Financial Crime World

British Virgin Islands Takes Major Step Against Financial Crime with New Crypto Regulations

The British Virgin Islands (BVI) has taken a significant step towards aligning itself with international standards set by the Financial Action Task Force (FATF) by introducing new regulations for crypto and blockchain businesses.

Aligning with International Standards

To bring crypto companies under the scope of anti-money laundering laws, the BVI has introduced two parts of changes:

Amendment to Existing Anti-Money Laundering Laws

The first part is an amendment to existing Anti-Money Laundering (AML) laws, which will now include Virtual Asset Service Providers (VASPs) under its purview. This change has already been enacted and businesses have until December 1st, 2022 to comply.

Regulatory Licensing Regime for VASPs

The second part is the introduction of a specific regulatory licensing regime for VASPs. The draft law has been published and is open to consultation until September 23rd, before being enacted by the end of 2022 or early 2023, followed by a six-month transition period.

Compliance Requirements

Under the new regulations, crypto businesses whose activities fall under the definition of a VASP will be required to comply with AML/CFT obligations, including:

  • Appointing a money laundering reporting officer
  • Establishing and maintaining policies and procedures for AML/CFT
  • Providing training to staff on AML/CFT obligations
  • Complying with the “travel rule” in relation to transfers of virtual assets

Additionally, VASPs will be required to:

  • Register with the Financial Services Commission (FSC)
  • Meet data protection and cyber security obligations
  • File annual accounts with the FSC
  • Undergo a fit and proper person test for senior officers and beneficial owners

Definition of a Virtual Asset Service Provider (VASP)

A VASP is defined as a business that provides one or more of the following activities:

  • Exchange between virtual assets and fiat currencies
  • Exchange between one or more forms of virtual assets
  • Transfer of virtual assets
  • Safekeeping or administration of virtual assets
  • Participation in, and provision of, financial services related to an issuer’s offer or sale of a virtual asset

Impact on the Crypto Industry

The changes are expected to reduce jurisdiction-hopping as projects seek a stable regulatory regime. Cavenwell 3.0, a crypto specialist corporate services provider and consultant, is well-equipped to assist businesses with understanding their options, relocating to other jurisdictions, and meeting compliance requirements.

Conclusion

With the BVI’s new regulations, it is likely that the jurisdiction will remain a popular choice for crypto and blockchain companies seeking a stable and regulatory-compliant environment.