The Financial Services Commission (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 November 17 2016. It is scheduled to come into force on December 19 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 British Virgin Islands is a regulated activity. Any 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:
- money transmission services;
- cheque cashing services;
- currency exchange services;
- the issuance, sale or redemption of money orders or traveller's cheques; and
- any 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, adhere and comply with all of the requirements in the Proceeds of Criminal Conduct Act 1997 and its subsidiary legislation, the Anti-money Laundering Regulations 2008 and the Anti-money Laundering and Terrorist Financing Code of Practice 2008.
Money service business providers supply services to persons who may not have access to traditional banking methods and who may find these services to be a more economical avenue compared to using banks. However, there is a risk that they may exploit this type of service and there is potential for them to launder or harbour the proceeds of crime contrary to the Proceeds of Criminal Conduct Act. This type of action is a criminal activity under BVI law and is subject to high fines and terms of imprisonment.
The FSC issued the guide to ensure that money service business providers and the wider financial services industry are 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:
- the requirement to conduct customer due diligence – in some cases enhanced customer due diligence – and when to apply this;
- implementing internal controls based on product service risk, transaction risk, customer risk, geographic or country risk, agent or distribution risk and senior management's role in risk management more generally;
- instances where suspicious activity reports (SAR) should be filed with the Financial Investigation Agency and how to identify when a SAR should be filed;
- matters involving record keeping and staffing (including training); and
- an outline of the relevant legislation concerning money services business.
For further information on this topic please contact Aki Corsoni-Husain or Mirza Manraj at Harney Westwood & Riegels by telephone (+1 284 494 2233) or email ([email protected] or [email protected]). The Harney Westwood & Riegels website can be accessed at www.harneys.com.