Financial Crime World

Assessment of the Virgin Islands (British) Anti-Money Laundering/Counter-Terrorist Financing Regime

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Context

The Virgin Islands (British) has faced significant challenges in recent years, including devastating hurricanes and the COVID-19 pandemic. These external events have impacted the country’s resources and capabilities to combat money laundering (ML)/terrorist financing (TF).

  • Severe impact of natural disasters: Hurricanes Irma and Maria in 2017 significantly affected the VI’s resources and capabilities.
  • COVID-19 pandemic: The global health crisis further strained the country’s resources and capacity to fight ML/TF.

Risks and General Situation

The main domestic proceeds-generating crimes in the Virgin Islands (British) are:

  • Drug trafficking
  • Smuggling
  • Domestic corruption

Foreign predicate crimes pose a significant threat to the corporate and financial services sector, including:

  • Corruption
  • Fraud
  • Tax evasion
  • Money laundering

Vulnerabilities

The following vulnerabilities are identified in the Virgin Islands (British) AML/CFT regime:

High-Risk Sector: Trust and Corporate Service Providers (TCSP)

  • Limited transparency: Beneficial ownership information is not adequately transparent.
  • Inadequate safeguards: TCSPs lack sufficient controls to mitigate ML/TF risks.

Large-Scale Reliance on Professional Business Introducers

  • Inadequate controls are in place, making it a vulnerability.

Emerging Risks

Virtual assets (VAs) and Virtual Asset Service Providers (VASPs) are identified as emerging and high-risk areas:

  • Entities established in the VI conducting virtual activities outside the country

Overall Level of Compliance and Effectiveness

The overall understanding of ML/TF risks among competent authorities is fair, but narrow:

  • Focusing on mitigation: Authorities have conducted risk assessments, but lack a deep appreciation for specific vulnerabilities.
  • Insufficient understanding of inherent vulnerabilities: The Financial Services Commission (FSC) lacks insight into the ownership and control of clients and active entities.

Overall, this report highlights areas of concern regarding the AML/CFT regime in the Virgin Islands (British), including limitations in transparency, resource constraints, and a narrow focus on mitigation.