The BVI's "recognised jurisdictions"

In Schedule 2 of the Anti-Money Laundering and Terrorist Financing Code of Practice 2008 (AMLTFCP), the British Virgin Islands (BVI) provides for a list of jurisdictions (commonly called the recognised jurisdictions) that have laws and regulations similar to that of the BVI. The principle advantage of placing reliance on Schedule 2 of the AMLTFCP is that business emanating from the recognised jurisdictions would generally attract the application of reduced client due diligence (CDD) measures. To date there are fifty-six jurisdictions listed in Schedule 2 of the AMLTFCP. These are:

  • Andorra, Argentina, Aruba, Australia, Bahamas, Barbados, Bermuda, Belgium, Brazil, Bulgaria, Canada, Cayman Islands, Chile, China, Curacao, Cyprus, Denmark, Dubai, Estonia, Finland, France, Germany, Gibraltar, Greece, Guernsey, Hong Kong, Hungary, Iceland, Ireland, Isle of Man, Italy, Japan, Jersey, Latvia, Liechtenstein, Luxembourg, Malta, Mauritius, Mexico, Monaco, Netherlands, New Zealand, Norway, Panama, Portugal, Russia, Singapore, Slovenia, Spain, South Africa, St Lucia, Sweden, Switzerland, United Kingdom, United States of America and Uruguay

Persons who are conducting business in the various financial services sectors in the BVI that would be considered as "relevant persons" under the Anti-Money Laundering Regulations 2008 (AMLR) should pay special attention to a business relationship and / or transaction that relates to a person from a jurisdiction which the BVI Financial Services Commission (FSC) considers does not apply or insufficiently applies the Financial Action Task Force Recommendations (FATF Recommendations) with respect to matters relating to anti-money laundering and counter terrorist financing (AML / CTF).

The jurisdictions listed in Schedule 2 of the AMLTFCP are jurisdictions which apply the FATF Recommendations and which the FSC considers apply or sufficiently apply the FATF Recommendations and whose AML/CTF laws are equivalent with the provisions of the AMLR.

It is advisable that relevant persons should not place too heavy a reliance on the list outlined in Schedule 2 when in appropriate cases prudence might dictate otherwise. It would be good practice to give due consideration to the particular circumstances of the business relationship concerned, the prevailing political and economic circumstances in a listed jurisdiction and the changing commercial environment prevailing at the relevant time. Any of these and other relevant factors may call for increased vigilance and re-assessment on the part of the entities and professionals before placing full reliance on business emanating from or relating to such listed jurisdiction. It is therefore important for all relevant persons to keep attuned to developing events around the world especially those that may relate to or adversely affect listed jurisdictions even if the FSC has not issued an advisory warning (notwithstanding that the FSC has not issued any advisory pursuant to the exercise of its exercise of its powers under the Financial Services Commission Act 2001 or the AMLTFCP.

In situations where a listed jurisdiction was removed from the list in Schedule 2, the FSC will normally publish this in the BVI Gazette and on its website. Relevant persons which have previously applied lower standards of CDD on the basis that a client or customer was from a jurisdiction on the Schedule 2 list, would be required to undertake the required CDD as is detailed under the AMLTFCP from the date the jurisdiction was de-listed. Failure to do so would be contravening the requirements of section 52 of the AMLTFCP.

In deciding whether to recognise a foreign jurisdiction as having a regime as equivalent to the BVI, the FSC considers whether the jurisdiction has laws, regulations or other enforceable means to effectively combat AML / CTF. The FSC is guided by the following factors:

  • whether the jurisdiction is a member of the FATF, the Caribbean FATF or other FATF regional style body which has been examined and assessed to have a good compliance and largely compliant rating with respect to the FATF Recommendations
  • whether the jurisdiction has undergone an independent assessment of its AML / CTF framework by the International Monetary Fund or other independent body that has responsibility for carrying out such assessment
  • the enactments in the jurisdiction and other regulatory and enforcement regimes to combat AML / CTF
  • other publicly available information relating to the effectiveness of the jurisdictions' legal, regulatory and enforcement regimes

