British Virgin Islands Sets to Complete Regulatory Frameworks for Financial Crime Prevention by Year’s End

The British Virgin Islands (BVI) is making significant progress in strengthening its regulatory frameworks for financial crime prevention. According to Kenneth Baker, Managing Director of the BVI Financial Services Commission (FSC), these efforts are set to be completed by year’s end.

Background on the BVI Financial Services Commission (FSC)

The FSC is the regulatory body responsible for overseeing financial services in the territory. Its mantra is “Vigilance, Integrity, Accountability,” reflecting its commitment to ensuring that financial institutions operate within a safe and secure environment.

Government Efforts to Reduce Financial Crimes

Over the years, the government has taken several steps to amend legislation and reduce financial crimes in the territory. These efforts are aimed at preparing for the upcoming Caribbean Financial Action Task Force (CFATF) assessment, which evaluates the effective implementation of international regulatory standards.

Key Amendments to Local Legislation

The FSC’s CEO highlighted that a number of amendments have been made to local financial services legislation in preparation for the CFATF assessment. These changes are designed to ensure that the BVI is compliant with international regulatory standards.

Translating Recommendations into Domestic Legislation

According to Baker, the territory’s role is to translate recommendations from the Financial Action Task Force (FATF) into domestic legislation or regulations. The FATF assesses whether jurisdictions have the right legislation in place and overall effectiveness.

Understanding the Revised Assessment Methodology

Since the last assessment in 2008, the FATF has revised its methodology, adding an effectiveness component which accounts for approximately 80 percent of the overall assessment score. Baker emphasized that a jurisdiction would need to demonstrate that it is:

• Identifying potential money laundering cases
• Investigating them
• Prosecuting where necessary
• Convicting and confiscating the proceeds of crime

Avoiding Money Laundering

People within and outside of the financial services industry may be exposed to some level of money laundering from time to time. However, this can be avoided by:

• Asking questions about financial transactions
• Knowing the persons they are doing business with
• Being suspicious when something does not feel right

Banks’ Legal Requirements

Baker noted that banks have legal requirements to ask questions about financial transactions and international standards require them to identify clients, know the source of funds, and monitor transactions.

Assessment Process

The assessment stages include:

• Dissemination and submission of questionnaires
• Personal interviews with both private and public sectors
• Determining the level of understanding of the anti-money laundering regime

Baker emphasized that if a jurisdiction can demonstrate these steps, it will be well on its way to having a good outcome in the assessment process.