliance Committee have
undergone training, which was provided by the Isle of Man in April 2012.
Ownership and identity information (ToR B.1.1) and accounting
records (ToR B.1.2)
182. The competent authority can do all things necessary or convenient
for the exchange of information on taxation matters, including executing
requests, as noted above. This includes obtaining ownership, identity, and
accounting information. The term information on taxation matters to which
access powers refer is broadly defined as any fact, statement, document and
record in whatever form (s. 2). The law further specifies that this includes:
(a) any fact, statement, document or record held by any bank, other finan-
cial institution, or any person, including any nominee and trustee,
acting in an agency or fiduciary capacity;
(b) any fact, statement, document or record regarding the beneficial
ownership of any company, partnership and any other person,
including (i) in the case of a collective investment fund, information
on any shares, units and other interests; and (ii) in the case of a trust,
information on any settlors, trustees and beneficiaries;
(c) articles of evidence relating to a taxation matter.
183. Before proceeding with a request, the competent authority must
notify the Attorney General of any request received, including particulars
of the request. If the Attorney General considers that the execution of the
request is contrary to public policy, he/she may issue a certificate to that
effect and the competent authority will deny the request (sections 9 and 10).
The law does not specify any time-limit for the Attorney General to issue a
certificate or authorise the competent authority to proceed with the request.
However, section 20 of the Interpretation Act applies to all legislation in
Montserrat, and provides that Where no time is prescribed or allowed within
which anything is to be done, the thing must be done with all convenient
speed, and as often as the prescribed occasion arises. The Attorney General
is therefore required to act with all convenient speed in issuing the certificate.
184. The procedure for collecting information will differ, depending on
whether or not the information is requested for proceedings in the jurisdiction
of the requesting authority (or for investigations related to such proceed-
ings). Proceedings are defined by reference to the Supreme Court Act as
including an action (a civil proceeding commenced by writ or in such other
manner as may be prescribed by rules of Court, but does not include a crimi-
nal proceeding), cause (includes any action, suit or other original proceeding
between a plaintiff and defendant, and any criminal proceeding) or matter
(every proceeding in court not in a cause).
185. First, when the information is requested in the absence of any pro-
ceeding or investigation, and the competent authority considers it necessary
to obtain the information from a person (i.e. the information is not already
in the possession of the competent authority), he/she issues a notice in writ-
ing requiring the production of the information specified in the notice. The
notice may require the information to be provided within a specified time, in
a specific form, and verified or authenticated in a specified manner (s. 13).
The competent authority may take copies or extracts of the information. The
access powers of the competent authority apply, whether or not the informa-
tion is required to be kept pursuant to a law of Montserrat.
186. Second, when the information is requested for civil or criminal
proceedings or related investigations in the requesting jurisdiction, the
competent authority must apply to a judge for an order to produce the infor-
mation (s. 14). Before making an order, the judge must be satisfied that five
conditions are fulfilled, i.e. that: (a) the Authority has certified the request in
accordance with the relevant scheduled agreement and the TIE Act; (b) the
information is under the control of a person in Montserrat; (c) the information
does not include items subject to legal privilege or items subject to protection
as secret, under the scheduled agreement; (d) the provisions of section 19(1)
(on the notification of the person subject to the request) have been complied
with; and (e) under the relevant scheduled agreement, there are no reasonable
grounds for not granting the request.
187. The judge may then make an order that the person who appears to be
in control of the information produces it to the competent authority to take
away or give the competent authority access to it within a specified period,
which in general would be of 14 days, unless the judge considers that another
period would be more appropriate (s. 14(3)). The judge may also issue a war-
rant for the competent authority, accompanied by a police officer, to enter the
premises to obtain access to the information. No appeal right is granted in the
TIE Act, but a judicial review is possible, in principle, as for any court order.
188. It should be noted that where the judge is satisfied that the condi-
tions are met, he/she may rather than shall issue an order, pursuant to
section 14(2). The judge therefore does not appear to be bound to do so. In
addition it is not clear what may constitute reasonable grounds for refusing
to issue an order, particularly if the competent authority is satisfied that the
request conforms with, and is therefore valid under, the relevant agreement.
189. Finally, if a person is required to testify, the competent authority
applies to a judge for the judge to receive the testimony. The judge can issue
a subpoena, take evidence under oath and exercise any other power that the
High Court may exercise for the purpose of compelling testimony (s. 12, but
a person cannot be compelled for EOI purposes to give evidence that he/she
cannot be compelled to give in proceedings before a court in Montserrat).
5
190. There are no practical impediments to the competent authority
obtaining ownership and identity information. The Department of Inland
Revenue can obtain this information for the purposes of its domestic audits.
Montserrat has confirmed that similar powers can be used for seeking infor-
mation to answer an EOI request under the TIE Act. The Department of
Inland Revenue can also call for all relevant accounting records in the course
of its proceedings. Similar powers can be used for EOI purposes. While these
powers have not been tested in the context of EOI, the use of similar powers
for domestic purposes indicates that there is no impediment to their effective
use for EOI purposes. This has been confirmed by Montserrat.
191. The procedure that involves the approval of a judge (where the
information is required in relation to an investigation in the requesting
5. The TIE Act also allows a representative of the foreign competent authority to
interview a person with his/her consent or examine records in Montserrat, if this
is provided for in the EOI bilateral instrument (s. 18).
jurisdiction), has also never been used in practice. Montserrat at present
does not have its own judge from the East Caribbean High Court. The judge
assigned to Montserrat is located in Nevis. However, the judicial authorities
have reported that this will not cause any delay in the process. The requests
can be forwarded to Nevis and the judge will rule on them. Montserrat
reports that the entire process should not take more than four working days.
192. As to how this procedure will actually function in practice, the judge
has indicated that the use of the word may in section 14(2) (see discussion
above) of the TIE Act will not create any difficulties as it points merely to
the normal discretion that is allowed to a judge in judicial matters. On the
interpretation of the words reasonable grounds (see discussion above) for
refusing an order, judicial authorities have indicated that if the competent
authority is satisfied that the information can be provided, there will normally
be no reason for the judge to decide otherwise.
Use of information gathering measures absent domestic tax interest
(ToR B.1.3)
193. The powers described above apply for the express purpose of
responding to requests for information from a foreign authority, without
regard to whether the information is relevant for Montserrats domestic tax
purposes (s. 3 and 8).
194. Montserrat received only one request during the review period which
it was able to answer to the satisfaction of the requesting jurisdiction. There
are no practical impediments to its ability to exchange information absent
any domestic interest in the information being exchanged. There was no
domestic tax interest in the one request that Montserrat received during the
review period and it provided information to the satisfaction of the requesting
jurisdiction.
Compulsory powers (ToR B.1.4)
195. The competent authority is empowered, upon application to the High
Court for a warrant, to execute searches and seizures in order to obtain infor-
mation for exchange purposes (s. 17). In considering such an application, the
judge must be satisfied that (i) a notice under section 13 or an order under
section 14 has not been complied with and the EOI request might be seriously
prejudiced unless immediate access to the information can be secured; or
(ii) the judge considers that an order under section 14 would not be appropri-
ate because it is not practicable to communicate with the subject person, or
another person entitled to grant access to the information, or because the EOI
request might be seriously prejudiced unless a police officer is able to secure
immediate access to the information.
196. The TIE Act stipulates penalties fines and/or imprisonment if
a person who is required to provide information does not comply with a
notice of the competent authority or an order of the judge within the speci-
fied time, or otherwise alters, destroys, mutilates, defaces, hides or removes
the information. The offender is liable on summary conviction to a fine of
XCD 10 000 (USD 3 700) and/or imprisonment of two years. A person who
refuses to provide testimony in response to a request is liable on summary
conviction to a fine of XCD 5 000 (USD 1 850) and/or imprisonment of up
to one year (s. 26).
197. Montserrat received one request during the review period, which it
was able to answer to the satisfaction of the requesting jurisdiction. The com-
pulsory powers of the competent authority were effectively used in this case.
It may be concluded that the compulsory powers of the competent authority
have been tested to a limited extent in practice and the competent authority
was able to effectively use these powers.
Secrecy provisions (ToR B.1.5)
198. Jurisdictions should not decline on the basis of secrecy provisions
(e.g. bank secrecy, corporate secrecy) to respond to a request for information
made pursuant to an exchange of information mechanism.
