Financial Crime World

British Virgin Islands’ Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) Assessment

Introduction

The British Virgin Islands (BVI) has been assessed by international authorities on its anti-money laundering (AML) and combating the financing of terrorism (CFT) regime. The assessment highlights various weaknesses and areas for improvement in the BVI’s AML/CFT regime.

Key Findings

Terrorist Financing (TF) Risk

  • Low TF risk: Although terrorist financing risk is recognized as being low, there are no clear indicators of TF threats facing the non-profit organization sector in the BVI.
  • Insufficient TF threat assessment: The report notes that a comprehensive understanding of TF threats facing the non-profit organization sector is lacking.

Supervisory Activities

  • Inadequate supervision: The report notes that supervisory activities are not sufficiently rigorous to ensure effective implementation of the Terrorist Financing Regulations (TFRs).
  • Limited risk-based supervision: Effective risk-based supervision could only be demonstrated to a limited extent, and the FSC’s risk model is not effectively supporting the assessment of the most important ML/TF risks.

Understanding of AML/CFT Obligations

  • Varied understanding: While banks and some legal practitioners have a good understanding of their anti-money laundering (AML) risks, this understanding is not homogeneous in the trust and company service providers (TCSP) sector.
  • Insufficient awareness: The report highlights that there are remaining obstacles that undermine effective implementation of CDD and EDD measures in both the financial and non-financial sectors.

Customer Due Diligence (CDD)

  • Inadequate CDD measures: The report highlights that while improvements have been made in implementing CDD measures by FSC-supervised entities, there are remaining obstacles that undermine effective implementation of CDD and EDD measures in both the financial and non-financial sectors.
  • Lack of control understanding: Although the application of beneficial ownership requirements is an improvement, it remains too focused on determining ownership rather than understanding control over a legal person or arrangement.

Suspicious Activity Reports (SARs)

  • Deficiencies in SARs: The report notes that important deficiencies in SARs continue to exist.
  • Training and resource allocation: The report recommends addressing these deficiencies through training and resource allocation.

Recommendations

To address the weaknesses identified, the BVI can consider implementing the following measures:

  1. Developing a more comprehensive understanding of TF threats facing the non-profit organization sector
  2. Enhancing supervisory activities to ensure effective implementation of TFRs and AML/CFT obligations
  3. Improving CDD measures in both the financial and non-financial sectors, with a focus on determining control over legal persons or arrangements
  4. Strengthening beneficial ownership requirements to move beyond mere ownership determination
  5. Addressing deficiencies in SARs through training and resource allocation

Conclusion

By implementing these measures, the BVI can improve its AML/CFT regime and reduce the risk of money laundering and terrorist financing within its jurisdiction.