British Virgin Islands’ Anti-Money Laundering Efforts Fall Short

A recent assessment by international authorities has revealed significant shortcomings in the British Virgin Islands’ (BVI) anti-money laundering (AML) efforts. The report, conducted by a team of experts from the International Monetary Fund (IMF), highlights numerous areas where the BVI can improve its AML regime to better combat money laundering and terrorist financing.

Risk-Based Supervision

One of the key concerns is the lack of effective risk-based supervision by the Financial Services Commission (FSC) and the Financial Intelligence Agency (FIA). The report notes that while both agencies have a supervisory framework in place, their risk assessments are not robust enough to identify and prioritize higher-risk licensees.

Customer Due Diligence

The assessment also found that many financial institutions and designated non-financial businesses and professions (DNFBPs) in the BVI lack a sufficient understanding of money laundering risks and do not adequately implement customer due diligence measures. The report notes that some sectors, such as trust and company service providers (TCSPs), are particularly vulnerable to money laundering and terrorist financing.

Institutional Risk Assessments

The FIA’s institutional risk assessments were also criticized for being too basic and inconsistent, leading to a limited understanding of ML/TF risks. Additionally, the report found that the BVI’s system for identifying and reporting suspicious activity is deficient.

Positive Developments

The IMF team did note some positive developments, including improvements in customer due diligence measures by FSC-supervised entities and the introduction of a supervisory regime for virtual asset service providers (VASPs).

Conclusion and Recommendations

However, the report concludes that significant deficiencies remain in the BVI’s AML framework, particularly in the TCSP and investment business sectors. The authorities have been urged to take immediate action to address these shortcomings and improve their risk-based supervision, customer due diligence measures, and suspicious activity reporting.

• Improve risk-based supervision by conducting more robust risk assessments
• Enhance customer due diligence measures among financial institutions and DNFBPs
• Strengthen institutional risk assessments by the FIA
• Develop a more effective system for identifying and reporting suspicious activity

The full report can be found on the IMF’s website.