199. Under common law, banks and all other financial institutions in
Montserrat have a duty to keep the affairs of their customers confidential.
Exceptions exist, for instance where disclosure is under compulsion of law or
agreed by the customer. The Confidential Information Act and the General
Banking Law regulate the disclosure of information.
200. The Confidential Information Act regulates the disclosure of infor-
mation imparted under conditions of professional confidence by banks and
financial institutions, barristers and solicitors, accountants, and every person
subordinate or in the employ or control of such persons or institutions for
professional activities, as well as to all IBCs and their directors, officers,
etc. (IBC Act, s. 119). Information considered as confidential is information
received by a professional person from or in respect of a principal concerning
any property in which the principal has an interest and which the recipi-
ent of such information is not authorised by the principal to divulge. The
confidentiality obligation extends to all persons coming into possession of
confidential information (s. 3(1)).
201. A person is guilty of an offence and liable on summary conviction
to a fine not exceeding XCD 50 000 (USD 18 500) and/or to imprisonment
up to two years if being in possession of confidential information he/she
divulges it or attempts, offers or threatens to divulge it, or wilfully obtains or
seeks to obtain confidential information to which he/she is not entitled. The
sanction is doubled for professionals (s. 5).
202. Similarly, pursuant to section 32(1) of the Banking Act, no person
who has acquired knowledge in his capacity as director, manager, secretary,
officer, employee or agent of any financial institution can disclose to any
person or governmental authority the identity, assets, liabilities, transac-
tions or other information in respect of a depositor or customer of a financial
institution.
203. Finally, trustees are also subject to a confidentiality duty pursuant
to the Trust Act (s. 32). Only a court, the settlor or protector and, subject to
the terms of the trust, the beneficiaries have access to the full and accurate
information as to the state and amount of the trust property. The trustee must
otherwise keep such information confidential except by reason of any other
Act. Similarly, s. 24 provides that the instrument creating a purpose trust
and the register that contains the name of the settlor and protector thereof is
confidential (except for the Attorney General and protector).
204. The confidentiality duty under the Confidential Information Act is
lifted in particular by directions of the High Court, a Minister or the Attorney
General; or with the consent of the principal; or in accordance with the
provisions of another act (s. 3(2)). The Banking Act similarly provides for
exceptions, in particular where the disclosure is made under the provisions of
any law of Montserrat (s. 32(1)(c)).
205. The TIE Act lifts these confidentiality duties. Section 22 expressly
indicates that a person who divulges confidential information in compli-
ance with a notice (under section 13) or order (under section 14) does not
commit an offence under the Confidential Information Act or any other law
in Montserrat. Furthermore, any disclosure or testimony given to satisfy a
request is deemed not to be a breach of any confidential relationship between
that person and any other person, and protects the person making the disclo-
sure from any civil claim or action by reason of such disclosure or testimony
(s. 22(2)). Section 13 also expressly indicates that a notice has effect despite
any obligation as to confidentiality or other restriction upon the disclosure
of information whether imposed by the Confidential Information Act, any
other law or the common law. Finally, as already mentioned, the definition
of the information on taxation matters that can be exchanged includes
any fact, statement, document or record held by any bank, other financial
institution (s. 2).
206. Montserrat received only one request during the review period, no
issues arose in relation to secrecy in practice that impeded effective EOI.
Attorney-client privilege
207. Notwithstanding section 22 of the TIE Act, section 13 (on informa-
tion notices) and section 14 (on court orders) both expressly exclude access
to items subject to legal privilege. The Montserratian authorities have
explained that the term legal privilege, also expressed as legal professional
privilege, is a common law protection which is afforded to any person who
consults with a legal practitioner for advice. The Montserratian authorities
have provided case law from the Eastern Caribbean Supreme Court, which
applies to legal privilege in the course of litigation: Essentially, it embodies
the rule that a client should be able to place unrestricted and unbounded
confidence in the professional agent, and that the communications he so
makes to him should be kept secret, unless with his consentthat he should
be enabled properly to conduct his litigation.
6
The Montserratian authorities
add that pursuant to common law, the documents covered by the privilege
are the instructions given by the client to the attorney, documents created
by a party for the purpose of instructing the attorney and obtaining advice,
copies of documents the original of which were created for such a purpose,
and a selection of pre-existing documents, whether obtained from the client
or a third party, which are not in themselves privileged, but which have been
copied or assembled by an attorney and betray the trend of the advice which
he/she is giving the client.
208. The Montserratian authorities further state that the attorney-client
privilege is applied rigidly by the courts in Montserrat and is very seldom
eroded. The client has to grant permission for release of privileged informa-
tion or there is no legally enforceable right to obtain access to privileged
information. The case law presented does not clarify whether the privilege
extends to third parties other than the attorney and the client who may be
involved in the communications and, if so, to what extent and in what cir-
cumstances. The Montserratian authorities confirm that the privilege extends
to communication with third parties such as potential witnesses, experts, or
office clerks. However no supporting case law was provided.
209. Montserrat did not receive any EOI request during the review
period that had implications in relation to attorney-client privilege. While
Montserrats practices have not been tested, there is nothing to suggest that
there will be a problem in this regard. Montserrats TIEAs have references to
attorney-client privilege that are in line with Article 7 of the OECD Model
TIEA.
6. The above quotation is from Anderson v Bank of British Columbia (1876) 2 Ch
D 644, 649 which was cited in the decided case of Danone Asia Pte. Ltd. et al. v.
Golden Dynasty et al. BVIHCV2007/0262, which is authority from the regional
Supreme Court, applicable in Montserrat.
Phase 2 rating
Compliant
B.2. Notification requirements and rights and safeguards
The rights and safeguards (e.g. notification, appeal rights) that apply to persons in the
requested jurisdiction should be compatible with effective exchange of information.
Not unduly prevent or delay exchange of information (ToR B.2.1)
210. Rights and safeguards should not unduly prevent or delay effective
exchange of information. For instance, notification rules should permit excep-
tions from prior notification (e.g. in cases in which the information request is
of a very urgent nature or the notification is likely to undermine the chance of
success of the investigation conducted by the requesting jurisdiction).
211. The TIE Act provides for three types of rights and safeguards. First,
as mentioned, before proceeding with a request, the competent authority must
notify the Attorney General of any request received, including particulars
of the request. If the Attorney General considers that the execution of the
request is contrary to public policy, he/she may issue a certificate to that
effect and the competent authority will deny the request (sections 9 and 10).
The Montserratian authorities clarified that this would cover cases where dis-
closure is likely to be injurious to the interests of the territory, the community
or the Crown. Section 10 empowers the Attorney General to act as amicus
curiae in any proceedings relating to a request and, in such cases, they have
also advised that there would be an obligation on the Attorney General to
disclose, to the relevant tribunal, all matters of which she is aware and which
were relevant to the case, even if this may involve the disclosure of facts that
do not directly relate to public policy.
212. Second, the TIE Act provides for notification rights to the person
who is the subject of the request in some circumstances: (i) where a request
for information is made that is not in connection with an (alleged) criminal
matter, and (ii) if the persons whereabouts or address are made known to the
competent authority. In these cases, the person must be notified by the com-
petent authority of the existence of the request, and specifying the country
making the request and the general nature of the information sought (s. 19(1)).
The competent authority is under no obligation to search for or conduct
enquiries into the address or whereabouts of any person for this purpose
(s. 19(5)). Any person notified may, within 15 days from the date of receipt
of the notice, make a written submission to the competent authority specify-
ing any grounds which he/she wishes the authority to consider in making
its determination as to whether or not the request is in compliance with the
scheduled agreement, including any assertions that the information requested
is subject to legal privilege (s. 19(3); the competent authority may, but is not
obliged to, accept an oral submission).
213. Therefore, the notification requirement only applies in limited cir-
cumstances, i.e. in civil tax matters and where the address or whereabouts
of the person who is subject of the request are made known to the compe-
tent authority. The time for making a written submission by the subject of
the request is short (15 days for receiving the notification plus 15 days for
contesting it) but there is no deadline for the competent authority to take a
decision, and in the case of civil proceedings this can be cumulated with the
time for the judicial oversight of s. 14. In addition, provided the whereabouts
of the persons are indicated in the EOI request, it does not appear that there
is any possibility to dispense with notification in a civil tax matter where,
for example, the notification is likely to undermine the chance of success of
the investigation conducted by the requesting jurisdiction, including where a
search is deemed necessary because a mere order under section 14 might seri-
ously prejudice the purpose of the EOI request (section 17(2)(b)(iii)). It may
be the case that such circumstances more often arise in criminal tax matters,
where no notification is required.
