Financial Crime World

British Virgin Islands’ Anti-Money Laundering (AML)/Countering the Financing of Terrorism (CFT) Framework: Progress and Areas for Improvement

The British Virgin Islands (BVI) has made significant progress in improving its AML/CFT framework, but there are still areas that require attention to ensure effective implementation of the Financial Action Task Force (FATF) Recommendations.

General Findings

  • The BVI has demonstrated improvements in its AML/CFT framework, but further efforts are needed to strengthen international cooperation and implement FATF Recommendations effectively.
  • Enhancing governance structures, such as the International Tax Authority (ITA), is crucial for effective implementation of AML/CFT measures.
  • Strengthening international cooperation with countries like the United States is essential for achieving greater compliance.

Regulatory Authorities

International Tax Authority (ITA)

  • The ITA has a robust governance structure and administers outgoing Mutual Legal Assistance (MLA) requests efficiently.
  • However, the lack of power to impose administrative penalties may hinder effective implementation of AML/CFT measures.

Financial Institutions

Trust and Corporate Service Providers (TCSPs)

  • TCSPs are the largest sub-sector in the BVI’s financial services industry, followed by investment business.
  • Common areas for improvement include:
    • Corporate governance issues
    • Beneficial ownership requirements
    • Client verification/CDD measures
    • AML/CFT internal control measures
    • Filing of Suspicious Activity Reports (SARs)/Suspicious Transaction Reports (STRs)

Money Service Businesses (MSBs)

  • MSBs may require improvement in their AML/CFT internal controls.

Trust and Corporate Service Providers

  • TCSPs present a lower risk than insolvency practitioners and insurance businesses.
  • High-risk areas for improvement include:
    • Over-reliance on third parties to obtain relevant client information
    • Ensuring accessibility of records

Insurance Business

Domestic Insurers

  • Domestic insurers account for most business, with property and casualty insurance posing a low AML/CFT risk.
  • Opportunities for improvement include procedures for identifying different customer risk categories and filing of SARs/STRs.

Insolvency Business

  • Insolvency practitioners are licensed under the Insolvency Act, 2003 and are required to maintain AML/CFT systems and controls.
  • The sample size of five practitioners is insufficient to draw definitive conclusions.