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Anti-money laundering and terrorist financing

The British Virgin Islands Financial Services Commission (FSC) has made significant changes to the BVI's Ant-Money Laundering and Terrorist Financing Code of Practice affecting all BVI entities and professionals and further modifying the Code's effects on BVI mutual funds and fund managers and administrators.

Among the key changes are:

  • The production of a list of countries and territories* that the FSC acknowledges as "recognised jurisdictions" which are equivalent to the BVI for anti-money laundering (AML) purposes;
  • Acceptance that a BVI entity including a mutual fund, although retaining ultimate responsibility, may now outsource many of its AML compliance functions to other persons or entities both inside and outside the BVI;
  • The acceptance by the FSC that a non-BVI administrator in a recognised jurisdiction observing its local AML and know-your-customer (KYC) regime for a BVI fund is compatible with that fund's own obligations under the Code;
  • An acknowledgment from the FSC that funds, managers and administrators who deal with customers in recognised jurisdictions may benefit from streamlined KYC requirements;
  • The removal of a presumption that enhanced customer due diligence should be applied in cases of non face-to-face business in place of a risk-based approach; and
  • The introduction of the Wire Transfer Test to assist in the verification of customer due diligence.

The Code also introduces important new obligations, including:

  • The need to have written outsourcing agreements in place with service providers that set out how AML compliance is to be achieved;
  • A new obligation on BVI managers and administrators to ensure adequate staff training on AML compliance; and
  • The requirement to have an independent audit function for KYC and AML compliance.

These changes were strongly influenced by industry consultation and the recent mutual evaluation report of the BVI by the Caribbean Financial Action Task Force. They are a positive step forward for the BVI and demonstrate the territory's commitment towards implementing practical and effective measures to meet the challenge of an increasingly regulated world.

The amendments are effective from February 5 2009 and are to be subject to active enforcement by the FSC from February 22 2009. The changes are the first of what is expected to be a series of changes to the BVI's AML regime and to its regulatory landscape more generally.

  • Argentina, Aruba, Australia, Bahamas, Barbados, Bermuda, Belgium, Brazil, Canada, Cayman Islands, Chile, China, Cyprus, Denmark, Dubai, Finland, France, Germany, Gibraltar, Greece, Guernsey, Hong Kong, Iceland, Ireland, Isle of Man, Italy, Japan, Jersey, Luxembourg, Malta, Mauritius, Mexico, Netherlands, Netherlands Antilles, New Zealand, Norway, Panama, Portugal, Singapore, Spain, South Africa, Sweden, Switzerland, United Kingdom, United States of America.

Ross Munro, Aki Corsoni-Husain and Jennifer Deacon

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