Financial Crime World

Anti-Money Laundering and Terrorist Financing Laws in the British Virgin Islands

The British Virgin Islands (BVI) has implemented various laws and regulations to combat money laundering, terrorism financing, and fraud. This article provides a summary of the key aspects of these laws, including predicate offenses, de minimis rules, penalties, plea agreements, defenses, record-keeping and disclosure requirements, compliance measures, customer due diligence, private enforcement, and remedies.

Predicate Offenses

The BVI has adopted an ‘all crimes’ approach under its AML and terrorist financing regime. Predicate offenses are defined as those set out in the Proceeds of Criminal Conduct Act and the Drug Trafficking Offences Act.

  • Key Points:
    • The BVI’s AML and terrorist financing regime applies to all predicate offenses.
    • These offenses include, but are not limited to, money laundering, terrorism financing, and fraud.

De Minimis Rules

There are no de minimis rules applicable to money laundering, terrorism financing, and fraud offenses in the BVI. This means that even small transactions may be subject to regulation and enforcement under these laws.

  • Key Points:
    • No threshold exists for de minimis rules in the BVI’s AML and terrorist financing regime.
    • Transactions of any size may be subject to scrutiny and potential penalties.

Penalties

The penalties for money laundering, terrorism financing, and fraud offenses in the BVI can be severe. These include imprisonment and fines, which vary depending on the nature of the offense and whether it is tried summarily or by indictment.

  • Key Points:
    • Up to 2 years’ imprisonment or a fine of up to $250,000 for summary conviction.
    • Up to 14 years’ imprisonment or a fine of up to $500,000 for indictment on conviction.

Plea Agreements

Plea agreements are available in the BVI courts. The director of public prosecution has discretion to accept or reject plea agreements, which can be used to resolve cases more efficiently and reduce the burden on the justice system.

  • Key Points:
    • Plea agreements can be negotiated between the defendant and the prosecution.
    • The director of public prosecution has final say in accepting or rejecting plea agreements.

Defenses

Certain defenses may arise under the anti-money laundering and terrorist financing regime. These include disclosure and consent defenses, as well as a statutory defense where a party reports a suspicious transaction to the Financial Investigation Agency (FIA).

  • Key Points:
    • Disclosure and consent defenses may apply in specific circumstances.
    • A statutory defense is created when a party reports a suspicious transaction to the FIA.

Record-Keeping and Disclosure Requirements

Relevant persons must maintain records of various matters, including identity verification evidence, transactions carried out by or on behalf of individuals, reports made to the FIA, and inquiries received from the FIA. These records must be kept for a specified period and made available upon request.

  • Key Points:
    • Relevant persons must keep accurate and up-to-date records.
    • Records must be retained for a minimum period of time.

Compliance Measures

Companies are advised to establish internal systems and controls, practice good record-keeping, and provide employee training. This will help ensure compliance with anti-money laundering and terrorist financing laws in the BVI.

  • Key Points:
    • Companies should implement effective internal systems and controls.
    • Employee training is essential for ensuring compliance with AML regulations.

Customer Due Diligence

Companies must effect customer due diligence measures to ensure they understand who their customers are, what services they require, and whether there are any potential risks associated with the transaction. This will help prevent money laundering and other financial crimes.

  • Key Points:
    • Companies must conduct thorough customer due diligence.
    • Understanding the customer’s identity, business, and risk profile is crucial.

Private Enforcement

Private actions can be brought in the BVI courts for damages arising from money laundering, terrorism financing, or fraud. Damages are calculated to put the aggrieved party in the position it would have been in had the breach not occurred. Other remedies may include injunctions, accounts of profit, rescission, and rectification.

  • Key Points:
    • Private actions can be brought for damages arising from financial crimes.
    • Remedies available to the court may include injunctive relief, disgorgement of profits, and rectification.