Financial Crime World

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Missing the Mark: BVI’s AML/CFT System Under Fire

A new report from the International Monetary Fund (IMF) has highlighted serious concerns about the British Virgin Islands’ (BVI) Anti-Money Laundering and Combating Financing of Terrorism (AML/CFT) system. The assessment reveals a lack of effective supervision, inadequate risk-based approach, and insufficient implementation of customer due diligence measures.

Weaknesses in AML/CFT Regime

The report identifies several weaknesses in the BVI’s AML/CFT regime, including:

  • Inadequate understanding of beneficial ownership requirements, with a focus on determining ownership rather than control over legal persons.
  • Deficiencies in the implementation of customer due diligence measures, particularly in the trust and company service providers (TCSP) sector.
  • Insufficient supervision by the Financial Services Commission (FSC), which is responsible for regulating the financial sector.

Sectors Struggling to Comply

While some sectors, such as banks and legal practitioners, have a good understanding of their AML/CFT obligations, others are still struggling to understand and mitigate ML/TF risks. Specifically:

  • TCSPs and investment businesses are lacking in their understanding of AML/CFT requirements.

Government Urged to Take Action

The report’s findings have sparked concerns about the BVI’s reputation as an international business center and financial hub. The government has been urged to take immediate action to address these weaknesses and improve its AML/CFT regime.

What the Government Needs to Do

To address the weaknesses identified in the report, the BVI government must:

  • Strengthen supervision of the financial sector by conducting more frequent onsite inspections.
  • Implement a risk-based approach to AML/CFT, prioritizing higher-risk licensees and sectors.
  • Improve understanding of beneficial ownership requirements and control structures.
  • Enhance customer due diligence measures, particularly in TCSPs and investment businesses.
  • Develop a comprehensive plan to address the weaknesses identified in the report.

A Call to Action

The BVI government must take immediate action to address these weaknesses and improve its AML/CFT regime. Failure to do so may result in reputational damage and increased risk of money laundering and terrorist financing.

Conclusion

The IMF’s assessment provides a stark reminder of the importance of effective AML/CFT measures and the need for governments to prioritize this critical issue. It is essential that the BVI government takes concrete steps to address these weaknesses and demonstrate its commitment to combating financial crime.