FSC Press Release 15 of 2024
Tortola, British Virgin Islands - 26 November 2024 - The BVI Financial Services Commission (the FSC) and BVI Financial Investigation Agency (the FIA), have issued their latest guidance titled ‘Effective Enhanced Customer Due Diligence Measures’ (the Guidance), for the benefit of their respective supervised entities.
This Guidance is aimed at assisting Financial Institutions supervised by the FSC and Designated Non-Financial Businesses and Professions (supervised for AML/CFT purposes by the FIA, to mitigate risks associated with money laundering (ML), terrorist financing (TF), and proliferation financing (PF) which could arise when dealing with higher risk customers or scenarios. The Guidance also highlights the importance of FIs and DNFBPs complying with reporting obligations outlined in local legislation, namely:
- Anti-Money Laundering and Terrorist Financing Code of Practice,
- Anti-Money Laundering Regulations, • Regulatory Code,
- Financial Investigation Agency Act,
- Financial Services Commission Act,
and also, calls for the application of a proper procedures, policies and controls when applying measures to mitigate the risks associated with higher risk customers.
The Guidance reminds supervised entities that engaging with customers can expose them to ML, TF, and PF risks, and that appropriate customer due diligence (CDD) measures, including enhanced customer due diligence (ECDD) should be employed to mitigate against these risks, and stresses the need to understand customers’ source of wealth and source of funds. It provides practical examples of why ECDD should be applied to higher risk individuals such as Politically Exposed Persons and highlights the links between ECDD and types of suspicious activities that may be identified through ECDD that may trigger internal reporting and filing of a suspicious activity report with the FIA. The Guidance also explains how risks related to customers introduced by way of third-party introducers can be mitigated through the conduct of ECDD and ongoing monitoring.
The connection between CDD, ECDD, and monitoring of transactions and business relationships with regard to beneficial ownership and control is of significant importance and has also been addressed in the Guidance. Emphasis has been placed on the need for supervised entities to identify beneficial ownership and control arrangements, particularly in complex ownership structures and structures posing or have characteristics of higher risk scenarios such as where business involves activities in higher risk jurisdictions for ML, TF and PF.
The FSC and FIA encourage FIs and DNFBPs to familiarise themselves with the Guidance and apply the information contained within when engaging with higher risk customers or scenarios. The FSC and FIA remain committed to enhancing the Territory’s capability for fighting ML, TF, PF and other financial crime and will continue to take steps to ensure that relevant tools are made available to supervised entities so that they can do their part in securing compliance.
Managing Director/CEO of the FSC, Mr Kenneth Baker, stated: “This new Guidance joins the FSC and FIA’s armoury of AML/CFT guidance, and serves to provide our respective supervised entities with pragmatic reference points to aid their day-to-day performance within legal, regulatory and supervisory expectations. This Guidance emphasises the need for supervised entities to take the necessary steps to know and understand the risks posed by their customers. We expect effective processes, procedures and controls to be implemented that flag instances where additional CDD and ECDD measures must be activated and support ongoing vigilance. The FSC is committed to ensuring compliance with international standards directed at combating money laundering, terrorist financing, and proliferation financing, as indicated by our continuing efforts to improve our supervised entities’ understanding through issued guidance such as this one.”
The Director of the FIA, Mr Errol George, commented, “The FIA is pleased to continue its collaborative efforts with the FSC to develop additional guidance to aid in enhancing compliance amongst its supervised entities. The FIA continues to emphasise the importance of having a well- written compliance manual together with robust systems for flagging structures, individuals, and activities that may trigger alarms and suggest the need for enhanced customer due diligence. Implementing enhance customer due diligence is crucial for strengthening risk management and ensuring compliance with regulatory standards, ultimately enhancing the overall integrity of the customer onboarding process. Supervised entities must familiarise themselves with the information contained in the Guidance and take immediate steps to conform to the requirements laid out in the Anti-Money Laundering and Terrorist Financing Code of Practice and the AML Regulations.”
The Guidance on Effective Enhanced Customer Due Diligence Measures is available here on the FSC's website, and here on the FIA’s website.
Questions concerning this Press Release may be directed to [email protected] or [email protected].