THE BVI Anti-Money Laundering Country Rreport

 THE BVI AML REPORT

Member of FATF? No. (Member of CFATF).

On FATF Blacklist/Public Statement? No.

Egmont FIU Member? Yes.

Anti-money laundering background — overview of country risks

The British Virgin Islands is a leading international financial centre with a robust anti-money laundering regulatory structure. The British Virgin Islands' anti-money laundering legislation has been carefully crafted and diligently upgraded to ensure that the jurisdiction remains in compliance with the highest of international standards. Most importantly, the highly skilled professionals in the British Virgin Islands, including lawyers, accountants, auditors and fund managers and administrators, cultivate a strong culture of compliance, taking very seriously the negative impact (both in terms of direct and reputational damage) that regulatory failures would bring to the jurisdiction. 

Key directives and legislative framework

The Proceeds of Criminal Conduct Act (the PCCA) is the primary legislation in the British Virgin Islands (BVI) intended to effectively combat the activity of money laundering. Growing out of the "forty plus nine" recommendations formulated by the Financial Action Task Force (FATF), the PCCA had the objective of developing and improving the BVI's legal systems and mechanisms to counter the laundering of drug trafficking money and other criminal proceeds. 

The Anti-Money Laundering Regulations and the Anti-Money Laundering and Terrorist Financing Code of Practice are promulgated under the PCCA and apply to entities and professionals engaged in relevant business. In addition, the Financial Services Commission has published certain guidance notes and advisories which are of practical use in establishing and maintaining suitable anti-money laundering mechanisms in different types of industries. 

Finally, there are a number of laws, treaties and orders which supplement the primary anti-money laundering legislation, particularly with respect to enforcement and international co-operation. These sources combine to create a comprehensive, robust and modern anti-money laundering and anti-terrorist financing legislative regime.

Regulators and monitoring authorities

The Financial Services Commission is responsible for the regulation, supervision and inspection of all financial service firms. It monitors its licensees' compliance with some or all of the above laws. It also regulates the AML programs of all regulated entities.

Financial Investigation Agency
P.O. Box 4090, Pasea Estate
Road Town, Tortola
British Virgin Islands 
Telephone: (284) 494 1335
Facsimile: (284) 494 1435
E-mail: fia@bvifia.org 

Reporting requirements/obligations

The PCCA contains extensive and comprehensive provisions with respect to investigations into alleged money laundering, as well as provisions pertaining to the seizure, detention, forfeiture and confiscation of the proceeds of criminal conduct.

The Anti-Money Laundering Regulations are promulgated under the PCCA and apply to regulated persons. "Regulated person" is defined as a person who is licensed or registered to carry on "relevant business". Relevant businesses are briefly described as follows: 

• banking; 

• insurance; 

• company management; 

• mutual funds and their managers and administrators; 

• trust or company service providers carrying on certain activities relating to the formation or administration of legal persons; 

• remittance service providers; 

• money transmission services; 

• acting as a real estate agent; 

• dealing in certain precious metals; 

• casino operations. 

• advising on capital structure, industrial strategy, money broking, safekeeping, lending and other related investment advice activities; 

• providing legal, notarial or accounting services relating to the buying and selling of real estate, the managing of client money, securities or other assets, the management of bank, savings or securities accounts, the organisation of contributions for the creation, operation or management of companies, and the creation, operation and management of legal persons or arrangements or the buying and selling of business entities;

o     In conducting relevant business, a relevant person is required to maintain client identification procedures, keep "know your client" and suspicious transaction records, establish internal reporting procedures for suspicious transactions, and have in place internal controls and communication procedures which are appropriate for the purposes of forestalling and preventing money laundering. Such businesses are also required to have in place adequate training for staff on their obligations under the law with respect to money laundering. The regulations describe in some detail the exact nature of these requirements and the form that the procedures should take. 

The offences

Under the PCCA, five primary offences are defined: 

• acquisition, possession or use of proceeds of criminal conduct; 

• assisting; 

• concealing; 

• failure to disclose; and 

• tipping off.

