The British Virgin Islands is expected to undergo its fourth round of mutual evaluation by the Caribbean Financial Action Task Force (CFATF) in 2018, based on the Financial Action Task Force's (FATF) International Standards on Combating Money Laundering and the Financing of Terrorism and Proliferation.

Each member country of the FATF and its associated regional bodies must now ensure that they can identify and assess the risks associated with money laundering and terrorist financing, and take action – including designation of an authority or mechanisms to coordinate the assessment of the identified risks – and apply resources aimed at effective risk mitigation.

In order to manage this process effectively, the Cabinet established the National Risk Assessment Council to serve as the policy-making body responsible for leading the way on significant policy issues in relation to the conduct of the national risk assessment. The National Risk Assessment Steering Group has also been established to act as the central coordinating body for the national risk assessment, with full responsibility for the preparation of the framework for, and the conduct and review of, the national risk assessment. This exercise was designed to help prepare the British Virgin Islands for its 2018 CFATF mutual evaluation, at which time the results of the national risk assessment will play a key role.

In addition, the Public Education Committee has been established and charged with the task of educating the public on anti-money laundering and countering the financing of terrorism. In accordance with this mandate, the committee has created a brochure which provides essential information on:

  • the national risk assessment exercise;
  • background on the origins and framework of the FATF; and
  • details of the BVI legislative framework as regards anti-money laundering and countering the financing of terrorism.

The resulting national risk assessment report was issued to participating BVI organisations. Risk assessment was conducted on the financial services sector to assess whether local and international anti-money laundering standards are being met by licensees.

The Financial Services Commission (FSC) has already commenced a preliminary exercise to ensure that all relevant persons conducting relevant business have complied with the anti-money laundering and countering the financing of terrorism requirements. Specifically, the FSC is testing such persons on four FATF recommendations, namely the development and implementation of:

  • policies and procedures that provide for senior management oversight functions, to ensure that they are fit for the trust and corporate service providers; these functions should be provided in a properly written document and shared with all key staff to ensure consistency of approach in dealing with money laundering and terrorist financing risks;
  • control measures (as outlined in Section 11 of the Anti-money Laundering and Terrorist Financing Code of Practice 2008), which are reviewed and updated periodically and are consistently used to assess business relationships to identify areas of risk; these risk areas must be appropriately classified as high or low, and appropriate resources must be channelled to those identified as high risk in the business relationships;
  • appropriate record-keeping measures to ensure that relevant data is properly and consistently recorded, readily accessible and easily retrievable; and
  • a training programme on anti-money laundering and countering the financing of terrorism to guide staff in:
    • identifying high-risk business relationships;
    • identifying red flags in relation to customers and business transactions; and
    • knowing which matters should be advanced to senior management for decision.

Mere training on the law and principles governing anti-money laundering and countering the financing of terrorism, without providing an appropriate nexus to the business and how that business could be abused for such purposes, may create a loophole whereby red flags are missed.

This article was first published by the International Law Office, a premium online legal update service for major companies and law firms worldwide. Register for a free subscription.

For further information on this topic please contact Aki Corsoni-Husain or Mirza Manraj at Harneys by telephone (+1 284 494 2233) or email (aki.corsoni-husain@harneys.com or mirza.manraj@harneys.com). The Harneys website can be accessed at www.harneys.com.