214. Third, where the EOI request relates to a civil or criminal proceeding
in the requesting jurisdiction, the TIE Act provides for judicial oversight. It is
narrowly prescribed and the conditions that must be met appear reasonable.
Nevertheless, where the judge is satisfied that the conditions are met, the
judge may issue such an order, but is not bound to do so. Moreover, it is not
clear what reasonable grounds for not granting the request would consist
of, particularly where the competent authority has certified that the request is
valid under the relevant agreement.
215. Montserrat believes that the procedure in place will not hinder effec-
tive EOI. However, Montserrat has expressed its readiness to carry out legal
amendments that will allow for exceptions to the notification procedures, in
line with the international standard, to ensure effective EOI. The issue of the
process where an order from the judge is required has been discussed earlier
in this report (see section B.1.1 and B.1.2)
216. Montserrat received only one EOI request during the review period
and this procedure was not applicable in this case.
Factors underlying
The prior notification procedure in
civil tax matters only allows for an
exception when the whereabouts of
the taxpayer are not disclosed to the
competent authority.
It is recommended that wider
exceptions from prior notification be
permitted in civil tax matters (e.g. in
cases in which the information
request is of a very urgent nature or
the notification is likely to undermine
the chance of the success of the
investigation conducted by the
requesting jurisdiction).
Phase 2 rating
Compliant
COMPLIANCE WITH THE STANDARDS: EXCHANGING INFORMATION 59
C. Exchanging Information
Overview
217. Jurisdictions generally cannot exchange information for tax purposes
unless they have a legal basis or mechanism for doing so. In Montserrat,
the legal authority to exchange information is largely derived from Tax
Information Exchange Agreements, double tax conventions (DTCs) and,
latterly, the Multilateral Convention on Mutual Administrative Assistance
in Tax Matters. This section of the report examines whether Montserrat has
a network of information exchange that would allow it to achieve effective
exchange of information (EOI) in practice.
218. Montserrats bilateral network for exchange of information covers
a total of 14 partner jurisdictions. Montserrat is party to two old DTCs with
Switzerland and the United Kingdom (which do not meet the standard).
Between December 2009 and October 2011 its EOI network developed, with
the signing of 12 TIEAs and a protocol to the DTC with the United Kingdom.
To date, seven TIEAs are in force, as well as the two protocol/DTCs.
219. In addition, Montserrat has implemented a unilateral mechanism by
which it can name scheduled countries to which it can provide relevant
information for tax purposes upon request, but no jurisdiction has been
scheduled yet. Montserrat states that given its progress so far it is unlikely
that that any country will be scheduled.
220. The Multilateral Convention on Mutual Administrative Assistance
in Tax Matters was extended to Montserrat in June 2013. It will have 89 EOI
relationships (with 76 jurisdictions) to the standard when it has completed its
domestic procedures (see section C.1.9 below).
221. Montserrat continues to expand its EOI network and discussions or
negotiations are underway with several jurisdictions. Comments were sought
from Global Forum members in the course of the preparation of this report,
and no jurisdiction advised that Montserrat had refused to negotiate or con-
clude such an arrangement.
60 COMPLIANCE WITH THE STANDARDS: EXCHANGING INFORMATION
222. All EOI articles in Montserrats bilateral arrangements have confi-
dentiality provisions which meet the international standard, and its domestic
legislation also contains relevant confidentiality provisions.
223. Montserrats post-2009 EOI arrangements ensure that the parties are
not obliged to provide information that would disclose any trade, business,
industrial, commercial or professional secret or information the disclosure of
which would be contrary to public policy.
224. There appear to be no legal restrictions on the ability of Montserrats
competent authority to respond to requests within 90 days of receipt by pro-
viding the information requested or by providing an update on the status of
the request.
225. Montserrats ability to effectively exchange information was tested
only to a limited extent during the review period as it received only one
request. Montserrat was able to answer this request to the satisfaction of the
requesting jurisdiction.
C.1. Exchange of information mechanisms
Exchange of information mechanisms should allow for effective exchange of information.
226. The EOI network of Montserrat is multiform, comprising tax infor-
mation exchange agreements (TIEAs), double tax treaties (DTCs), and a
unilateral mechanism, covering a total of 76 jurisdictions (see Annex 2).
227. First, Montserrat has signed 12 TIEAs, with Australia, Belgium,
Denmark, Faroe Islands, Finland, Germany, Greenland, Iceland, Ireland the
Netherlands, Norway and Sweden. Only the TIEAs with Australia, Denmark,
the Faroe Islands, Finland, Germany, the Netherlands and Norway have
entered into force, as of April 2014.
228. Second, Montserrat has signed a DTC with the United Kingdom
(1947) and benefits from an extension of the United Kingdoms DTC with
Switzerland (1961). The EOI provision in the UK treaty was updated through
a protocol signed in 2009 that includes the full EOI provision in line with
Article 26 of the Model Tax Convention. The DTC with Switzerland contains
a number of restrictions, of which the most important are that the DTC limits
the exchange of information to information as is necessary for carrying out
the provisions of the Convention and it does not contain a provision corre-
sponding with Article 26(5) of the OECD Model Tax Convention regarding
bank information. Although Montserrat is able to exchange bank informa-
tion on a reciprocal basis in the absence of such provision, Switzerland is
not. Because of these restrictions, the DTC with Switzerland does not allow
Montserrat to exchange information in accordance with the international
standard. The DTC with Switzerland is not further considered in this section.
Montserrat has reported that both jurisdictions have agreed to sign a TIEA.
It has been agreed that after that the DTC will not be applicable to the EOI
relationship between Switzerland and Montserrat anymore.
229. Finally, Montserrats Tax Information Exchange Act, 2010 (the TIE
Act) provides for powers to access and provide information for exchange of
information purposes in respect of a scheduled country on a unilateral
basis. Jurisdictions which are eligible to become a scheduled country, are
those in respect of which there is (a) a bilateral agreement or arrangement
between Montserrat or the United Kingdom and the country that facilitates
trade and investment in Montserrat or the United Kingdom by nationals
or residents of that country; or (b) a Double Taxation Agreement between
Montserrat or the United Kingdom and the country, if that Agreement does
not cover exchange of information on taxation matters to the OECD standard.
The Governor may bind Montserrat to execute requests from a scheduled
country by order published in Montserrats Gazette that sets out the scope of
the assistance offered to the jurisdiction and any other conditions subject to
which requests are to be executed (TIE Act, section 6).
230. The Governor in Council made Rules for the Exchange of Information
on Taxation Matters to govern the exchange of information on taxation mat-
ters with scheduled countries, pursuant to section 28 of the TIE Act. These
Rules, dated 6 October 2011, are largely based on the OECD Model Tax
Information Exchange Agreement. They apply unless otherwise provided
under section 6(3) of the Act in an Order scheduling the country. Currently,
no jurisdiction is designated as a scheduled country. As the conditions and
limits for the unilateral transmission of information by Montserrat are to be
set out in the individual order scheduling a particular jurisdiction, the present
report cannot definitively assess whether this way of exchanging information
could meet the standard. Montserrat has reported that there is no immediate
intention to schedule any country.
231. At Montserrats request, in June 2013 the UK extended territo-
rial application of its signature of the Multilateral Convention on Mutual
Administrative Assistance in Tax Matters to cover Montserrat. It will have
89 EOI relationships (with 76 jurisdictions) to the standard when it has com-
pleted its domestic procedures (see section C.1.9 below).
Foreseeably relevant standard (ToR C.1.1)
232. The international standard for exchange of information envisages
information exchange upon request to the widest possible extent. Nevertheless
it does not allow fishing expeditions, i.e. speculative requests for informa-
tion that have no apparent nexus to an open inquiry or investigation. The
balance between these two competing considerations is captured in the stand-
ard of foreseeable relevance which is included in Article 1 of the OECD
Model TIEA, set out below:
7
The competent authorities of the Contracting Parties shall provide
assistance through exchange of information that is foreseeably
relevant to the administration and enforcement of the domestic
laws of the Contracting Parties concerning taxes covered by this
Agreement. Such information shall include information that is
foreseeably relevant to the determination, assessment and collec-
tion of such taxes, the recovery and enforcement of tax claims, or
the investigation or prosecution of tax matters.
