Financial Crime World

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BVI Financial Services Commission Unveils 2022 Virgin Islands Money Laundering Risk Assessment

The BVI Financial Services Commission (FSC) has released its 2022 Virgin Islands Money Laundering Risk Assessment report, highlighting key vulnerabilities and expectations for regulated sectors in the territory.

Inherent Weaknesses in the Financial System

The report identifies inherent weaknesses in the financial system, including:

  • Complexity of available structures that can conceal the source of assets and identity of beneficial owners (BOs)
  • Potential use by high-risk customers, including foreign Politically Exposed Persons (PEPs)
  • Lack of registration requirements for trusts, making it challenging to identify existing trustees and beneficiaries

Emerging Risks

The report also examines emerging products and technologies that facilitate quick transfer of funds without requiring regulated money services, elevating ML risk. These include:

  • Decentralized Financial Products (DeFi)
  • Mobile phone app transfers
  • Hawala-style systems

To mitigate these risks, the FSC expects all regulated sectors to review and adjust policies, procedures, and internal controls to address the findings of the report and other identifiable risk factors.

Expectations

The report outlines several expectations for all regulated sectors:

Enhanced Client Monitoring

  • Enhanced monitoring of clients based on risk
  • Demonstrable understanding of clients’ behavior and ability to identify potential areas of concern
  • Ability to demonstrate adjustments to client monitoring based on changes in activity
  • Proper monitoring of financial sanctions notices and actions taken relative to potential breaches

Institutional Risk Assessment Frameworks

  • Implement institutional risk assessment frameworks
  • Amend Section 11 of the Anti-Money Laundering and Combating Financing of Terrorism (AML/CFT) Operating Procedures
  • Ensure timely and accurate submission of statistical returns, including AML/CFT returns
  • Maintain adequate procedures and controls for verification and maintenance of information on legal persons, legal arrangements, and BOs

Understanding ML Risk

The report emphasizes the importance of understanding ML risk within each sector, identifying main ML risks, and implementing mitigating measures to minimize this risk.

Full Report Available Online

The full report is available online at bvifsc.vg/risk-assessments.