BVI FSC Supplements Anti-Money Laundering Legislation

On 25 February, BVI FSC published 3 new documents related to Anti-Money Laundering legislation. The documents were gazetted on February 22, 2008. The largest document, including 127 pages, is Anti-Money Laundering and Terrorist Financing Code of Practice, 2008. It is divided into 8 parts and 2 schedules and covers such important topics as:

• general duties of Financial Investigation Agency and the Financial Services Commission;
• information on establishing internal control systems, i.e. duties and responsibilities of Officers and employees, reporting on suspicion, etc.
• requirements on customer due diligence, general verification, verification of legal person, requirement for certified documentation;
• prohibition of shell banks and restrictions on corresponding banking relationships;
• wire transfers, requirements on record keeping and on employee training.
• information exchange between public authorities and with private sector, application of counter-measures, guidance on the types of suspicious activities and transactions, etc.

Schedule 2 of the above document includes the list of offences and administrative penalties for failure to execute this code of practice. For example, failure to keep records of full originator information on payer is punishable with $3,500 penalty both to Corporate body and Individual, but failure to review and keep up-to-date customer due diligence information in the required manner will be punished with $1,500 penalty for individual and $2,500 penalty for corporate body.

Non-Financial Business (designation) notice, 2008 is the shortest one from three Anti-Money laundering documents published on the BVI FSC site and it clarifies that any person engaged in the business of buying and selling high-valued goods and accepting/making cash payments in the amount more than $15,000, or equivalent in another currency, “is designated as an entity vulnerable to activities of money laundering and terrorist financing, and shall comply with the requirements of the above-named Code of Practice. This document complies with the newly adopted Anti-Money Laundering/countering the financing of terrorism (AML/CFT) regime, extending coverage of anti-money laundering measures to high-end goods dealers.

The third document is Anti-Money Laundering Regulations, 2008 and it includes identification procedures in relation to new and continuing business relationships, exceptions to identification procedures, maintaining record of transactions and reports, maintaining register of money laundering reports and inquiries, duty to appoint Money Laundering Reporting Officer, due diligence audit, establishment of procedures in relation to suspicious transactions, etc.

BVI FSC Appoints Brodrick Penn as New Investment Business Director

Last week, BVI FSC formally appointed the director of investment business. With effect from January 1, 2008, Brodrick Penn took the place of Ruth Chadwick who had been the head of the BVI regulator's investment department from 2002 until last year.

As Director of Investment Business, Penn will bear responsibility for regulation and supervising mutual funds and investment business in the Territory. He will also provide assistance in the development of the regulatory regime for investment business in the jurisdiction, and advise the commission on strategic and operational issues related to the funds and investment industry.

Brodrick Penn has more than 10 years experience of work in the area of mutual funds and investment business. He started to work in this field as the assistant registrar of mutual funds with the government's Financial Services Department, the predecessor to the commission. Between 2001 and June 2002, he was acting as the registrar of mutual funds, before assuming the role of Deputy Director of investment business. On several occasions he has also been the director of investment business – the most recent being May to June 2007. Penn completed a five-month secondment in Dublin with GAM Fund Management – a fund administration firm belonging to the GAM group, a world leader in multi-manager investing, which has domiciled nearly 100 alternative funds in the BVI.

Penn's professional qualifications include bachelors of science degree received in 1997, and LLM in International Tax Planning received in 2005 (with certifications in Offshore Financial Centres, AML/Compliance, and Trust and Estate Planning).

Managing director/CEO of the FSC Robert Mathavious has commented on Penn's appointment saying that his expertise across a wide range of regulatory issues in the financial services arena will be extremely valuable for the FSC as it faces more complex issues working with partners inside and outside of the BVI.

DPU taking measures to improve the BVI economic data collection

Every country for taking strategic decisions needs accurate data on its economy indicators. Also the effectiveness of private business depends on availability of reliable information about performance in various sectors of country's economy. In the BVI, the Development Planning Unit (DPU) working under the patronage of the Premier's Office bears responsibility for collecting economic data of the British Virgin Islands which afterwards is processed and presented to the Government as well as private business, local and international investors.

Currently, the DPU is improving its collection of economic data that informs Government's policy on making processes and private sector's investment and growth decisions; these data will be necessary for territory's accounting statistics database, to measure the economic performance of various sectors of the Territory's economy.

From February 26 until March 17, the preliminary phase of Government's Establishment Survey will be performed. This pilot phase will allow to make all necessary changes to the questionnaire. It will be used by the DPU to identify and address any possible logistical problems, as well as any issues and concerns that business establishments might have, to collect preliminary data, and test the interview and data collection procedures. After that, the actual Establishment Survey will be launched in April.

The survey is supervised by the Director of DPU Mr. Raymond J. Philips, who also noted specially this is a sample survey that targets public or private businesses and agencies resident in the territory to secure information on their operations. Now Philips is seeking co-operation from the operators of business establishments, to invite them to participate in the pilot survey.

Till here about the efficiency of measuring BVI economy. Now some words about the main components of BVI economy that contribute to its growth and development. Some weeks ago, the Premier and Minister for Tourism Ralph T. O'Neal has taken steps towards improving the efficiency of tourism industry, which is one of the main sectors of the economy of BVI along with offshore financial services. The nine new members of the BVI Tourist Board were appointed by Cabinet to serve for a period of four years, with effect from February 1, 2008. The new BVI Tourist Board members will take an insight in the situation with the local tourism sector during the last four years and plot the new policy.