233. All TIEAs concluded by Montserrat meet the foreseeably relevant
standard set out above and described further in the Commentary to Article 1
of the OECD Model TIEA. Similarly, the protocol to the DTC with the United
Kingdom provides for the exchange of information that is foreseeably rel-
evant for carrying out the provisions of the arrangement or of the domestic
laws of the parties.
234. Under Article 2 of the TIEAs concluded with Belgium and Germany
the requested party is under no obligation to provide information which is
neither held by the authorities nor in the possession of nor obtainable by per-
sons who are within its territorial jurisdiction. These provisions use the words
obtainable by instead of the expression in control of used in Article 2 of
the OECD Model TIEA. The Montserratian authorities consider that the term
obtainable by to be broader, not narrower, than in control of.
235. Montserrat has reported that it does not have a stated policy with
respect to the interpretation of what is foreseeably relevant. However,
whenever a decision will have to be made, the guidance provided by the
terms of reference and the international standard will be followed. Montserrat
has received one request during the review period, which did not involve this
matter being tested in practice.
In respect of all persons (ToR C.1.2)
236. For exchange of information to be effective it is necessary that a
jurisdictions obligation to provide information is not restricted by the resi-
dence or nationality of the person to whom the information relates or by the
residence or nationality of the person in possession or control of the infor-
mation requested. For this reason the international standard for exchange of
information envisages that exchange of information mechanisms will provide
for exchange of information in respect of all persons.
7. Article 26(1) of the Model Tax Convention contains a similar provision.
237. None of Montserrats TIEAs nor the protocol to the DTC with the
United Kingdom is restricted to certain persons such as those considered
resident in or nationals of one of the contracting jurisdictions, or precludes
the application of EOI provisions in respect to certain types of entities.
238. The TIEA with the Netherlands expressly indicates that informa-
tion shall be exchanged without regard to whether the person to whom the
information relates is a resident, national or citizen of a contracting party, or
whether the person by whom the information is held is a resident, national or
citizen of a contracting party.
239. While the practical applications of the Montserratian systems have
not been tested in practice, there is no practical impediment on this matter.
Obligation to exchange all types of information (ToR C.1.3)
240. Jurisdictions cannot engage in effective exchange of information if
they cannot exchange information held by financial institutions, nominees or
persons acting in an agency or a fiduciary capacity. Both the OECD Model
Convention and the OECD Model TIEA, which are primary authoritative
sources of the standards, stipulate that bank secrecy cannot form the basis for
declining a request to provide information and that a request for information
cannot be declined solely because the information is held by nominees or
persons acting in an agency or fiduciary capacity or because the information
relates to an ownership interest.
241. The TIEAs concluded by Montserrat as well as the protocol to its
DTC with the United Kingdom explicitly forbid the requested jurisdiction
to decline to supply the information requested solely because it is held by a
financial institution, nominee or person acting in an agency or a fiduciary
capacity, or because it relates to ownership interests in a person.
242. All of the TIEAs concluded by Montserrat expressly provide that
information to be exchanged extends either to information on the beneficial
ownership of companies, partnerships, trusts, foundations and other persons
or all persons in an ownership chain of such entities.
243. There are no practical impediments to exchanging information for
tax purposes. Montserrat received one request, under a DTC, during the
review period. It was able to answer that request to the satisfaction of the
requesting jurisdiction. If requested under a DTC or TIEA, Montserrat will
be able to exchange all types of information, including banking information.
In addition, as mentioned earlier in this report, the assessment team has been
advised that the FCAU has exchanged information, including banking infor-
mation, with overseas agencies that it has mutual agreements with.
Absence of domestic tax interest (ToR C.1.4)
244. The concept of domestic tax interest describes a situation where a
contracting party can only provide information to another contracting party
if it has an interest in the requested information for its own tax purposes. A
refusal to provide information based on a domestic tax interest requirement
is not consistent with the international standard. EOI partners must be able
to use their information gathering measures even though invoked solely to
obtain and provide information to the requesting jurisdiction.
245. All of the TIEAs concluded by Montserrat as well as the protocol
to its DTC with the United Kingdom explicitly permit the information to be
exchanged, notwithstanding that it may not be required for a domestic tax
purpose. In addition, Montserrats TIE Act does not constrain the competent
authoritys access powers by a requirement that the information must be
required for a domestic tax purpose.
246. Montserrat can exchange information absent any domestic tax inter-
est in the information being exchanged.
Absence of dual criminality principles (ToR C.1.5)
247. The principle of dual criminality provides that assistance can only be
provided if the conduct being investigated (and giving rise to the information
request) would constitute a crime under the laws of the requested country if
it had occurred in the requested country. In order to be effective, exchange of
information should not be constrained by the application of the dual criminal-
ity principle.
248. None of the TIEAs concluded by Montserrat, nor the protocol to
its DTC with the United Kingdom, apply the dual criminality principle to
restrict the exchange of information.
249. Montserrat can exchange information without any hindrance with
regard to this matter.
Exchange of information in both civil and criminal tax matters
(ToR C.1.6)
250. Information exchange may be requested both for tax administration
purposes and for tax prosecution purposes. The international standard is not
limited to information exchange in criminal tax matters but extends to infor-
mation requested for tax administration purposes (also referred to as civil
tax matters).
251. All of the TIEAs concluded by Montserrat explicitly or implic-
itly provide for the exchange of information in both civil and criminal tax
matters.
252. Montserrat can exchange information on both civil and criminal tax
matters.
Provide information in specific form requested (ToR C.1.7)
253. In some cases, a contracting party may need to receive information
in a particular form to satisfy its evidentiary or other legal requirements.
Such forms may include depositions of witnesses and authenticated copies of
original records. Contracting parties should endeavour as far as possible to
accommodate such requests. The requested party may decline to provide the
information in the specific form requested if, for instance, the requested form
is not known or permitted under its law or administrative practice. A refusal
to provide the information in the form requested does not affect the obligation
to provide the information.
254. All of the TIEAs concluded by Montserrat allow for information to
be provided in the specific form requested, to the extent allowable under the
requested jurisdictions domestic laws. In addition, there are no restrictions
in Montserrats TIE Act that would prevent it from providing information in
a specific form.
255. Montserrat can provide information in any form requested.
In force (ToR C.1.8)
256. Exchange of information cannot take place unless a jurisdiction has
EOI arrangements in force. Where EOI arrangements have been signed, the
international standard requires that jurisdictions must take all steps necessary
to bring them into force expeditiously.
257. Montserrat has signed 13 bilateral arrangements which allow for
the exchange of information for tax purposes to the standard (12 TIEAs and
1 protocol to a DTC), out of which only eight are now in force, despite the
fact that Montserrat has ratified them all but the TIEA signed with Ireland
in December 2012 (the two DTCs with Switzerland and the United Kingdom
have been in force for a long time).
258. The operation of the Multilateral Convention on Mutual Administrative
Assistance in Tax Matters has been extended to Montserrat with effect from
1 October 2013 (see section C.1.9 below).
Be given effect through domestic law (ToR C.1.9)
259. For information exchange to be effective the parties to an exchange
of information arrangement need to enact any legislation necessary to comply
with the terms of the arrangement.
260. The United Kingdom has constitutional responsibility for the defence
and international relations of the Overseas Territories (including Montserrat)
and the Crown Dependencies. However, in certain circumstances, they may
be authorised to represent their own interests internationally by a process
of entrustment, through letters of entrustment from the UK Government. A
Letter of Entrustment is a formal means by which Her Majestys government
transfers the competence to conclude international agreements to Montserrat.
New letters of entrustment can be solicited to conclude TIEAs with jurisdic-
tions which are not covered by existing Entrustment.
261. The TIE Act indicates that an EOI arrangement is given legal effect
by the publication in the official Gazette of an order of the Governor in
Cabinet. The order must set out the full text of the arrangement and insert
in Part A of the Schedule to the TIE Act the parties, effective date and des-
ignated competent authority (section 5). Ten TIEAs have been the object of
separate orders of the Governor made on 14 June 2011, and published by
exhibition at the Clerk of Councils Office on 21 June. The eleventh TIEA was
the object of another order of the Governor made on 27 December 2012, and
published by exhibition at the Clerk of Councils Office on 5 February 2013.
