British Virgin Islands

1. Do the British Virgin Islands have legislation making it a criminal offence to engage in money laundering and/or terrorist financing?

Yes. The following statutes, regulations, codes and orders (along with Government-issued guidance and international sanctions extended by the United Kingdom to the British Virgin Islands (BVI)) form a comprehensive and modern anti-money laundering, counter-terrorist financing and sanctions regime:

• Anti-Money Laundering Regulations (made under the Proceeds of Criminal Conduct Act)
• Anti-Money Laundering and Terrorist Financing Code of Practice (Code of Practice)
• Counter-Terrorism Act
• Financial Investigation Agency Act
• Financial Services Commission Act
• Financial Services (Prudential and Statistical Returns) Order
• Non-financial Business (Designation) Notice
• Proceeds of Criminal Conduct Act
• Proceeds of Criminal Conduct (Enforcement of External Confiscation Orders) Order
• Proliferation Financing (Prohibition) Act
• Regulatory Code.

2. To whom does the legislation apply?

The Code of Practice issued pursuant to the Proceeds of Criminal Conduct Act applies to (a) entities that are regulated by the Financial Services Commission (FSC); (b) entities not regulated by the FSC but identified by the Caribbean Financial Action Task Force and the Financial Action Task Force as forming a link in the fight against money-laundering and the financing of terrorism; (c) entities (whether public or private), not falling under (b), that are not regulated by the FSC but which the FSC designates, by Notice published in the Gazette, as vulnerable to activities of money laundering and terrorist financing; and (d) professionals who may be engaged in preparing or carrying out transactions for their clients concerning (i) the buying and selling of real estate; (ii) managing client monies, securities or other assets; (iii) the management of bank, savings or securities accounts; (iv) the organisation of contributions to the creation, operation and management of companies; (v) the creation, operation or management of legal persons or arrangements; (vi) the buying and selling of business entities; and (vii) any other activity relating or incidental to any of the matters outlined in (i) to (vi). The obligation to report a suspicious activity or transaction to an entity’s Money Laundering Reporting Officer applies to any employee of the entity or a professional (including senior management).

The Proliferation Financing (Prohibition) Act applies to all persons and so does the Counter-Terrorism Act.

The Proceeds of Criminal Conduct Act provides that where a person fails to comply with or contravenes a provision of the Code of Practice, he or she commits an offence. Where the offence is committed by a body corporate, every director, partner or other senior officer of the body corporate shall be proceeded against as if the director, partner or other senior officer committed the offence and is liable on conviction to the same penalty as set out above (except if the director, partner or senior officer can show that he or she neither knew nor connived in the commission of the offence). The Counter-Terrorism Act and the Proliferation Financing (Prohibition) Act have similar provisions attributing liability to directors and others for offences committed by a body corporate.

3. What does the legislation prohibit?

A person commits an offence under the Proceeds of Criminal Conduct Act if he or she (a) acquires, transfers or uses any property or has possession of it which, in whole or in part, directly or indirectly represents his or her proceeds of criminal conduct; or (b) knowing or suspecting that any property is, or in whole or in part directly or indirectly represents, another person’s proceeds of criminal conduct, he or she acquires, transfers or uses that property or has possession of it. A person commits an offence if he or she enters or is otherwise concerned in an arrangement which he or she knows or suspects facilitates, whether by concealment, removal from the BVI, transfer to nominees or other means, the acquisition, retention, use or control of proceeds of criminal conduct by or for himself or herself or by or on behalf of another person. The Act also creates the offences of tipping off and failure to report a suspicious transaction.

4. How is money laundering defined? Does underlying criminal activity have to be proven?

The term “money laundering” is defined as “the doing of any act which constitutes an offence under section 28 [assisting another to retain the benefit of criminal conduct], 29 [acquisition, possession or use of proceeds of criminal conduct], 30 [concealment or transfer of proceeds of criminal conduct] or 30A [reporting a suspicious transaction] or, in the case of an act done otherwise than in the [BVI], would constitute such an offence if done in the [BVI], and, for that purpose, having possession of any property shall be taken to be doing an act in relation to the property.” In addition, a non-exclusive list of types of activities or transactions that may give rise to suspicion of money laundering, terrorist financing or proliferation financing is set out in Schedule 3 to the Code of Practice. The Proceeds of Criminal Conduct Act states that for the purposes of the Code of Practice a reference to “money laundering” includes drug money laundering within the meaning of the Drug Trafficking Offences Act.

Prior conviction for the criminal conduct is not a prerequisite for the offence of money laundering to be made out.

5. What level of intent or knowledge is required to establish a violation?

Most offences require that the alleged perpetrator “knows or suspects” that the arrangement or transaction relates to another person’s proceeds of criminal conduct. In some cases, the standard is “knowing or having reasonable grounds to suspect”. The offence of failing to disclose requires that the person “knows or suspects or has reasonable grounds for knowing or suspecting” that another person is engaged in money laundering.

6. What are the potential penalties for infringing the legislation?

The Proceeds of Criminal Conduct Act states that where a person fails to comply or contravenes a provision of a Code of Practice, he or she commits an offence and is liable, on summary conviction, to a fine not exceeding $150,000 or imprisonment for a term not exceeding two years, or both. The Code of Practice may nonetheless create offences and impose penalties to be enforced by (a) the FSC, for entities that are regulated by it; or (b) the Financial Investigation Agency, for entities that are regulated by it, as administrative penalties (in which case the maximum penalty is $100,000). The administrative penalties in respect of offences currently covered by the Code of Practice range from $60,000 to $100,000 for a body corporate and $60,000 to $80,000 for an individual.

