Financial Crime World

Low Financial Crime Enforcement in British Virgin Islands Raises Concerns

The International Monetary Fund (IMF) has recently published a report highlighting significant shortcomings in the British Virgin Islands’ (BVI) efforts to combat money laundering and terrorist financing.

Shortcomings in Money Laundering Investigations

  • The majority of money laundering cases involve simple possession of cash proceeds from drug trafficking, with limited investigations into more complex schemes.
  • The Financial Crime Unit (FCU) faces challenges due to:
    • Insufficient staff resources
    • Perceived weaknesses in financial intelligence agency disseminations
  • As a result, authorities have not initiated large-scale money laundering investigations or cross-border probes into suspected criminal activities of British Virgin Island Business Companies (BVIBCs) involved in foreign predicates.

Lack of Investigation and Confiscation

  • The report noted that there has been no effort to investigate third-party laundering or identify and locate criminal assets in the jurisdiction and abroad.
  • Confiscation is not treated as a policy objective, and there were no investigations aimed at identifying and locating criminal assets.

Positive Developments

  • An increase in investigative staff
  • Consequences of a Commission of Inquiry report on corruption have prompted authorities to take a more forceful approach to money laundering

Terrorist Financing Concerns

  • The BVI was found to have identified and investigated a small number of terrorist financing cases, but did not prosecute or convict any activities during the assessed period.
  • The Financial Intelligence Agency (FIA) demonstrated some preparedness to identify, prioritize, and investigate terrorist financing cases, although there is a need to improve financial investigations capacity.

Targeted Financial Sanctions Concerns

  • Variances in screening frequency by reporting entities
  • Lack of sufficient mechanisms for identifying potential targets
  • Inconsistent understanding among reporting entities of legal obligations regarding targeted financial sanctions for terrorist financing and proliferation financing.

The IMF’s report highlights the need for the BVI to improve its financial crime enforcement efforts, including increasing investigative staff, improving financial investigations capacity, and implementing effective measures to combat money laundering and terrorist financing.