BVI completes updates on Iran sanctions legislation to comply with JCPOA

On 16 November 2016, the BVI Financial Investigation Agency (FIA) issued Statutory Instrument 69 of 2016 entitled “The Direction Given by the Financial Investigation Agency (Revocation) Order 2016” (we term this as the “New Order” in this legal update). The New Order repeals the last remaining historic obstacle within the BVI to the full local implementation of the JCPOA’s obligations as relevant to EU Member States and their Overseas Countries and Territories. The New Order took effect as of 24 November 2016 following its inclusion in the Virgin Islands Official Gazette.

To recap, the JCPOA – Joint Comprehensive Plan of Action – represents the historic agreement reached between the P5+1 (USA, UK, France, Germany, Russia and China) and Iran on 14 July 2015 for the easing of sanctions relevant to Iran’s nuclear programme following the verification of the International Atomic Energy Agency that Iran is now in compliance with its nuclear non-proliferation commitments.

Under the New Order, the last remnant of the pre-JCPOA sanctions regime in the BVI, contained in a Direction of the FIA dated 2 December 2011 (the Repealed Direction), issued under the BVI Proliferation Financing (Prohibition) Act 2009, has been revoked. This follows other recent measures taken by the FIA to repeal historic domestic sanctions on Iran.

The Repealed Direction represented draconian restrictions in the BVI in that it was previously prohibited for BVI persons, including BVI companies, to enter into or continue to participate in any transaction or business relationship with a “designated person”, which included the following:  

•    A credit institution incorporated in Iran (an Iranian bank)
•    The Central Bank of Iran also known as Bank Markazi Jomhouri Islami Iran
•    A branch wherever located, of an Iranian bank
•    A subsidiary, wherever located, of  an Iranian bank

The Repealed Direction was originally implemented by the BVI to bring the jurisdiction into line with the UK position at the time under the Financial Restrictions (Iran) Order 2011 (the UK Order) issued further to the UK Counter Terrorism Act 2008. However the UK Order was itself repealed in 2013 when the government made changes to its regime to bring it into line with the pan-EU position under Council Regulation (EU) No. 267/2012.  

Since that time, and until the passing of the New Order recently, it was appropriate to think of the BVI regime as more restrictive than the UK position when dealing with Iranian banks. The BVI position was also not fully compliant with the requirements of the more recent JCPOA as relevant to EU Member States and their Overseas Countries and Territories, one which is the BVI.  

In light of international events the New Order therefore represents a very welcome revision of BVI sanctions law in this area and completes the jurisdiction’s transition following the JCPOA.