Financial Crime World

Complaints Galore: Financial Services Commission Faces Criticism

The Financial Services Commission (FSC) has come under fire for its sluggish response to compliance inspections and enforcement actions, according to a recent report.

Sluggish Inspections and Enforcement Actions

The report analyzed the FSC’s performance from January 2011 to December 2014 and found that there was a low level of inspections during this period. This led to slow finalizing of reports, resulting in a backlog of cases waiting to be resolved.

International Tax Authority Faces Timeliness Issues

The International Tax Authority (ITA) also received criticism for its timely processing of requests for Mutual Legal Assistance (MLA). The report identified other areas for improvement, including:

  • Inter-agency cooperation
  • Handling incoming MLA requests from foreign tax authorities
  • Providing assistance in MLA requests that result in prosecution

Financial Institutions Face AML/CT Challenges

The report highlighted that financial institutions (FIs) in the Virgin Islands face challenges in implementing anti-money laundering and combating the financing of terrorism (AML/CFT) measures. Common areas for improvement include:

  • Corporate governance issues
  • Beneficial ownership
  • Client verification
  • Internal risk assessment measures

Trust and Corporate Service Providers Face Challenges

The report criticized trust and corporate service providers (TCSPs) for relying too heavily on third parties to obtain relevant client information. TCSPs were also found to be less effective in applying risk assessments and more proactive in filing SARs/STRs.

Insurance Business Faces Low AML/CFT Risk

The report found that insurance business poses a low AML/CFT risk, with domestic insurers accounting for most of the business. However, there were still opportunities for improvement, including:

  • Procedures for identifying different customer risk categories
  • Risk-profiling of business relationships

Insolvency Practitioners Face AML/CFT Challenges

The report analyzed the insolvency practitioners’ performance and found that they face challenges in implementing AML/CFT measures. While most practitioners maintain adequate records, there were still areas for improvement, including:

  • Procedures for identifying different customer risk categories
  • Filing of SARs/STRs

Recommendations

To improve compliance and enforcement practices in the financial services sector, the report made several recommendations, including:

  • Improving risk assessment mechanisms
  • Enhancing inter-agency cooperation
  • Improving record-keeping practices
  • Increasing the frequency of inspections and finalizing reports in a timely manner

By implementing these recommendations, the FSC can strengthen its regulatory framework and better protect the financial system from risks.