Financial Crime World

BVI Takes Steps to Combat Proliferation Financing

The British Virgin Islands (BVI) has strengthened its efforts to combat proliferation financing (PF), a critical issue that threatens global security. The territory’s new Proliferation Financing (Prohibition) Act, 2021 (PFPA) aims to prevent the financing of activities related to weapons of mass destruction and their means of delivery.

The Threat of Proliferation Financing

According to experts, PF is a significant threat to international peace and security, as it enables non-state actors to acquire weapons that can cause harm on a massive scale. The BVI’s move to criminalize PF aligns with the United Nations Security Council Resolution (UNSCR) 1540, which calls on all member states to refrain from supporting activities related to nuclear, chemical, or biological weapons.

Key Provisions of the PFPA

  • Defines PF as any activity that facilitates the manufacture, production, possession, acquisition, stockpiling, storage, development, transportation, sale, supply, transfer, export, trans-shipment, or use of weapons of mass destruction
  • Includes provisions for providing technical training, advice, service, brokering, or assistance related to these activities

The Role of the BVI Financial Investigation Agency (FIA)

  • Confers powers on the FIA to monitor and assess the level of PF risk in the territory
  • Empowers the FIA to take appropriate measures to prevent and detect PF, investigate and prosecute PF-related offenses
  • Requires the FIA to work closely with international partners to ensure that the territory’s financial system is not used to support PF activities

Industry Requirements

  • Financial institutions are required to implement robust anti-money laundering and combating the financing of terrorism (AML/CFT) measures to prevent PF
    • Reporting suspicious transactions
    • Maintaining customer due diligence records
    • Conducting regular risk assessments

International Cooperation

The BVI’s efforts to combat PF align with recommendations from the Financial Action Task Force (FATF) and the United Nations, and demonstrate its commitment to international cooperation in combating this serious threat.

Threat Level

The PFPA is designed to address the following threats:

  • Use of registered agents to facilitate business transactions
  • Use of cryptocurrencies for illegal activities
  • Exposure of high-risk customers in the banking sector
  • Use of money service businesses (MSBs) for cash transfers
  • Use of BVI-flagged vessels owned via British Virgin Islands business companies (BVIBCs)
  • Use of non-domestic vessels owned via BVIBCs
  • Use of BVIBCs to facilitate international trade and collection of funds

Risk Rating

According to the PFPA, the likelihood of these threats materializing is rated as follows:

  • Use of registered agents: 2.42/10
  • Use of cryptocurrencies: 1.64/10
  • Exposure of high-risk customers: 2.67/10
  • Use of MSBs for cash transfers: 1.00/10
  • Use of BVI-flagged vessels: 1.17/10
  • Use of non-domestic vessels: 1.71/10
  • Use of BVIBCs for international trade and collection of funds: 2.31/10