The effective date specified in each of the orders is the one of the signature
of the TIEA.
262. This procedure diverges from the articles of the TIEA that govern
their entry into force, and differs from the TIE Act provision as well. First,
the TIEAs generally provide that they will enter into force 30 days/2 months
after the later of the dates on which each of the Parties has notified the other
in writing that the formalities constitutionally or otherwise required in their
respective jurisdictions have been complied with. However, as noted under
the preceding subsection, the exchange of diplomatic notes has been com-
pleted with only eight partners. Second, section 4 of the TIE Act provides
that the act does not permit a request to be made or executed prior to the
effective date, which is defined in section 2 as the date of entry into force
stipulated in the agreement. However, the effective date mentioned in the
order is the one of the signature of the TIEAs. It is questionable whether
exchange of information can be performed, even if an order has been
taken, where the corresponding TIEA has not properly entered into force.
Montserrats cabinet has approved a legislative proposal to clarify that the
date on the order is the date of signature and not the date of entry into force.
263. In practice, once a treaty has been signed it is added to the Schedule
of Agreements and the Schedule of Countries within the TIE Act. This is
done by the Cabinet. Once done, Montserrat informs the treaty partner that
they have completed all legal formalities for the treaty to come into force. It
is then for the treaty partner to provide Montserrat with a notification of the
treaty coming into force. Once both countries have exchanged these notes,
the agreement can come into effect. Montserrat reports that it normally takes
about a month to ratify treaties at its end.
264. The Multilateral Convention was extended to Montserrat with effect
from 1 October 2013. This followed a declaration of June 2013 by the UK
extending the territorial application of the UK signature to cover the territory
of Montserrat. However, Montserrat has not completed its domestic proce-
dures. The process is the same as described above in the case of other EOI
agreements. However in this case Montserrat needs first to amend its TIE Act
to extend the definition of agreement to cover the Multilateral Convention. It
is recommended that Montserrat quickly complete its procedures.
Phase 2 rating
Compliant
C.2. Exchange of information mechanisms with all relevant partners
The jurisdictions network of information exchange mechanisms should cover
all relevant partners.
265. Ultimately, the international standard requires that jurisdictions
exchange information with all relevant partners, meaning those partners
who are interested in entering into an information exchange arrangement.
Agreements cannot be concluded only with counterparties without economic
significance. If it appears that a jurisdiction is refusing to enter into agree-
ments or negotiations with relevant partners, in particular ones that have a
reasonable expectation of requiring information from that jurisdiction in
order to properly administer and enforce their tax laws it may indicate a lack
of commitment to implement the standards.
266. As of April 2014, Montserrat had signed a total of 12 TIEAs and 1
protocol to a DTC that meet the international standard, of which only seven
are in force although four others have been ratified by Montserrat. The major
economic partner of Montserrat, the United Kingdom, is already part of this
network.
267. Montserrat continues to work on expanding its network, with nego-
tiations ongoing. Montserrat has also initialled a number of TIEAs and is
waiting for its partners to be available to sign the agreements. Montserrat has
never refused to enter an EOI arrangement with a Global Forum member;
however the launch of some negotiations has been delayed in the past, as the
authorisation to do so from the United Kingdom through letters of entrust-
ment was awaited.
268. Currently, Montserrat is negotiating EOI agreements with Canada,
Guernsey, New Zealand, Korea, India, Switzerland, Seychelles and the
United States.
269. The Multilateral Convention on Mutual Administrative Assistance
in Tax Matters was extended to Montserrat in June 2013. It will have 89 EOI
relationships (with 76 jurisdictions) to the standard when it has completed its
domestic procedures.
Factors underlying
Montserrat should continue to develop
its network of EOI mechanisms with
all relevant partners.
Phase 2 rating
Compliant.
C.3. Confidentiality
The jurisdictions mechanisms for exchange of information should have adequate
provisions to ensure the confidentiality of information received.
270. Governments would not engage in information exchange without the
assurance that the information provided would only be used for the purposes
permitted under the exchange mechanism and that its confidentiality would
be preserved. Information exchange instruments must therefore contain
confidentiality provisions that spell out specifically to whom the information
can be disclosed and the purposes for which the information can be used.
In addition to the protections afforded by the confidentiality provisions of
information exchange instruments, jurisdictions with tax systems generally
impose strict confidentiality requirements on information collected for tax
purposes.
Information received: disclosure, use, and safeguards (ToR C.3.1)
271. The TIEAs concluded by Montserrat, the protocol to the DTC with the
United Kingdom, its unilateral mechanism and the Multilateral Convention on
Mutual Administrative Assistance in Tax Matters meet the standard for con-
fidentiality, including the limitation on disclosure of information received and
use of the information exchanged, which is reflected in Article 8 of the OECD
Model TIEA. These confidentiality obligations are also reflected in specific
domestic provisions.
Exchange of information mechanisms
272. The TIEAs of Montserrat include a confidentiality provision
(Article 8) that conforms to the standard. Similarly, the EOI provision of the
protocol to the DTC with the United Kingdom has confidentiality provisions
to ensure that the information exchanged will be disclosed only to persons
authorised by the treaty:
Any information received by a Contracting Party under this
Agreement shall be treated as confidential and may be disclosed
only to persons or authorities (including courts and admin-
istrative bodies) in the jurisdiction of the Contracting Party
concerned with the assessment or collection of, the enforcement
or prosecution in respect of, or the determination of appeals in
relation to, the taxes covered by this agreement. Such persons or
authorities shall use such information only for such purposes.
They may disclose the information in public court proceedings
or in judicial decisions.
273. All of the TIEAs and the protocol to the DTC with the United
Kingdom also allow the disclosure of information exchanged for other pur-
poses, with the consent of the requested party, in accordance with Article 8
of the Model TIEA and Commentary 12.3 to the Model Tax Convention. In
addition, the EOI mechanisms of Montserrat, except the ones with Australia,
Germany and the Netherlands, provide that information provided to the
competent authority of the requesting party may be disclosed to another juris-
diction with the consent of the competent authority of the requested Party.
274. The TIE Act further regulates the use of exchanged information for
other purposes, requiring the authorisation of the Montserrat Court (s. 25).
The law does not provide any guidelines or conditions upon which the court
would grant the authorisation.
275. The DTC with Switzerland also provides for confidentiality. Pursuant
to its EOI provision, Any information so exchanged shall be treated as
secret and shall not be disclosed to any persons other than those concerned
with the assessment and collection of the taxes which are the subject of this
Arrangement.
276. The Multilateral Convention that has been extended to Montserrat
also contains a clause on confidentiality (Article 22).
277. Montserrat received one EOI request during the review period. The
requesting jurisdiction was satisfied with Montserrats response and no issue
was raised concerning confidentiality. All information exchanged is kept
in secure storage places which are accessible only to authorised person-
nel. The data that will be stored electronically will be available only to the
Comptroller of Inland Revenue, who is the competent authority. As of now
there are no other staff members assigned to the work of EOI but Montserrat
reports that if any other person is also assigned to this work, all norms of
electronic security like passwords will be adopted. The computer of the
Comptroller of Inland Revenue is password protected.
Montserrat legislation
278. The maintenance of secrecy in the contracting party receiving
information is a matter of domestic laws (whether it is the requested or the
requesting jurisdiction). Sanctions for the violation of such secrecy in that
party are governed by the administrative and penal laws of that party. The
laws should also ensure that the competent authority can disclose confidential
information to a requesting party.
279. Section 24 of the TIE Act indicates that the particulars of and all mat-
ters relating to a request must be treated as confidential if so instructed by the
competent authority. Considering that all the TIEAs and DTCs of Montserrat,
as well as the Multilateral Convention, contain a clause on confidentiality,
it is expected that the competent authority would always consider an EOI
request as confidential.
280. Tax officials in Montserrat have more generally a duty of official
secrecy under section 43 of the Income and Corporation Tax Act, the breach
of which constitutes an offence (Every person having any official duty or
being employed in the administration of this Act shall regard and deal with
all documents, information, returns, assessment lists, and copies of such
lists relating to the income or items of income of any person as secret and
confidential). The duty is lifted where provision is made for the granting
of double taxation relief. Most of the EOI arrangements of Montserrat are
under the Multilateral Convention or TIEAs, which do not provide for double
taxation relief.
