Financial Crime World

British Virgin Islands Introduces New Legislation to Combat Financial Crime

Introduction

The British Virgin Islands (BVI) has announced plans to introduce new legislation aimed at implementing the Financial Action Task Force’s (FATF) standards on virtual assets and virtual asset service providers. This two-step approach will ensure compliance with anti-money laundering, counter-terrorist financing, and proliferation financing regulations.

Compliance Obligations for Virtual Asset Service Providers (VASPs)

As of December 1, 2022, VASPs in the BVI will be required to comply with the country’s Anti-Money Laundering Regulations (AMLR) and related Anti-Money Laundering and Terrorist Financing Code of Practice. Key compliance obligations include:

  • Appoint a Money Laundering Reporting Officer: Designate an individual responsible for ensuring compliance with AML regulations.
  • Establish policies and procedures to identify and mitigate financial crime risk: Develop effective systems to prevent money laundering, sanctions breaches, terrorist financing, and proliferation financing.
  • Verify the identity of customers and prospective customers: Ensure accurate identification and due diligence on all clients.
  • Risk rating business products and services, customers, and delivery channels: Assess potential risks associated with various activities and implement controls accordingly.
  • Implement effective sanctions screening, record-keeping, staff training, testing, and suspicious activity and transaction monitoring and reporting: Implement robust measures to prevent financial crime and ensure regulatory compliance.

Registration Regime for VASPs

The BVI is expected to bring into force its Virtual Asset Service Providers Act (VASP Act) in December 2022 or the first quarter of 2023. The new law will establish a registration regime for VASPs, requiring them to register with the Financial Services Commission (FSC). A period of transitional relief of six months is expected to be provided for VASPs to make their application without having to stop their business.

Conclusion

The introduction of these regulations aims to ensure that the BVI remains a trusted and secure jurisdiction for financial services. However, businesses operating in the sector should seek specialist advice to ensure compliance with the new legislation.