The BVI FSC published "A Money Services Business Guide to the Prevention of Money Laundering and Terrorist Financing Activities in and from within the Virgin Islands" on 17 November 2016 (the Guide). It is scheduled to come into force on 19 December 2016 and was issued under section 41A of the Financial Services Commission Act 2001.

The activity of undertaking money services business in or from within the BVI is a regulated activity and an entity or individual undertaking this type of business is required to obtain a licence from the FSC under the Financing and Money Services Act 2009.

Under BVI law, money services business refers to financial services that include the following types of activities:

  • money transmission services
  • cheque cashing services
  • currency exchange services
  • the issuance, sale or redemption of money orders or traveller's cheques
  • operating as an agent or franchise holder of a person carrying on any business specified above

Persons conducting any of the above types of business must, in addition to being duly licensed, also adhere and comply with all of the requirements in the Proceeds of Criminal Conduct Act, 1997 (the PCCA) as well as the subsidiary legislation to the PCCA, ie the Anti-Money Laundering Regulations 2008 and the Anti-Money Laundering and Terrorist Financing Code of Practice 2008.

Money service business providers provide services to persons who may not have access or can avail themselves to traditional banking methods. Persons may also find using money service business providers a cheaper and more economical avenue as compared to using banks. In this lies the risk that persons may exploit the type of service and there is potential for persons to launder or harbour the proceeds of crime contrary to the PCCA. This type of action is a criminal activity under BVI law and is subject to very high fines and terms of imprisonment.

The FSC issued the Guide to ensure that money service business providers and the wider financial services industry is protected by helping to sensitise various stakeholders on matters surrounding money laundering, terrorist financing and other forms of financial crime. The idea was to provide a simplified form of guidelines for sectors to understand what money laundering and terrorist financing is in relation to money services business. The Guide highlights the licensing regime and requirements, what service providers need to know in order to be able to execute their duties with vigilance, and the consequences for failing to do so.

The Guide touches on important topics such as:

  1. The requirement to conduct customer due diligence (CDD) and in some cases enhanced CDD, and when to apply this 
  2. Implementing internal controls based on product service risk, transaction risk, customer risk, geographic/country risk, agent/distribution risk, and senior management’s role in risk management more generally
  3. Instances where suspicious activity reports (SAR) should be filed with the Financial Investigation Agency and how to identify when a SAR should be filed
  4. Matters involving record keeping and staffing (including training)
  5. An outline of the relevant legislation touching and concerning money services business

For more information please contact the authors or your usual Harneys contact. Click here for a copy of the FSC Guide.