BVI FSC Holds Seminar on New Anti-Money Laundering Measures

The newly adopted anti-money laundering/countering the financing of terrorism (AML/CFT) regime, which was passed in the House of Assembly a week ago, extends coverage of anti-money laundering measures to dealers in high-end goods.

The changes are based on the recommendations of the global standard setting institution, - Financial Action Task Force (FATF), - to extend the legislation to cover the non-financial industry. The FATF's 40 recommendations on money laundering, including additional nine recommendations against terrorism financing were taken as the guiding principles of the new legislation. The new law will make mandatory money transfer companies to get information on the source of the funds and the background of the sender.

The delegation from the BVI Financial Services Commission (FSC) on January 31 held a public seminar on the new legislation regime on anti-money laundering that finally brought together jewelers, money transmitters, car dealers, real estate agents, lawyers and accountants of all the areas that were not covered under the old anti-money laundering regime but will be covered under the new regime.

Cherno Jallow, Director of Policy, Research and Statistics at the Financial Services Commission, said in his comments: “This is something we are required to do internationally…It is important that the legitimate structures of this country are not used or abused for purposes that are incompatible with established standards.”

U.S. New Passport Cards Ease Travelling Regime between BVI and USVI

The U.S. State Department this spring will start issuing passport cards for those who cross border frequently, and these new documents will be also accepted by the British Virgin Islands as the neighbor state.

Passport rules have been tightening in the United States since September 11, 2001, and the new passport cards are just part of an overall tendency. The cards that will be of special importance at land borders with Canada and Mexico can also be useful to local boat captains and other residents of U.S. Virgin Islands who often travel to the BVI and do not want to fill in their paper passports with stamps.

The passport cards will be acceptable for entry and exit by sea from the BVI and other Caribbean territories. The U.S. State Department's assistant Consular Affairs spokesman Cyril Ferenchak said that the entry document will be granted to those going by ferry from the U.S. Virgin Islands to the BVI.

The top officials dealing with passports in both territories, including deputy chief immigration officer for BVI Immigration, recently said they were not aware of any arrangements for passport cards for use by sea in the territory. David Edgecombe, special assistant to the U.S. Virgin Islands governor for external affairs, said he expected the passport cards issue to be discussed with BVI officials during the next weeks.

Clyde Lettsome becomes Permanent Secretary in the BVI Natural Resources and Labour Ministry

On February 1, 2008, the Governor appointed Clyde Lettsome to be Permanent Secretary in the Ministry of Natural Resources and Labour. Mr. Lettsome, who served as Permanent Secretary in the Chief Minister’s Office, succeeded Mrs. J. Callwood who has retired from the public service.

The Natural Resources and Labour Permanent Secretary advises the Minister on all matters of policy affecting the Ministry, any of its Departments and Statutory Bodies, and ensures the implementation of any policy agreed by the Minister. Also, his responsibilities are co-ordination of all major budgetary and policy-related activities of the Departments falling within the Ministry, and serving as the Accounting Officer for the Ministry.

Mr. Lettsome has more than 16-year experience of public administration with the BVI Government and with non-government organizations all over the world. In 1982, he started in Environmental Health with the BVI Government and had several positions until 1999. In 1999, Mr. Lettsome was appointed as the Permanent Secretary in the Ministry of Health and Welfare. In 2003, he took another position – he became Permanent Secretary to the Chief Ministers Office of the Government of British Virgin Islands.

New Insurance Act 2008 passed by the First House of Assembly

The Insurance Act 2008, replacing the Insurance Act of 1994, was passed at the Sixth Sitting of the First House of Assembly. The new act will have the purpose of positioning the insurance industry in the BVI territory in order to meet international insurance standards.

Premier Ralph T. O'Neal pointed out that the bill has developed and enhanced the framework of the previous act, to achieve full compliance with the international association of insurance supervisors. Describing the bill, he said that it seeks to reform the legal and regulatory regime on the licensing, administration and supervision of insurance businesses in the British Virgin Islands, and reforms of the regime relating to insurance managers, intermediaries and loss adjustors.

By words of the Minister of Finance, the BVI territory is scrutinized both by the international community and investors. In connection to this, O'Neal said that the more successful one is in the insurance business, the more careful he has to be.

In terms of compliance with the new Act, the Financial Services Commission (FSC) is to ensure that businesses are in compliance with the new Act.

Prior to being passed, the new Insurance Act was endorsed from both the Government's side and the Opposition during the debate. In the opinion of Deputy Speaker Keith Flax who also endorsed the bill the new Act has tightened a lot of loop holes that existed in the 1994 law. Elvis Harrigan, representing the Fifth District, noted that the insurance sector is a source of income that can strengthen the FSC and bring more funds into the BVI territory. The National Democratic Party traditionally does not have opposition when it comes to the financial services industry.

In his speech during the debating session prior to the passing of the Insurance Act 2008, Minister for Education and Culture Andrew Fahie noted he would like to see more local people who are interested to get managerial positions within the sector of insurance industry. Fahie said that even though the insurance sector is bringing in substantial revenue, the BVI territory needs to look at what benefits the industry brings to the people.