British Virgin Islands: Progress on Anti-Money Laundering and Combating Terrorism Financing Measures
The British Virgin Islands (BVI) has made significant strides in implementing anti-money laundering (AML) and combating the financing of terrorism (CFT) measures, but there are still notable areas that require improvement. This article highlights key findings and recommendations for addressing these concerns.
Key Findings
Terrorist Financing Risks
- Vulnerability assessment: Authorities have not identified a subset of nonprofit organizations vulnerable to terrorist financing abuse nor specific threats facing the NPO sector in BVI.
- Supervisory approach: The Financial Investigation Agency’s (FIA) supervisory approach is not robust, risk-based, or aimed at mitigating the specific risk of terrorist financing.
Understanding Money Laundering Risks
- Lack of understanding: Certain sectors, including trust and company service providers (TCSPs) and investment businesses, lack a comprehensive understanding of money laundering risks.
- Customer Due Diligence (CDD): Remaining obstacles hinder the effective implementation of CDD measures in both financial and non-financial sectors.
Beneficial Ownership Requirements
- Application: The application of recently amended beneficial ownership requirements by all sectors, including TCSPs and investment business sectors, remains too focused on determining ownership rather than understanding control over a legal person or arrangement.
Suspicious Activity Reports (SARs)
- Deficiencies: Important deficiencies in SARs continue to exist.
- Reporting mechanisms: Addressing these deficiencies is crucial for improving reporting mechanisms.
Supervisory Framework
- Risk-based supervision: While there is a supervisory framework in place at both supervisory agencies, effective risk-based supervision could only be demonstrated to a limited extent.
Recommendations
To address the identified concerns, the BVI authorities should:
- Develop a robust TF risk assessment framework: Identify vulnerable NPOs and specific threats facing the sector.
- Enhance the FIA’s supervisory approach: Focus on high-risk licensees and ensure effective risk-based supervision.
- Improve ML risk understanding: Educate and train TCSPs, investment businesses, and other sectors to enhance their understanding of money laundering risks.
- Implement CDD measures effectively: Ensure that all sectors, including beneficial ownership requirements, are implemented correctly.
- Address SAR deficiencies: Improve reporting mechanisms and address the existing shortcomings in SARs.
- Strengthen the supervisory framework: Enhance risk-based supervision to ensure effective implementation of AML/CFT measures.