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Virgin Islands Money Laundering Risk Assessment: 2022 Report Highlights Key Vulnerabilities

The BVI Financial Services Commission (FSC) has released its latest money laundering risk assessment report, highlighting the vulnerabilities of various sectors in the Virgin Islands to money laundering and terrorist financing. The report identifies key risks and provides recommendations for mitigating these threats.

The report flags legal persons, such as business companies and trusts, as high-risk areas due to their complexity and potential for anonymity. These structures can be used to conceal the source of assets and identity of beneficial owners. The FSC received over 1,125 suspicious activity reports (SARs) involving legal persons, accounting for approximately 15.6% of all SARs filed.

Gaming and Betting: Growing Concern

The report expresses concern about the growing popularity of gambling activities in the Virgin Islands, including sports betting and lottery ticket sales. Intelligence suggests that these activities are being used as a form of money laundering. The FSC urges greater vigilance to prevent these illegal activities.

Emerging Products and Technologies: Decentralized Financial Products (DeFi)

The report highlights the elevated ML risk associated with DeFi, which facilitates the transfer of funds and purchase/exchange of financial assets without regulation. The FSC warns that exposure to ML risk lies not only in the actual DeFi activities but also in the VI’s ability to identify BVI entities facilitating these activities.

Expectations for Regulated Sectors

The report outlines expectations for regulated sectors, including:

  • Review and adjust policies, procedures, and internal controls.
  • Enhanced monitoring of clients based on risk.
  • Demonstrable understanding of client behavior and potential areas of concern.
  • Ability to demonstrate adjustments to client monitoring based on changes in activity.

Implementation of Institutional Risk Assessment Frameworks

The FSC urges all regulated entities to carry out full institutional AML/CFT risk assessments and make them available to senior management, relevant staff, and competent authorities upon request.

Conclusion

The 2022 Virgin Islands Money Laundering Risk Assessment report highlights the need for greater vigilance and cooperation among financial institutions, law enforcement agencies, and regulatory bodies to combat money laundering and terrorist financing. The FSC encourages all regulated sectors to review and adjust their policies, procedures, and internal controls to mitigate these risks.

Where To Find The Report

The full report can be accessed on the BVI Financial Services Commission website at bvifsc.vg/risk-assessments.