Virgin Islands’ Money Laundering Risk Assessment Reveals High Vulnerability
The Financial Services Commission (FSC) and other stakeholders have conducted a recent assessment, revealing a medium-high risk of money laundering in the Territory of the Virgin Islands. This assessment highlights several factors contributing to this high vulnerability.
Factors Contributing to High ML Risk
- Face-to-Face Transactions: The widespread use of face-to-face transactions by high-risk customers, including foreign politically exposed persons (PEPs), increases their vulnerability to being misused for money laundering purposes.
- Virtual Assets: Virtual assets can be transmitted and used globally, making them attractive for criminals seeking to launder illicit proceeds.
- Compliance Deficiencies: Compliance deficiencies within financial institutions (FIs) contribute to the high ML risk. FIs with inadequate anti-money laundering (AML) compliance programs may allow suspicious transactions to occur without adequate screening or reporting.
- Inherent Vulnerabilities: The inherent vulnerabilities relating to legal persons and legal arrangements remain high.
Sectoral Assessment
The assessment also noted that while some sectors have been able to mitigate the risk of money laundering through strong adherence to customer due diligence (CDD), beneficial ownership (BO), and transaction recordkeeping and reporting requirements, the overall ML risk remains medium-high. The results showed that the overall risk of money laundering to the Virgin Islands is medium-high.
Comparison with Previous Assessment
The assessment compared the results of the 2016 National Risk Assessment with the current sectoral assessment, finding some consistency in the level of risk identified within each sector. However, the quality of data used was significantly improved in this assessment, allowing for better and more critical analysis.
Recommendations
To mitigate the risks associated with money laundering, we recommend:
- FIs Prioritize AML Compliance: Financial institutions should prioritize AML compliance and implement effective risk management strategies to mitigate the risks associated with money laundering.
- Robust AML Policies: Stakeholders operating in the Virgin Islands should ensure that they have robust AML policies, procedures, and controls in place to prevent money laundering and terrorist financing.
- Regulatory Monitoring: The FSC and other regulatory authorities should continue to monitor the ML risk in the Territory and take steps to address any vulnerabilities identified.
Key Findings
• Face-to-face transactions used by high-risk customers, including foreign PEPs, increase their vulnerability to being misused for money laundering purposes. • Virtual assets can be transmitted and used globally, making them attractive for criminals seeking to launder illicit proceeds. • Compliance deficiencies within FIs contribute to the high ML risk, as FIs with inadequate AML compliance programs may allow suspicious transactions to occur without adequate screening or reporting. • The inherent vulnerabilities relating to legal persons and legal arrangements remain high.