281. However, section 22 of the TIE Act protects any person who divulges
confidential information or gives testimony in compliance with an order or
notice, against claims or actions for a breach of confidentiality duty under
any other law in Montserrat. Therefore, when a tax official exchanges
information under the TIE Act he/she is acting under the powers in that Act,
and under the protection of section 22 of that Act, not under the Income and
Corporation Tax Act, and so there is no offence of breach of confidentiality
under section 43 of the Income and Corporation Tax Act.
282. Montserrat has reported that in its communications with informa-
tion holders (pursuant to an EOI request that may be received in the future)
it will make the minimum possible disclosure. It will not pass on the actual
request to the information holder. In its internal communications, Montserrat
already has in place practices that ensure that all confidential communica-
tions will carry confidential stamps and are accessed only by authorised
personnel. These same practices shall also extend to communications related
to EOI requests, as and when received. These practices have been tested in
the context of EOI only to a very limited extent as Montserrat received only
one request during the review period.
All other information exchanged (ToR C.3.2)
283. Confidentiality rules should apply to all types of information
exchanged, including information provided in a request, information trans-
mitted in response to a request and any background documents to such
requests. The provisions of Montserrats EOI arrangements are not restrictive
on this respect.
Phase 2 rating
Compliant.
C.4. Rights and safeguards of taxpayers and third parties
The exchange of information mechanisms should respect the rights and
safeguards of taxpayers and third parties.
Exceptions to requirement to provide information (ToR C.4.1)
284. The international standard allows requested parties not to supply
information in response to a request in certain identified situations where an
issue of trade, business or other secret may arise. All Montserrats TIEAs,
the protocol to the DTC with the United Kingdom and the Multilateral
Convention ensure that the contracting parties are not obliged to provide
information which would disclose any trade, business, industrial, commercial
or professional secret, or trade process, or information the disclosure of which
would be contrary to public policy.
8
285. Among other reasons, an information request can be declined where
the requested information would disclose confidential communications pro-
tected by the attorney-client privilege, as defined in the commentary to the
OECD Model Tax Convention. Attorney-client privilege is a feature of the
legal systems of many jurisdictions. However, communications between a
client and an attorney or other admitted legal representative are, generally,
only privileged to the extent that the attorney or other legal representative
acts in his or her capacity as an attorney or other legal representative. Where
attorney-client privilege is more broadly defined it does not provide valid
grounds on which to decline a request for exchange of information. To the
extent, therefore, that an attorney acts as a nominee shareholder, a trustee,
a settlor, a company director or under a power of attorney to represent a
company in its business affairs, exchange of information resulting from and
relating to any such activity cannot be declined because of the attorney-client
privilege rule.
286. All the TIEAs of Montserrat expressly refer to the attorney-client
privilege as an exception to the disclosure of information. As mentioned in
Section B.1, the precise scope of legal professional privilege in Montserrat is
somewhat unclear. The TIEAs with Belgium and the Netherlands also specify
that this does not prevent an attorney, solicitor or barrister from providing the
name and address of a client where doing so would not constitute a breach of
legal privilege.
287. In respect of rights and safeguards of persons, the OECD Model
TIEA provides that they remain applicable to the extent that they do not
unduly prevent or delay effective exchange of information. In contrast,
8. The DTC with Switzerland does not cover commercial secrets, but includes a
reservation for sovereignty and security in addition to public order.
the TIEA with Australia provides that a requested party shall use its best
endeavours to ensure that they do not so unduly prevent or delay effective
EOI. The TIEA with Germany does not set any exception to the rights and
safeguards in domestic law. Nevertheless, it is unlikely that this will materi-
ally affect exchange of information to international standards.
288. The practical application of the legal framework in this regard has
been tested only to a limited extent as Montserrat received just one request
during the review period. There was no problem in this regard in the course
of answering that request.
Phase 2 rating
Compliant.
C.5. Timeliness of responses to requests for information
The jurisdiction should provide information under its network of agreements
in a timely manner.
Responses within 90 days (ToR C.5.1)
289. In order for exchange of information to be effective, it needs to be
provided in a timeframe which allows tax authorities to apply the informa-
tion to the relevant cases. If a response is provided but only after a significant
lapse of time, the information may no longer be of use to the requesting
authorities. This is particularly important in the context of international co-
operation as cases in this area must be of sufficient importance to warrant
making a request.
290. There are no provisions in Montserrats protocol to the DTC with the
United Kingdom pertaining to the timeliness of responses or the timeframe
within which responses should be provided. The Multilateral Convention
provides that assistance should be given as soon as possible (Article 20).
291. All of Montserrats TIEAs require the provision of request confirma-
tions, status updates or the provision of the requested information, within the
timeframes foreshadowed in Article 5(6) of the OECD Model TIEA.
292. The only deadlines in the TIE Act relate to the notification rights of
the person subject to an EOI request: the person has 30 days to contest the
validity request (15 days for receiving the notice and 15 days to contest it).
293. Montserrat received one request during the review period and that
was answered within 90 days, so Montserrats practices on the issues of
timeliness have been tested to a limited extent. Montserrat states that when
received, an EOI request will be given priority and all efforts will be made to
provide information in the shortest possible time. Montserrat recognises the
90 day timeframe and is aware of the need to provide timely updates to the
requesting jurisdiction.
Organisational process and resources (ToR C.5.2)
294. Though Montserrat has received only one request during the review
period, it has set up organisational processes, including compiling a manual
to deal with EOI requests. Once a request is received, it will be entered into
the database that will be maintained by the Comptroller of Inland Revenue
(who is the competent authority). The Comptroller will be responsible for the
maintenance of this database. The database will contain all the details of the
request including the date received, the date on which any clarification was
sought, the date of the Attorney Generals response, taxpayer notification and
the date on which the request was finally answered. The one request received
by Montserrat, during the review period, was not entered into the database.
Montserrat states that this is because the requestwas received through regular
mail. It was therefore entered into the normal incoming mail register.
295. Once the request has been entered, the next step will be to inform the
Attorney General. Montserrat reports that the office of the Attorney General
will provide their comments within three working days. Once the Attorney
General is satisfied that the request is not contrary to public policy and can
be answered, the competent authority will check the request to see whether it
contains the legal basis of the request, whether the requesting jurisdiction has
taken all measures to obtain the information in its jurisdiction, a statement
that confidentiality will be maintained, that the request is foreseeably relevant
and there is some background information.
296. In case some clarification is required, Montserrat will seek the
same from the requesting jurisdiction, but the request will not be refused
on this ground. If the information that is requested is in possession of the
Comptroller of Inland Revenue, the information can be provided immedi-
ately, once the competent authority has decided that the request is a valid one.
297. In cases where the requested information is in the possession of
another person, the person who is subject of a request (that is not a criminal
matter) is notified of the request if his whereabouts are known. The taxpayer
will be notified in all cases even when the information is in possession of
the tax authorities. The person has 15 days to respond and has the oppor-
tunity to demonstrate that the request is not in keeping with the terms of
the applicable agreement. The procedure has been described earlier in this
report (see element B.2). This entire process has been tested to a limited
extent only as Montserrat has received only one request during the review
period. Montserrat states that the nature of that request was such that it did
not require the taxpayer to be notified.
298. In cases where the information requested is located outside
Montserrat and it is found that there is a legal obligation to hold the infor-
mation on the island, an application would be made to a Judge for a Court
order to have the documents returned to Montserrat. If it is revealed that the
information was removed to avoid exchange of information, the case will be
referred to the Director of Public Prosecution A person could be prosecuted
even if information is eventually provided but it is found that it was removed
to avoid exchange of information. A person who holds the information on the
island and refuses to provide the same to the competent authority will also be
referred to the Director of Public Prosecution.
299. Once the information holder provides the information, the competent
authority will check that the information received is what was requested.
Once the competent authority is satisfied, the information will be transmitted
to the requesting jurisdiction. The mode of transmission will depend on the
amount of material to be sent.
Absence of unreasonable, disproportionate or unduly restrictive
conditions on exchange of information (ToR C.5.3)
300. Exchange of information assistance should not be subject to unrea-
sonable, disproportionate, or unduly restrictive conditions.