Each of the offences of (a) assisting another to retain the proceeds of criminal conduct; (b) the acquisition, possession or use of proceeds of criminal conduct; or (c) concealing or transferring proceeds of criminal conduct is subject to a maximum penalty (i) on summary conviction, of $250,000 or imprisonment for a term of two years, or both; or (ii) on conviction on indictment, of $500,000 or imprisonment for a term of 14 years, or both. The offence of failing to report a suspicious transaction in circumstances where reporting is mandatory is subject to a maximum penalty (i) on summary conviction, of $150,000 or imprisonment for a term of three years, or both; or (ii) on conviction on indictment, of $500,000 or imprisonment for a term of five years, or both.

Where a person has reported a suspicious transaction to the Financial Investigation Agency and the Agency has given that person notice that investigative action has been taken or is contemplated in respect of that transaction and the Agency has directed that person that all further transactions by or relating to the person to whom the disclosure relates shall be treated in such manner as the Agency sees fit, failure to comply with the Agency’s direction is an offence and subject to a maximum penalty, on summary conviction, of $150,000 or imprisonment for a term of three years, or both.

The Anti-money Laundering Regulations state that contravention of any provision thereof or any directive made by the Financial Investigation Agency for purposes of these regulations or the Code of Practice is an offence, subject to a maximum fine of $150,000.

7. Does the legislation have extra-territorial reach?

The Proceeds of Criminal Conduct Act applies to property wherever situated. In addition, criminal conduct occurring outside the BVI may underpin a money laundering charge within BVI if that conduct would constitute an offence to which the Act would have applied if it had occurred in the BVI.

Proceedings for an offence committed under the Counter-Terrorism Act committed outside of the BVI may be taken, and the offence may for incidental purposes be treated as having been committed in the BVI.

8. Are there additional anti-money laundering or counter terrorist financing regulations or obligations, such as registration or reporting obligations, for businesses or individuals that operate in particular sectors or undertake particular activities?

Offences relating to the failure to disclose a suspicion of money laundering and tipping off apply to persons who come into that suspicion as an employee of an entity or as a professional (including senior management). The offences of failing to establish and maintain adequate policies and procedures for the prevention of money laundering, conduct of customer due diligence, maintenance of records, training of staff and so on apply to businesses in the regulated sectors (banks, insurers, mutual funds and fund managers, etc.).

Pursuant to the Non-financial Business (Designation) Notice issued under the Proceeds of Criminal Conduct Act, the Code of Practice also applies to a person who is engaged in the business of buying and selling boats, vehicles, jewellery or other high valued goods when the transaction involves accepting a cash payment of at least $15,000 (or the equivalent in another currency).

A person engaged in a relevant business within the meaning of the Anti-money Laundering Regulations or any non-financial business designated by the FSC in the Non-financial Business (Designation) Notice is required under the Code of Practice to appoint a Money Laundering Reporting Officer who shall be responsible for performing the functions set out in the Anti-money Laundering Regulations. Under these regulations, a relevant person shall, within 14 days of appointing a Money Laundering Reporting Officer, notify the FSC of that fact (in the case of a relevant person regulated by the FSC) or the Financial Investigation Agency (in any other case), specifying the date of his or her appointment.

The Financial Services (Prudential and Statistical Returns) Order, issued under the Financial Services Commission Act, requires that certain persons licensed by the FSC file annually with the FSC an AML/CFT Return in the form of Schedule 9 to the Order.

9. What are the potential penalties for failing to comply with these obligations?

Most of the offences covered by the Code of Practice and referred to in section 8 above are subject to a maximum administrative penalty of $100,000, in the case of a body corporate, or $80,000, in the case of an individual.

The maximum penalty for failure to file a prudential or statistical return (where an extension is not granted) is $400 for the first 30 days and $100 for each additional month or part thereof during which the return remains outstanding. Where an extension has been granted, the maximum penalty for failure to file the return increases to $600 for the first 30 days (plus $100 for each additional month or part thereof during which the return remains outstanding).

10. Who are the relevant enforcement authorities in the British Virgin Islands and what are their contact details?

The Financial Investigation Agency is the law enforcement agency generally responsible for the investigation of white collar and other serious financial crimes taking place in or from within the BVI, including money laundering offences. Its responsibilities also include processing requests for legal assistance from authorities in foreign jurisdictions as well as receiving all disclosures of information required to be made under relevant financial services legislation (including suspicious activity reports concerning money laundering, terrorist financing and proliferation financing and disclosure from foreign authorities).

The FSC is the regulatory authority responsible for the regulation, supervision and inspection of all financial services businesses operating in and from within the BVI. Its responsibilities include policing the perimeter of regulated activity, combating financial crime (including cross-border white-collar crime) and assisting in the prosecution of such crime.

The Office of the Director of Public Prosecutions prosecutes those charged with a criminal offence. It reviews cases submitted by the Royal Virgin Islands Police Force and other government departments and agencies for prosecution and is also responsible for making requests to other jurisdictions for legal assistance in criminal matters.