Navigating BVI FSC inspections – guidance and action for BVI licensees

Trust and corporate service providers, investment business licensees and virtual asset service providers (VASPs) in the British Virgin Islands should be prepared for on-site inspections running through the rest of 2025 and into to the first quarter of 2026.

The BVI Financial Services Commission (FSC) announced earlier this year that it would be conducting thematic, focused and full-scoped onsite inspections on at least 45 licensed entities operating in those sectors which present higher prudential, money laundering, terrorist financing or proliferation financing risks. Trust and corporate service providers, investment business licensees and virtual asset service providers have been identified as being sectors that these inspections will focus on.

What do the FSC inspections mean for you?

The inspections will cover three areas of assessment:

• internal controls, which will assess anti-money laundering / countering the financing of terrorism / countering the financing of proliferation of weapons of mass destruction (AML / CFT / CPF) policies including policies and procedures relating to sanctions handling and suspicious activity reporting
• internal audit, which will assess whether regular reviews (and internal audits) of the established controls are conducted to ensure that policies and procedures are appropriate for the nature, size and complexity of each entity and that relevant actions are taken to remediate deficiencies to ensure policies are effective
• staff training, which will assess whether established policies and procedures have been communicated to staff and whether training is tailored to the relevant roles

In undertaking these inspections, the FSC will be assessing the implementation and effectiveness of the entity's established control systems through inquiry, demonstrations and sample testing of client files.

As it relates to entities from each sector to be assessed, the FSC have indicated that they will focus on the following:

Trust and corporate service providers

• Implementation of verification measures to identify and verify beneficial owners
• Third-party relationship reviews to assess their suitability, beneficial ownership information requirements, maintenance of agreements and whether such agreements have been periodically tested in accordance with the AMLTF Code of Practice
• Sanctions handling, to assess the mechanisms implemented to conduct screening and identify designated persons (including beneficial owners) and implement sanctions monitoring and reporting procedures

Investment business licensees

• Risk assessments and categorisation of customers and transactions which may pose higher money laundering, terrorist financing or proliferation financing risks
• Implementation of ongoing monitoring controls to appropriately monitor customer profiles and transactions to ensure risks are effectively monitored and anomalous patterns or transactions within customer profiles are identified
• Sanctions handling, to assess the mechanisms implemented to conduct screening and identify designated persons (including beneficial owners) and implement sanctions monitoring and reporting procedures

Virtual asset service providers

• Customer due diligence (CDD) and enhanced customer due diligence assessments to assess the licensees ability to gather initial CDD, inclusive of source of funds and wealth and the conduct of verification to ensure the accuracy and legitimacy of information provided
• Assessment of compliance with Travel Rule requirements and the rate of collection of originator and beneficiary information
• Implementation of ongoing monitoring controls to allow for effective monitoring, flagging, investigation and escalation of client transactions or activities

What will FSC inspections involve?

In most cases, the inspections are likely to be desk-top exercises, by which we mean that licensees will be required to send documents supporting their compliance measures and governance to the FSC. The FSC has said that each licensed entity will be provided with at least three weeks' prior notice of the inspection, which will advise of the scope of the inspection and indicate specific areas of assessment.

The inspections themselves will comprise discussions with senior management, interviews, review of processes and procedures and client file reviews. All identified files and other supporting documentation will be required to be uploaded to a secure portal for review by the FSC's Compliance Inspection Unit.

Following the inspection, each entity will receive a Compliance Inspection Report, outlining the inspection findings, along with relevant corrective actions.

What might be the consequences of adverse findings?

Non-compliance with the BVI AML regulations constitutes a criminal offence, with fines of up to US$150,000. Additionally, there would be heightened scrutiny from the regulator for a significant period of time and requirements for remediation of internal compliance programs.

What should you do now?

Compliance programs should be reviewed annually and this is a good time to do so. Undertaking a gap analysis against the regulations and international best practice guidance is advisable, as well as stress testing the effectiveness of the program with a targeted AML / CFT audit.

How Ogier can help

Ogier provides specialist regulatory legal advice, using hindsight and foresight to deliver insight on your business needs today and tomorrow. In particular, we can assist clients to prepare for and manage the outcomes of the inspections.

Financial crime risk management

• Pragmatic and commercial AML / CFT / sanctions advice
• Preparation of targeted audits for each financial crime risk
• Advice on suspicious activity reporting
• Assisting clients being investigated for criminal breaches of regulatory regimes

Business crisis management

Our team is on hand to take the pressure off when clients encounter difficult situations with their regulator. On a cross-sectoral basis, the team advise on:

• dawn raid preparation, incident reporting and communication
• regulatory inspection management / investigation support
• skilled person reports and / or strategic regulatory defence advice

Compliance programmes, policies and procedures  

• Risk-based compliance monitoring programmes / calendars
• Comprehensive policies and procedures
• Risk management frameworks and registers
• Gap analysis / benchmarking against regulations and laws

About Ogier

Ogier is a professional services firm with the knowledge and expertise to handle the most demanding and complex transactions and provide expert, efficient and cost-effective services to all our clients. We regularly win awards for the quality of our client service, our work and our people.

Disclaimer

This client briefing has been prepared for clients and professional associates of Ogier. The information and expressions of opinion which it contains are not intended to be a comprehensive study or to provide legal advice and should not be treated as a substitute for specific advice concerning individual situations.

Regulatory information can be found under Legal Notice