Financial Crime World

BVI’s Financial Institutions Face Increased Scrutiny over Money Laundering Concerns

Urgent Need for Improved Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) Controls

The Financial Services Commission (FSC) in the British Virgin Islands has issued a warning to financial institutions, urging them to strengthen their AML/CFT controls to prevent fraud and tax evasion.

Recent Report Highlights Concerns

According to a recent report by the Financial Intelligence Agency (FIA), there was a significant number of suspicious activity reports (SARs) related to possible cases of fraud, money laundering, counterfeiting, and tax evasion. The report emphasizes the need for financial institutions to implement robust AML/CFT controls and conduct regular risk assessments to identify vulnerabilities.

Recommendations from the FSC

The FSC has issued specific recommendations to address these concerns, including:

  • Ensuring relevant data is maintained, collected, and analyzed to demonstrate the territory’s effectiveness in investigating and prosecuting money laundering cases.
  • Maintaining adequate internal controls.
  • Conducting regular monitoring of clients.
  • Ensuring staff are properly trained on AML/CFT procedures.

Sector-Specific Concerns

The report highlights specific areas of concern for each sector, including:

Banking

  • Timely filing of SARs and submission of statistical returns
  • Maintaining adequate procedures for verification and maintenance of information on beneficial owners (BOs) and legal persons

Financing Services

  • Understanding client verification procedures
  • Staff training on identifying suspicious activities

Money Services

  • Proper verification of beneficial ownership information
  • Execution of enhanced customer due diligence (ECDD) measures

Trust Company Service Providers (TCSPs)

  • Conducting regular risk assessments
  • Executing ECDD measures
  • Ensuring third-party introducers understand their AML/CFT obligations

Investment Business

  • Ensuring entities operating outside the jurisdiction fully understand their AML/CFT obligations
  • Conducting regular monitoring of clients

Insurance Business

  • Maintaining adequate procedures for verification and maintenance of information on BOs and legal persons

Insolvency Practitioners

  • Conducting regular risk assessments
  • Verifying BO information
  • Ensuring entities involved in joint appointments understand their AML/CFT obligations

Deadline and Consequences

Financial institutions have been given a deadline to implement these recommendations and improve their AML/CFT controls. Failure to comply may result in regulatory action, including fines and penalties.

Commitment to Effective AML/CFT Framework

In response to the report, the BVI Financial Services Commission emphasized its commitment to maintaining a robust and effective AML/CFT framework that protects the territory’s financial system from criminal activity.