301. There are no laws or regulations in Montserrat that impose restrictive
conditions on exchange of information, which would be incompatible with the
international standard.
302. There are no other restrictive conditions (other than those referred to
earlier in this report) that may hinder effective EOI in Montserrat.
This element involves issues of practice that are assessed in the Phase 2
review. Accordingly no Phase 1 determination has been made.
Phase 2 rating
Largely Compliant.
Factors underlying
Montserrat has committed resources
and has in place organisational
processes for exchange of information
that appear to be adequate for
dealing with incoming EOI requests.
Montserrat received only one EOI
request during the three-year period
under review. Consequently, the
organisational processes have not
been sufficiently tested in practice.
practical implementation of the
organisational processes of the
competent authority as well as the
level of resources committed to EOI
purposes, in particular taking account
of any significant changes to the
volume of incoming EOI requests, to
ensure that both the processes and
level of resources are adequate for
effective EOI in practice.
SUMMARY OF DETERMINATIONS AND FACTORS UNDERLYING RECOMMENDATIONS 77
Summary of Determinations and Factors
Underlying Recommendations
Overall Rating
LARGELY COMPLIANT
Determination
Factors underlying
Jurisdictions should ensure that ownership and identity information for all relevant entities
and arrangements is available to their competent authorities. (ToR A.1.)
Phase 2 rating:
Largely Compliant
New provisions were introduced
in August 2013 on availability
of ownership information on
all shareholders of companies
(domestic and foreign) and
in respect of beneficiaries of
trusts. In view of the short
period between the introduction
of the new provisions and
the end of the period under
review, the enforcement of the
new provisions could not be
assessed.
Montserrat should monitor
the operation of the new
provisions on the availability
of ownership information for
all shareholders of companies
(domestic and foreign) and
all beneficiaries of trusts in
Montserrat.
In situations where
deficiencies in complying
with AML obligations are
detected by the FSC, the
person concerned is asked to
address the situation. If these
deficiencies are addressed
in the timeframe granted by
the FSC, sanctions are not
applied.
When significant breaches
of AML obligations are
discovered, even if the gaps
are addressed by the person
concerned, the FSC should
consider applying sanctions.
78 SUMMARY OF DETERMINATIONS AND FACTORS UNDERLYING RECOMMENDATIONS
Determination
Factors underlying
Jurisdictions should ensure that reliable accounting records are kept for all relevant entities
and arrangements. (ToR A.2.)
Phase 2 rating:
Largely Compliant
In view of the recent introduction
of legal obligations for LLCs to
maintain accounting information
in Montserrat the enforcement
of these obligations could not be
assessed.
enforcement of the accounting
obligations applying to LLCs.
Banking information should be available for all account-holders. (ToR A.3.)
Phase 2 rating:
Largely Compliant
The FSC has not carried out
any inspections of banks since
2010 to check their compliance
levels.
Montserrat should quickly
put in place the schedule of
regular inspections of banks
so that their compliance can
be effectively monitored.
Competent authorities should have the power to obtain and provide information that is the
subject of a request under an exchange of information arrangement from any person within
their territorial jurisdiction who is in possession or control of such information (irrespective
of any legal obligation on such person to maintain the secrecy of the information). (Tor B.1.)
Phase 2 rating:
Compliant
The rights and safeguards (e.g. notification, appeal rights) that apply to persons in the
requested jurisdiction should be compatible with effective exchange of information.
(ToR B.2.)
The element is in place The prior notification
procedure in civil tax matters
only allows for an exception
when the whereabouts of the
taxpayer are not disclosed to
the competent authority.
It is recommended that
wider exceptions from prior
notification be permitted in civil
tax matters (e.g. in cases in
which the information request
is of a very urgent nature or
the notification is likely to
undermine the chance of the
success of the investigation
conducted by the requesting
jurisdiction).
Phase 2 rating:
Compliant
SUMMARY OF DETERMINATIONS AND FACTORS UNDERLYING RECOMMENDATIONS 79
Determination
Factors underlying
Exchange of information mechanisms should allow for effective exchange of information.
(ToR C.1.)
Phase 2 rating:
Compliant
The jurisdictions network of information exchange mechanisms should cover all relevant
partners. (ToR C.2.)
The element is in place Montserrat should continue
to develop its network of EOI
mechanisms with all relevant
partners.
Phase 2 rating:
Compliant
The jurisdictions mechanisms for exchange of information should have adequate provisions
to ensure the confidentiality of information received. (ToR C.3.)
Phase 2 rating:
Compliant
The exchange of information mechanisms should respect the rights and safeguards of
taxpayers and third parties. (ToR C.4.)
Phase 2 rating:
Compliant
The jurisdiction should provide information under its network of agreements in a timely
manner. (ToR C.5.)
This element involves
issues of practice
that are assessed in
the Phase 2 review.
Accordingly no
Phase 1 determination
has been made.
80 SUMMARY OF DETERMINATIONS AND FACTORS UNDERLYING RECOMMENDATIONS
Determination
Factors underlying
Phase 2 rating:
Largely Compliant
Montserrat has committed
resources and has in place
organisational processes for
exchange of information that
appear to be adequate for
dealing with incoming EOI
requests. Montserrat received
only one EOI request during
the three-year period under
review. Consequently, the
organisational processes have
not been sufficiently tested in
practice.
practical implementation of
the organisational processes
of the competent authority as
well as the level of resources
committed to EOI purposes,
in particular taking account
of any significant changes to
the volume of incoming EOI
requests, to ensure that both
the processes and level of
resources are adequate for
effective EOI in practice.
ANNEXES 81
Annex 1: Jurisdictions response to the review report
9
This annex is left blank because Montserrat has chosen to not provide
any material to include in it.
9. This Annex presents the jurisdictions response to the review report and shall not
be deemed to represent the Global Forums views.