 

·         Money laundering:

A person commits an offence if he enters into or is otherwise concerned in an arrangement which he knows or suspects facilitates, whether by concealment, removal from the Territory, transfer to nominees or other means, the acquisition, retention, use or control of proceeds of criminal conduct by or of himself or by or on behalf of another person. 

Furthermore, a person commits an offence if he acquires, transfers, conceals, disguises, converts, or uses any property or has possession of it which, in whole or in part, directly or indirectly represents the proceeds of criminal conduct (or he does so knowing or suspecting that it is the proceeds of criminal conduct).

Failure to report: 

A person commits an offence if he knows or suspects, or has reasonable grounds for knowing or suspecting, that another person is engaged in money laundering, the knowledge or suspicion came to him in the course of his trade, profession, business or employment, and he does not disclosure the information to the authorities as soon as is reasonably practicable. Certain statutory defences apply. 

Predicate offences: 

The offences hinge on the notion of the "proceeds of criminal conduct". Criminal conduct means conduct which constitutes an indictable offence in BVI (or which would constitute such an offence if it had occurred in the Territory) and, for the purposes of a confiscation order, includes an offence under the Drugs (Prevention of Misuse) Act.

Is foreign tax evasion a predicate offence? 

No, because domestic tax evasion is a summary offence and not an indictable one.

Penalties

Money Laundering:

A person guilty of any money laundering offence is liable on summary conviction to a fine of $250,000 and/or imprisonment for two years. On conviction on indictment, the maximum penalty is a fine of $500,000 and/or 14 years' imprisonment.

Failure to report:

The maximum penalty on summary conviction is three years' imprisonment and/or a $50,000 maximum fine. On conviction on indictment, the maximum penalty is five years' imprisonment and/or a $500,000 fine.

Tipping off:

The maximum penalty for tipping off on summary conviction is two years' imprisonment and/or a fine of $250,000. The maximum penalty on conviction on indictment is five years' imprisonment and/or a fine of $500,000.

Reporting requirements

Money laundering reporting officer required for all relevant persons. Relevant person means a person carrying on relevant business. Relevant business means: 

• banking business or trust business within the meaning of the Banks and Trust Companies Act, 1990; 

• insurance business within the meaning of the Insurance Act, 1994; 

• the business of company management within the meaning of the Company Management Act, 1990; 

• business as a mutual fund or providing services as manager or administrator of a mutual fund within the meaning of the Mutual Funds Act, 1996; 

• without prejudice to paragraphs (a) and (c), the business of acting as a trust or company service provider for the purpose of providing any of the following services to a third party:
• acting as a formation agent of legal persons; 

• acting (or arranging for another person to act) as a director or secretary of a company, a partner of a partnership, or a similar position in relation to other legal persons; 

• providing a registered office, business address or accommodation, correspondence or administrative address for a company, partnership or any other legal person or arrangement; 

• acting (or arranging for another person to act) as a trustee of a trust; 

• acting (or arranging for another person to act) as a nominee shareholder for another person;
• the business of providing remittance service of Telegraphic Money Order under the Post Office (Telegraph Money Order) Rules, 1934 or money order under the Post Office Rules, 1976; 

• the business of providing money transmission services or cheque encashment, whether pursuant to an enactment or otherwise; 

• the business of
• providing advice on capital structure, industrial strategy and related matters, and advice and services relating to mergers and the purchase of undertakings; 

• money broking; 

• the safekeeping and administration of securities; or 

• lending or financial leasing;
• the provision of services to clients by legal practitioners, notaries public or accountants which involve transactions concerning any of the following activities:
• buying and selling of real estate; 

• managing of client money, securities or other assets; 

• management of bank, savings or securities accounts; 

• organization of contributions for the creation, operation or management of companies; and 

• creation, operation or management of legal persons or arrangements, or buying and selling of business entities;
• the business of acting as a real estate agent when engaged in a transaction for a client concerning the buying and selling of real estate; 

• the business of dealing in precious metals or precious stones when such transaction involves accepting a cash payment of 15,000 dollars or more or the equivalent in any other currency; 

• the business of operating a casino (where permitted by law) when a transaction involves accepting a cash payment of three thousand dollars or more or the equivalent in any other currency; 

 

Obligation to know your client and to report suspicious transactions extends to banks, trustees, insurance firms, company management firms, company formation firms, mutual fund managers and administrators, trust and company service providers, nominee shareholders, money service businesses (money transmitters, cheque cashers and bureaux de change). Also affects people who give advice about M&A, industrial structures, money broking, safekeeping and financial leasing.

