Background

On 1 January 2016 (the Effective Date), the [BVI] Anti-money Laundering (Amendment) Regulations 2015 (the Amendment Regulations) came into effect, amending the Anti-Money Laundering Regulations 2008.

Paragraph 3(1) of the Schedule to the Amendment Regulations provides that every 'relevant person' conducting 'relevant business' must be compliant with the Amendment Regulations on or before 31 December 2016 (the Compliance Date), subject to any extension of time sought by a relevant person under paragraph 4.

The BVI Financial Services Commission (the FSC) recently issued Guidance Notes which modified the Compliance Date. The Guidance Notes provide that:

  • For every company that is incorporated or registered as of 1 January 2016, the relevant person must collect and maintain beneficial ownership information prior to or at the time of incorporation or registration.
  • For companies that were incorporated or registered prior to 1 January 2016, there is a transition period of 12 months ending on 31 December 2016 within which the relevant person must collect and maintain beneficial ownership information.

Circumstances under which extension will be granted

The FSC may extend the period of compliance in the following circumstances:
(a) a relevant person has made sufficient progress to comply with its obligations to source and maintain the applicable customer due diligence (CDD) information in respect of clients;
(b) depending on the amount of clients on a relevant person's client books it may not be practicable for the relevant person to comply with the requirements set out in the Amendment Regulations and obtain all of the applicable CDD information; or
(c) there are other situations which make it desirable for the FSC to grant an extension in favour of the relevant person.

Grounds for obtaining the extension

(a) First: By 31 July 2016, the relevant person has shown that it has made effort and has been able to obtain CDD information in respect of at least fifty per cent of its clients; and 
(b) Second: By 31 October 2016, the relevant person has shown that it has made effort and has been able to obtain CDD information in respect of at least seventy-five per cent of its clients.

Practical considerations

The FSC will have regard to the following:
(a) Prior to submitting applications for extensions, the thresholds set out in the grounds above must be complied with. Failure to meet the thresholds will render the extension application non-compliant and will likely not be granted.
(b) The application will need to be in writing from the relevant person and should be submitted no later than 31 August 2016 (where the relevant person is seeking to rely on the fifty per cent threshold) or by 30 November 2016 (where the relevant person is seeking to rely on the seventy-five per cent threshold). There is no need to satisfy both thresholds to qualify for the extension.
(c) The application must provide:
    (i) CDD information on the relevant person i.e. name and address;
    (ii) the number of entities it services (dividing them into active and struck-off companies);
    (iii) the number and percentages of entities for which CDD information has been obtained (fully);
    (iv) the number and percentages of outstanding entities for which beneficial ownership remains to be obtained and maintained;
    (v) the period of extension requested (such period not being more than six months after the Compliance Date); and
    (vi) such other information requested by the FSC in the fixed form "Application and Declaration for Extension of Time pursuant to paragraph 4 of the Schedule to the Anti-money Laundering Regulations 2008" (this form is attached to the Guidance Notes).
(d) A director or the registered agent of the relevant person will need to attest to the fixed form extension application referred to in (c)(vi) above.
(e) The Guidance Notes provide that although the FSC will base its assessment on the level of compliance with a specified threshold in respect of active companies only for which CDD information has been obtained, relevant persons are encouraged to obtain and maintain the same information with regard to struck off companies with which a relationship exists. It was highlighted in the Guidance Notes that a policy document in relation to struck off companies is currently being discussed and will address the issue of struck off companies.

The "such other information consideration"

An application made under the "such other information consideration" referred to in c (vi) above will likely be considered by the Commission on a case by case basis. The relevant person will need to demonstrate why the extension should be granted and provide cogent evidence of the factors being used in order to obtain the extension. The information on the fixed form extension application will be very relevant when this ground is being used.

An extension application made under this ground will need to be submitted to the FSC by no later than 30 November 2016 and no application made under this ground will be reviewed or processed before 1 November 2016.

Length of the extension

Where the FSC decides to grant an extension, this can be for a period of up to but not necessarily six months – ie June 2017. The length of the extension granted will be conditional on the following:
(a) the efforts made by the relevant person to obtain and maintain the CDD information;
(b) the number of clients that the relevant person still need to collect CDD on;
(c) the likelihood of completion of the CDD information in the time specified in the request;
(d) the resources available to complete the CDD exercise.

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.