Financial Crime World

BVI Introduces Regulations for Virtual Assets

The British Virgin Islands (BVI) has introduced new regulations governing virtual assets in an effort to combat money laundering, terrorist financing, and proliferation financing.

Background

The BVI’s new regulations aim to provide a framework for businesses operating in the digital currency space, including exchanges, brokers, and other service providers. These laws require these entities to register with the Financial Services Commission (FSC) and comply with anti-money laundering (AML) and combating the financing of terrorism (CFT) regulations.

Key Requirements

Under the new regulations, virtual asset businesses must:

  • Register with the FSC within a specified timeframe.
  • Comply with AML/CFT requirements, including conducting customer due diligence and reporting suspicious transactions.
  • Implement measures to prevent the use of their services for money laundering or terrorist financing.
  • Maintain accurate records and provide information to regulators upon request.

Reporting Requirements

The regulations also introduce new reporting requirements for virtual asset businesses. These include:

  • Reporting all transactions involving virtual assets valued at $1,000 or more.
  • Suspicions of money laundering or other criminal activity must be reported to the FSC and/or the BVI’s Financial Investigation Agency.

Estate Planning and Testamentary Succession

The regulations do not specifically address the treatment of virtual assets upon the death of an individual holding them. However, in principle, these assets will be treated like any other asset under BVI law.

OECD Crypto-Asset Reporting Framework

The Organisation for Economic Co-operation and Development (OECD) has published a final version of its Crypto-Asset Reporting Framework (CARF), which provides a cross-border reporting framework to standardize the exchange of information on transactions in crypto-assets. The BVI is likely to amend its legislative framework to implement CARF recommendations.

Conclusion

The new regulations aim to provide clarity and consistency for businesses operating in the virtual asset space, while also ensuring that these assets are not used to facilitate illicit activities. As the digital currency landscape continues to evolve, it is essential for businesses and individuals alike to understand their obligations under these new regulations.