82 ANNEXES
Annex 2: List of Montserrat exchange of information
mechanisms
Exchange of information mechanisms signed by/extended to Montserrat,
in alphabetical order:
Jurisdiction Type of arrangement
Signed/
Extended#
Date entered
into force/in effect#
1 Albania Multilateral Convention
#
signed
In force in Albania
01-Dec-2013
2 Andorra Multilateral Convention signed Not in force
3 Anguilla Multilateral Convention extended
In force in Anguilla
01-Mar-2014
4 Argentina Multilateral Convention signed
In force in Argentina
01-Jan-2013
5 Aruba Multilateral Convention extended
In force in Aruba
01-Sep-2013
6 Australia
Multilateral Convention signed
In force in Australia
01-Dec-2012
TIEA 22-Nov-2010 1-Jul-2010
7 Austria Multilateral Convention signed Not in force
8 Azerbaijan
Multilateral Convention
(Original)
signed
In force in Azerbaijan
01-Oct-2004
9 Belgium
Multilateral Convention signed Not in force
TIEA 16-Feb-2010
Ratified by Montserrat
on 14-Jun-2011
10 Belize Multilateral Convention signed
In force in Belize
01-Sep-2013
11 Bermuda Multilateral Convention extended
In force in Bermuda
01-Mar-2014
12 Brazil Multilateral Convention signed Not in force
ANNEXES 83
Signed/
Extended#
Date entered
13 British Virgin Islands Multilateral Convention extended
In force in British
Virgin Islands
01-Mar-2014
14 Canada Multilateral Convention signed Not in force
15 Cayman Islands Multilateral Convention extended
In force in Cayman
Islands
01-Jan-2014
16 Chile Multilateral Convention signed Not in force
17 China Multilateral Convention signed Not in force
18 Colombia Multilateral Convention signed Not in force
19 Costa Rica Multilateral Convention signed
In force in Costa Rica
01-Aug-2013
20 Croatia Multilateral Convention signed Not in force
21 Curaao Multilateral Convention extended
In force in Curaao
01-Sep-2013
22 Czech Republic Multilateral Convention signed
In force in Czech
01-Feb-2014
23 Denmark
In force in Denmark
01-Jun-2011
TIEA 22-Nov-2010 21-Oct-2011
24 Estonia Multilateral Convention signed Not in force
25 Faroe Islands
TIEA 22-Nov-2010
on 14-Jun-2011
Multilateral Convention extended
In force in Faroe
Islands
01-Jun-2011
26 Finland
In force in Finland
01-Jun-2011
TIEA 22-Nov-2010 31-Dec-2011
27 France Multilateral Convention signed
In force in France
01-Apr-2012
28 Georgia Multilateral Convention signed
In force in Georgia
01-Jun-2011
29 Germany
Multilateral Convention signed 3-Jan-2014
TIEA 28-Oct-2011 31-Mar-2012
84 ANNEXES
Signed/
Extended#
Date entered
30 Ghana Multilateral Convention signed
In force in Ghana
01-Sep-2013
31 Gibraltar Multilateral Convention extended
In force in Gibraltar
01-Jan-2014
32 Greece Multilateral Convention signed
In force in Greece
01-Sep-2013
33 Greenland
TIEA 22-Nov-2010
on 14-Jun-2011
In force in Greenland
01-Jun-2011
34 Guatemala Multilateral Convention signed Not in force
35 Hungary Multilateral Convention signed Not in force
36 Iceland
In force in Iceland
01-Feb-2012
TIEA 22-Nov-2010
on 14-Jun-2011
37 India Multilateral Convention signed
In force in India
01-Jun-2012
38 Indonesia Multilateral Convention signed Not in force
39 Ireland
In force in Ireland
01-Sep-2013
TIEA
40 Isle of Man Multilateral Convention extended
In force in Isle of Man
01-Jan-2014
41 Italy Multilateral Convention signed
In force in Italy
01-May-2012
42 Japan Multilateral Convention signed
In force in Japan
01-Oct-2013
43 Kazakhstan Multilateral Convention signed Not in force
44 Korea, Republic of Multilateral Convention signed
In force in Korea
01-Jul-2012
45 Latvia Multilateral Convention signed Not in force
46 Liechtenstein Multilateral Convention signed Not in force
47 Lithuania Multilateral Convention signed Not in force
48 Luxembourg Multilateral Convention signed Not in force
ANNEXES 85
Signed/
Extended#
Date entered
49 Malta Multilateral Convention signed
In force in Malta
01-Sep-2013
50 Mexico Multilateral Convention signed
In force in Mexico
01-Sep-2012
51 Moldova Multilateral Convention signed
In force in Moldova
01-Mar-2012
52 Morocco Multilateral Convention signed Not in force
53 Netherlands
In force in Netherlands
01-Sep-2013
TIEA 10-Dec-2009 1-Dec-2011
54 New Zealand Multilateral Convention signed
In force in New
Zealand
01-Mar-2014
55 Nigeria Multilateral Convention signed Not in force
56 Norway
In force in Norway
01-Jun-2011
TIEA 22-Nov-2010 19-Dec-2011
57 Poland Multilateral Convention signed
In force in Poland
01-Oct-2011
58 Portugal Multilateral Convention signed Not in force
59 Romania Multilateral Convention signed Not in force
60 Russian Federation Multilateral Convention signed Not in force
61 San Marino Multilateral signed Not in force
62 Saudi Arabia Multilateral Convention signed Not in force
63 Singapore Multilateral Convention signed Not in force
64 Sint Maarten Multilateral Convention extended
In force in Sint
Maarten
01-Sep-2013
65 Slovak Republic Multilateral Convention signed Not in force
66 Slovenia Multilateral Convention signed
In force in Slovenia
01-Jun-2011
67 South Africa Multilateral Convention signed
In force in South
Africa
01-Mar-2014
68 Spain Multilateral Convention signed
In force in Spain
01-Jan-2013
86 ANNEXES
Signed/
Extended#
Date entered
69 Sweden
In force in Sweden
01-Sep-2011
TIEA 22-Nov-2010
on 14-Jun-2011
70 Switzerland
Multilateral Convention signed Not in force
DTC 20-Aug-1963 1-Jan-1961
71 Tunisia Multilateral Convention signed Not in force
72 Turkey Multilateral Convention signed Not in force
73
Turks and Caicos
Islands
In force in Turks and
Caicos Islands
01-Dec-2013
74 Ukraine Multilateral Convention signed
In force in Ukraine
01-Sep-2013
75 United Kingdom
In force in the UK
since 01-Oct-2011
DTC 19-Dec-1947 9-Dec-1947
DTC Protocol 9-Dec-2009 31-Mar-2012
76 United States Multilateral Convention signed Not in force
# The Multilateral Convention on Mutual Administrative Assistance on Tax Matters has been extended
to Montserrat w.e.f 1 October 2013.
DTCs and protocols are available in English on the EOI Portal at http://eoi-tax.org/.
ANNEXES 87
Annex 3: List of laws, regulations and other material
Banking Act, Cap 11.03
International Banking and Trust Companies Act, Cap. 11.04
Trusts Act Cap. 11.06
Partnership Act, Cap. 11.09
Limited Partnership Act, Cap. 11.10
Registration of Business Names Act, Cap. 11.11
Companies Act, Cap. 11.12
International Business Companies Act, Cap. 11.13
Limited Liability Company Act, Cap. 11.14 and Limited Liability Company
(Amendment) Act 2010
Confidential Information Act, Cap. 11.25
Company Management Act Cap. 11.26
Income Tax and Corporation Act Cap. 17.01 and Income and Corporation
Tax Act (Amendment) Act No. 21 of 2011
Tax Information Exchange Act Tax No. 21 of 2010
Financial Services Act 2008
AML/CFT Regulations 2010
88 ANNEXES
Annex 4: List of persons interviewed during on-site visit
Comptroller of Inland Revenue
Registrar of Companies
Officers of the Attorney Generals chambers
Representatives of the Financial Services Commission
Officers of the Financial Crime and Analysis Unit
ORGANISATION FOR ECONOMIC CO-OPERATION
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OECD PUBLISHING, 2, rue Andr-Pascal, 75775 PARIS CEDEX 16
(23 2014 22 1 P) ISBN 978-92-64-21777-5 2014
GLOBAL FORUM ON TRANSPARENCY AND EXCHANGE
OF INFORMATION FOR TAX PURPOSES
Peer Review Report
Phase 2
Implementation of the Standard
in Practice
Global Forum on Transparency and Exchange of Information
for Tax Purposes
PEER REVIEWS, PHASE 2: MONTSERRAT
This report contains a Phase 2: Implementation of the Standards in Practice review, as well
as revised version of the Phase 1: Legal and Regulatory Framework review already released
for this country.
The Global Forum on Transparency and Exchange of Information for Tax Purposes is the
multilateral framework within which work in the area of tax transparency and exchange of
information is carried out by over 120 jurisdictions which participate in the work of the
Global Forum on an equal footing.
The Global Forum is charged with in-depth monitoring and peer review of the implementation
of the standards of transparency and exchange of information for tax purposes. These
standards are primarily reected in the 2002 OECD Model Agreement on Exchange of
Information on Tax Matters and its commentary, and in Article 26 of the OECD Model Tax
Convention on Income and on Capital and its commentary as updated in 2004, which has
been incorporated in the UN Model Tax Convention.
The standards provide for international exchange on request of foreseeably relevant
information for the administration or enforcement of the domestic tax laws of a requesting
party. Fishing expeditions are not authorised, but all foreseeably relevant information must
be provided, including bank information and information held by duciaries, regardless of the
existence of a domestic tax interest or the application of a dual criminality standard.
All members of the Global Forum, as well as jurisdictions identied by the Global Forum as
relevant to its work, are being reviewed. This process is undertaken in two phases. Phase 1
reviews assess the quality of a jurisdictions legal and regulatory framework for the exchange
of information, while Phase 2 reviews look at the practical implementation of that framework.
Some Global Forum members are undergoing combined Phase 1 plus Phase 2 reviews.
The ultimate goal is to help jurisdictions to effectively implement the international standards
of transparency and exchange of information for tax purposes.
All review reports are published once approved by the Global Forum and they thus represent
agreed Global Forum reports.
For more information on the work of the Global Forum on Transparency and Exchange of
Information for Tax Purposes, and for copies of the published review reports, please visit
www.oecd.org/tax/transparency and www.eoi-tax.org.
MONTSERRAT
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Consult this publication on line at http://dx.doi.org/10.1787/9789264217768-en.
This work is published on the OECD iLibrary, which gathers all OECD books, periodicals and
statistical databases.
Visit www.oecd-ilibrary.org for more information.
ISBN 978-92-64-21777-5
23 2014 22 1 P
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