In determining whether a recognised jurisdiction should cease to be recognised and therefore removed from Schedule 2, the FSC considered whether the jurisdiction continues to maintain the factors that justified its inclusion in Schedule 2 of the AMLTFCP. If therefore the jurisdiction alters its AML / CTF enactments in a manner as to reduce the level of effectiveness of the legal framework for AML / CFT compliance, or a subsequent assessment poorly rates the jurisdiction's AML / CFT compliance level, or other publicly available information demonstrates the ineffectiveness of the jurisdiction's AML / CFT framework, the FSC will consider the desirability of whether to continue to recognise the jurisdictions and act accordingly.

Where a relevant person considers that the FSC should recognise a jurisdiction that is not listed in Schedule 2, it may do so in writing addressed to the FSC outlining its reasons. The relevant person would be expected to have carried out its research into the proposed jurisdiction's AML/CFT framework using the factors outlined above and provide the necessary evidence. The basis of any conclusion must properly and adequately demonstrate that the proposed jurisdiction has laws, regulation and other enforceable means that meet the

standards established by the FATF Recommendations. The FSC would likely also consider representations from any relevant authority in foreign jurisdictions that seek to have that jurisdiction recognised by the FSC under section 52 of the AMLTFCP.

In circumstances where an entity does not have any employees in the BVI nor is it managed or administered in the BVI, it would nevertheless be considered and accepted by the Financial Investigation Agency and the FSC as being compliant with the AMLTFCP if the entity is regulated in a jurisdiction that is recognised in accordance with section 52 of the AMLTFCP. For example, if a mutual fund that is recognised or registered under the Securities and Investment Business Act 2010 (SIBA) but whose manager or administrator is not resident in the BVI will be accepted and compliant with the requirements of the AMLTFCP if two conditions are satisfied:

  • that there is a written contractual agreement between the fund and the administrator (ie the administrator's agreement) or the fund and the manager (ie the investment management agreement) for the latter to undertake to conduct the requisite CDD requirements
  • that the fund complies with the AML / CTF of a jurisdiction that is a recognised jurisdiction under section 52 and Schedule 2 of the AMLTFCP

It is important to note that SIBA has its own list of recognised jurisdictions that are separate and distinct from the Schedule 2 countries. The two sets of recognised jurisdictions should not be confused. The SIBA recognised jurisdictions were created under the Securities and Investment Business (Recognised Jurisdictions) Notice 2010 (SIBA Recognised Jurisdictions) and it came into force on 17 May 2010, the date when SIBA itself came into force. The FSC may, subject to SIBA, recognise and accept any functionary of a fund that is established and located in a jurisdiction that is a SIBA Recognised Jurisdiction.

Where a functionary of a fund is not established and located in a jurisdiction listed in the SIBA Recognised Jurisdictions, the FSC may recognise and accept the functionary, if satisfied, upon application, that the functionary's jurisdictions of establishment and location has a system for the effective regulation of investment business, including funds. The list of SIBA Recognised Jurisdictions include:

  • Argentina, Australia, Bahamas, Bermuda, Belgium, Brazil, Canada, Cayman Islands, Chile, China, Curacao, Denmark, Finland, Germany, Gibraltar, Greece, Guernsey, Hong Kong, Ireland, Isle of Man, Italy, Japan, Jersey, Luxembourg, Malta, Mexico, Netherlands, New Zealand, Norway, Panama, Portugal, Singapore, Spain, South Africa, Sweden, Switzerland, United Kingdom and United States of America

It is important to highlight that the Schedule 2 list and the SIBA Recognised Jurisdictions lists are not closed lists and to the extent good cause can be shown to the relevant BVI competent authorities as to why a new jurisdiction should be added, the lists may be amended from time to time. Equally, as highlighted above current recognised jurisdictions may be removed.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.