The British Virgin Islands’ AML Regulations

The British Virgin Islands (BVI) are constantly improving and enhancing their anti-money laundering (AML) and terrorist financing regulations, earning them a spot as one of the world’s leading financial hubs for corporate domicile.  As an overseas territory of the UK, the UK also helps the BVI amplify their regulations specifically in relation to terrorist financing and sanction regulations.

Some primary and secondary legislation regarding money laundering, terrorist financing and fraud within the BVI include:

The legislation holds both individuals and companies liable, and gives the BVI regulator the ability to impose fines and penalties if violations are detected.  Companies that violate know-your-customer (KYC) requirements from the AML and Terrorist Financing Code of Practice may also be subjected to an administrative penalties enforcement regime.  The legislation is also extraterritorial because crimes committed outside of the BVI are still considered relevant for violations of AML and terrorist financing regulations.  As an international member of the Financial Action Task Force (FATF), the Caribbean Financial Action Task Force (CFATF), and the Egmont Group of Global Financial Intelligence Units, the BVI’s AML and terrorist financing regulations are constantly changing due to daily reviews and inspections.  The BVI have also signed numerous international agreements with other nations which include full cooperation with Interpol, removal of certain individuals or corporations in overseas criminal investigations and prosecutions, and implementing the same regulations and sanction requirements as the EU and the UN.

The job of enforcing these regulations is divided between the Financial Investigation Agency, the attorney general, the Financial Services Commission, the Royal Islands Police Force, the director of public prosecutions, various BVI courts, and the Joint AML and Terrorist Financing Advisory Committee.  Regardless of the power being split, there is no legal limitation for court prosecutions with regards to money laundering, terrorist funding and fraud.  However, authorities will not take action on crimes that have been committed more than two years ago.

Various businesses such as credit institutions, financial institutions and professional firms are also subject to the BVI’s AML regulations.  Some examples of violations from the BVI Proceeds of Criminal Conduct Act 1997 and the Drug Trafficking Offences Act 1993 include assisting or benefiting from criminal conduct, possessing or using the proceeds from criminal conduct, hiding or transferring proceeds from criminal conduct, failing to report possible money laundering and hindering a money laundering investigation.  Conviction on an indictment of any violation of these legislations can result in a fine of $250,000 and/or a two year prison sentence, while the punishments for conviction on indictment is a fine of $500,000 and/or a 14 year prison sentence.

In order to comply with all of the BVI’s AML regulations, an institution’s internal controls should be able to provide employee training, maintain proper recordings and record keeping, and practice strong customer due diligence.  The AML Regulations 2008 focuses on record keeping and requires relevant individuals to be able to verify their identity, and maintain a record that states the source of the obtained information.  A similar legislation is Regulation 9 of the AML Regulations that requires relevant individuals to maintain a record of all their transactions as well as all reports to the Financial Investigation Agency (FIA) and all inquiry reports regarding money laundering sent to the FIA.

Some recent developments the BVI have made in regards to AML and terrorist funding regulations include the enactment of:

  • The Beneficial Ownership Secure Search System Act of 2017 – a register of beneficial ownership information available for companies in the BVI, created in order to comply with the framework exchange of notes agreement in April 2016
  • The Criminal Justice (International Cooperation) (Enforcement of Overseas Forfeiture Orders) Order 2017 – an update and repeal of a previous regulation from 1996 that offers guidelines for processing forfeiture orders between the BVI and overseas regulatory and federal authorities and courts
  • The Proceeds of Criminal Conduct (Enforcement of External Confiscation Orders) Order 2017 and the Drug Trafficking Offences (Enforcement of Overseas Confiscation Orders) Order 2017 – an update to the previously existing BVI confiscation order regulations given by overseas authorities and courts
  • The Terrorist Asset Freezing Etc Act 2010 (Overseas Territories) (Amendment) Order 2017 – Increased cooperation between the UK and the BVI for the ability to list persons suspected of terrorist funding to be issued a freezing order
  • The AML (Amendment) Code of Practice 2015 and the AML (Amendment) Regulations 2015 – enhancing the regulations for BVI companies that depend on eligible introducers 

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