The Financing and Money Services Act was passed by the
British Virgin Islands (BVI) House of Assembly in May 2009 and
is expected to come into force in the near future.
The Act is one of several recent statutory measures in the
jurisdiction designed to ensure that the BVI legislative and
regulatory regime is in line with, or exceeds, international
best practice when it comes to combating money laundering and
terrorist financing. Once in force it will introduce a
comprehensive regime for the licensing, regulation and
supervision of financing and money services businesses carried
out in or from within the BVI, together with criminal offences
for breach or non-compliance.
Under the Act, a person shall not carry on, or hold himself
out as carrying on, (i) financing business or (ii) money
services business, in or from within the BVI, unless the person
is a company (whether registered in the BVI or abroad) that has
been duly licensed under the Act (although note that licensed
banks and post offices are expressly excluded from the scope of
the Act). For the purposes of the Act a BVI company that
carries on money services business anywhere in the world is
deemed to carry on money services business from within the
A company carries on financing business if it carries on in
- the business of providing credit under financing
agreements to borrowers resident in the BVI (or in the course
of any other business, it provides credit under a financing
agreement in an amount exceeding $50,000 to a borrower in the
- the business of leasing moveable property to a person
resident in the BVI; or
- such business as may be later specified in any
regulations under the Act.
Money services business is defined quite widely and includes
any business if it is carried on (or operated as an agent or
franchise holder of a person carrying on) as a business
providing any of the following services:
- money transmission services;
- cheque cashing services;
- currency exchange services;
- the issuance, sale or redemption of money orders or
traveller's cheques; or
- other services as may be later specified in any
regulations under the Act.
Under the Act it is a criminal offence to carry on, or hold
oneself out as carrying on, financing business or money
services business without a licence under the Act. Penalties
are a fine of $60,000 for corporate bodies and $40,000 or three
years imprisonment, or both, for individuals.
For those companies that are licensed under the Act, there
are requirements to maintain the company in a financially sound
condition by being in a position to meet its liabilities at all
There are also restrictions (which may by regulations be
disapplied or modified in respect of companies registered
outside the BVI) on a licensed company: to maintain its capital
resources in the prescribed amount; to get the approval of the
BVI Financial Services Commission (FSC) for the appointment of
a director or senior officer, or the disposal of a significant
interest in a licensee; to establish and maintain an
FSC-approved principal place of business in the BVI; and to
maintain a certain level of insurance.
In terms of corporate governance, under the Act a licensed
company must at all times have at least two directors (which
must be individuals, not corporate bodies) and maintain clear
and appropriate apportionment of responsibilities within the
BVI amongst its directors, officers and functionaries.
There are also statutory requirements with regard to the
accounting and financial records of relevant companies. A
licensee must keep at its principal office in the BVI
sufficient records to show and explain its transactions and
enable its financial position to be determined with reasonable
accuracy. These records must also enable the company to meet
its financial reporting and audit requirements under the Act.
These are that the company shall (amongst other things) prepare
financial statements for each financial year, and submit them
to the FSC within six months of the financial year end,
together with a report from a duly appointed auditor. The
auditor is required amongst its obligations to report anything
that suggests the commission of a criminal offence or a serious
breach of the Act or other specified anti-money laundering
legislation by the licensed company.
There are a number of offences under the Act in respect of
failure by licensees to comply with the various regulatory,
notification and reporting matters set out above, with fines of
up to $60,000 applicable for offenders.
Finally, it should be noted that once the Act comes into
force, there will be a transitional period whereby those
already engaged in financing or money services business will
have six months in which to obtain a licence, and will not be
guilty of an offence if they continue their business while
unlicensed during that period.