Financial Crime World

British Virgin Islands’ Compliance with Anti-Money Laundering (AML)/Countering the Financing of Terrorism (CFT) Standards

The International Monetary Fund (IMF) has released an assessment report on the British Virgin Islands’ (BVI) compliance with AML/CFT standards. The report highlights both progress and significant weaknesses in various aspects of its AML/CFT framework.

Key Findings

  • Limited investigations: The Financial Crimes Unit (FCU) has not initiated large-scale Money Laundering (ML) investigations, cross-border investigations, or investigations related to British Virgin Island Business Companies allegedly involved in foreign predicates.
  • Insufficient confiscation: Confiscation is not treated as a policy objective, and there were no investigations aiming at identifying and locating criminal assets in the jurisdiction and abroad.
  • Low Terrorist Financing (TF) risk profile: The BVI identified and investigated a small number of TF cases, but did not prosecute or convict any TF activities over the assessed period.
  • Ineffective implementation of Targeted Financial Sanctions (TFS): Variances in screening frequency by reporting entities, lack of sufficient mechanisms for identifying potential targets for designation, and inconsistent understanding among reporting entities undermine effective implementation of TFS.
  • Weaknesses in Customer Due Diligence (CDD) and Enhanced Due Diligence (EDD): Serious deficiencies exist in the implementation of CDD requirements, including beneficial ownership requirements and EDD measures by Trust and Company Service Providers (TCSPs) and investment business sectors.
  • Inadequate risk-based supervision: The Financial Services Commission’s (FSC) risk model is not effectively supporting the assessment of ML/TF risks, and the number of onsite inspections for TCSPs, investment businesses, and banks is still low.
  • Limited understanding of ML/TF risks in Non-Profit Organizations (NPO) sector: The authorities have not identified the subset of NPOs that are vulnerable to TF abuse nor the specific TF threats facing the NPO sector in BVI.

Recommendations

The IMF recommends that the BVI takes steps to address these issues to improve its compliance with international AML/CFT standards. By implementing effective measures, the BVI can strengthen its AML/CFT framework and reduce the risks associated with money laundering and terrorist financing.