Also applies to lawyers, accountants and notaries public who are involved in the following: buying and selling real estate, managing client money assets, the management of bank accounts, the organization of contributions for the creation, management or operation of companies, the creation and management of legal persons and the buying and selling of business entities. Also applies to real estate agents, dealers in precious metals and stones worth $15,000 or more, and casinos.

Recordkeeping period: five years.

Statutes

The code, while not strictly a statute in the ordinary sense, nevertheless has the force of law. It is intended to give practical guidance on issues relating generally to money laundering and the financing of terrorism. Where a person fails to comply with or contravenes a provision of the code, he commits an offence and is liable on summary conviction to a fine not exceeding $150,000 and/or a term of imprisonment not exceeding two years. To break its various administrative requirements is to face a myriad of fines in the $50,000 to $75,000 range. 

The Non-Financial Business Designation Notice 2008, which the Financial Services Commission issued under the PCCA, has extended the reporting obligation to jewellers, and people who sell boats, vehicles, furniture, machinery, antiques and other goods of so-called "high value", for sales valued at $15,000 or more. If a man sells his own personal boat for more than that sum, he has no obligation to report. If he owns a marina, however, and one of his boats costs more than $15,000, he is obliged to set up reporting procedures. 

Information is shared with other jurisdictions under the Act and under the Drug Trafficking Offences Act 1992.

The Drug Trafficking Offences Act and the Drug Trafficking Offences (Designated Countries and Territories) Order, 1996 establish machinery for the registration by the High Court of external confiscation orders made by the courts of designated countries. Under section 7 of the Criminal Justice (International Co-operation) Act, 1993 (read with the Criminal Justice (International Cooperation) (Enforcement of Overseas Forfeiture Orders) Order, 1996) provisions for confiscation and restraint apply to a broader range of offences. Under this act, provision is made for facilitating cooperation with other countries in criminal proceedings and investigations.

Financial Services (International Co-operation) Act, 2000 was passed on December 21, 2000. It enhances the ability of regulators to access information by providing an effective administrative procedure for obtaining information. This act is essentially assistance-oriented and designed to provide assistance to recognised foreign regulatory authorities to obtain information in respect of persons in BVI in relation to any "regulatory function". 

The Director of Financial Services is empowered to request, of any person, the production of information or documents with respect to any matter relevant to an inquiry to which a request under the act relates. Failure to comply may lead the director to apply to the court for an order of compliance against the subject person or to have that person examined under oath. In order to ensure confidentiality of information, the act makes provisions for restricting the disclosure of information.

Mutual Legal Assistance Treaties allow generally for the exchange of evidence and information in criminal and ancillary matters. The Mutual Legal Assistance (United States of America) Act, 1990, Act gives effect in the BVI to the Mutual Legal Assistance Treaty concerning the Cayman Islands agreed between the UK and the United States in 1986. This law facilitates the provision, on a reciprocal basis, of legal assistance in criminal matters between the United States and the BVI, with the objective of enhancing the investigation, prosecution and suppression of criminal offences and allows for the sharing of assets with that country. Virtually identical legislation is in place in the other Caribbean Overseas Territories.

For the purposes of the treaty, a criminal offence is either conduct which satisfies the dual criminality test, that is, it is conduct which is punishable by imprisonment of more than one year in both the BVI and the United States, or it is one of a number of specific listed offences which include insider trading and fraudulent securities practices. 

With the exception of certain civil and administrative proceedings relating to narcotics, the Treaty does not extend to civil matters. Conduct which relates directly or indirectly to the regulation, imposition, calculation or collection of taxes is excluded from the treaty with the exception of tax fraud and the wilful or dishonest making of false statements to government tax authorities (for example, by submitting a false tax return).

The above is a high level overview of certain aspects of anti-money laundering laws and regulations in the British Virgin Islands and should not be regarded as comprehensive or as legal advice.