Statement
Statement By The Honourable Lorna Smith, OBE
Deputy Premier And Minister For Financial Services, Labour And Trade
Fifth Sitting Of The First Session Of The Fifth House Of Assembly
Of The Virgin Islands
Tuesday, 31st October 2023
Update on Financial Services Supervision and Compliance
Madam Speaker, I am pleased to present to this Honourable House a statement on the work of the Financial Services Commission (FSC) over the past year, and its priorities for the upcoming year.
The FSC plays a vital role in the sustainable development of the Virgin Islands economy. It is responsible for regulating and supervising the financial services industry, and for ensuring that the BVI remains a well-respected and competitive international financial centre.
AML/CFT Mutual Evaluation
The British Virgin Islands is currently being evaluated against the Financial Action Task Force's (FATF) International Standards on Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT). This evaluation is being led by a team from the International Monetary Fund (IMF) on behalf of the Caribbean Financial Action Task Force.
In March 2023, the IMF team conducted an onsite visit to meet with the FSC and other competent authorities, as well as industry participants. These authorities have since been heavily engaged with the evaluation team in providing follow-up information and clarification on the measures that the Virgin Islands has in place to combat money laundering, terrorist financing and proliferation financing.
It is anticipated that the mutual evaluation report, which will include recommended actions to improve the Virgin Islands' AML/CFT measures, will be finalised and published by the end of the year or early in the New Year. Following the publication of this report, the relevant competent authorities, including the FSC, will place priority on implementing such recommended actions, and ensuring the Virgin Islands' AML/CFT systems adequately and appropriately prevent and forestall money laundering, terrorist financing and proliferation financing.
Virtual Assets Service Providers Act
A key initiative undertaken by the FSC during the year was the administration of the Virtual Assets Service Providers Act (“VASP Act”) which brings virtual asset service activities under the Commission's remit.
The VASP Act came into force in February 2023, requiring persons providing virtual asset services to be registered with the FSC to perform such activities. Persons that conducted these activities prior to 1st February 2023, were allowed until 31st July 2023 to submit applications for registration.
The Commission has been assessing these applications to determine the adequacy of measures that the applicants have in place to undertake these activities, in consideration of the risks posed by these types of entities. Following the registration of applicants, supervisory and monitoring measures will be fully implemented by the Commission in overseeing Virtual Assets Service Providers on an ongoing basis.
External Relations
As part of its external relations function, the FSC provided direct interface with industry participants in both the local and international spheres.
The Commission hosted a Meet the Regulator Forum, which facilitates real-time communication between the FSC and industry participants in the Virgin Islands. At this forum, industry partners were provided with key updates on current initiatives being undertaken by the Commission, future legislative reforms in the pipeline and clarity on requirements that were imposed via legislation implemented earlier in the year. Industry participants were also afforded the opportunity to provide feedback to the Commission at this forum and receive answers to any queries at hand.
The FSC also conducted in-person meetings in Hong Kong with key industry stakeholders from the Asian region. Given that a large portion of the BVI's business emanates from Asia, the Commission recognized the importance of direct engagement with these industry participants. This engagement aimed to ensure that they were well-informed about proposed legislative changes and supervisory procedures. It also provided an opportunity for these participants to voice their concerns and offer feedback on regulatory and registry issues that have an impact on the region and their clients.
Upcoming Priorities
On its priority list for the rest of the year, into 2024, the Commission intends to undertake a revamp of the VIRRGIN platform. This platform has been in place since 2006 and facilitates the administration of corporate transactions at the Registry of Corporate Affairs. With advancements in technology since the initial launch of VIRRGIN, the Commission is seeking to modernise the platform to increase efficiency for all users, enhance customer service capabilities, facilitate ease of doing business and enhance data and statistical production capabilities.
The upcoming legislative agenda will prioritise several key actions. Firstly, it will focus on implementing recommendations stemming from the CFATF mutual evaluation report regarding legislative reforms. Additionally, the Commission will undertake reforms in response to the revisions made to the FATF Recommendations concerning Transparency and beneficial ownership of Legal Persons and Legal Arrangements.
Another set of priority actions on the legislative agenda involves the development of draft legislation to repeal the Banks and Trust Companies Act and replace it with two separate pieces of legislation, each addressing distinct subject matters. Specifically, a new Banking Act will be developed to exclusively handle banking-related matters and align with standards outlined by the Basel Committee on Banking Supervision. Alongside the Banking Act, the Commission will also work on creating a Banking Code to enforce consumer protection measures within the banking industry.
Madam Speaker, the Financial Services Commission is committed to maintaining the BVI's reputation as a well-regulated and well-respected international business and finance centre. The initiatives that I have outlined today are just a few of the ways in which we are working to achieve this goal.
Thank you, Madam Speaker.
