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The British Virgin Islands simplifies the way to deal with compliance services

05 Nov 2018

British Virgin Islands (BVI) law places significant importance on the role and function of compliance, and in particular, the compliance officer in so far as it relates to financial services licensees.

Traditionally, only an individual could be approved as the compliance officer of a licensee. However, in order to adapt to a more modern approach to compliance, the Financial Services Commission Act 2001 (the FSC Act) has been amended recently to now allow for corporate compliance function services to be provided to licensees.

What does the change in the law mean?

Under the amendments to the FSC Act, the Financial Services Commission (the Commission) may on receipt of a written application approve a body corporate to undertake the duty of providing compliance function services for licensees. Importantly, no licensee should engage the compliance function services of a corporate entity unless the licensee has submitted an application in writing identifying a senior officer within the licensee who would have responsibility for overseeing the compliance function of the licensee and the senior officer is approved by the Commission.

A streamlined process for approval

The change is welcome in that it streamlines and sets standards for the industry in the BVI as to the organisations that may provide compliance function services to third party licensees. Previously such standards focussed entirely on the individuals who would act as compliance officers. In practice this approval process could take time as the process was the same as those used to assess executive directors and ultimate beneficial owners, termed the “Form A” approval process.

As with all licensing regimes, the quid pro quo  however is that now no BVI-based ‘licensee’, such as a fiduciary services provider, may engage in the provision of compliance function services to others unless they have been approved by the Commission. Though time will tell, we understand that unapproved providers of compliance officers based outside of the BVI would, in practice, continue to be able to provide services but the approval of the compliance officer would be handled by the Commission in the old way, ie through the Form A approval process.

What is needed for the application?

In preparing the application to the Commission, the following points will need to be satisfied, that the corporate entity:

  • is incorporated under the BVI Business Companies Act 2004 and not struck off or dissolved;
  • is physically resident in the BVI;
  • employees are physically resident in the BVI and any absences are not in excess of 90 days;
  • has provided a written undertaking indicating that it will not assign or deploy any employees to perform compliance functions for and or on behalf of a licensee unless such employees are approved by the Commission and appointed formally by the licensee in relation to the Commission’s approval;
  • has a primary responsibility to provide compliance function services to licensees that are based in and carrying on business in or from within the BVI;
  • will have within 180 days and before commencing business, the relevant number of employees considered sufficient to perform the compliance officer duties having regard to the number, nature, size and complexity of the licensees to which the services are geared; and
  • understands the business of the licensees.

How can we assist?

Harneys has a fully-fledged regulatory team who can assist with:

  • advising corporate entities on their obligations under the financial services legislation;
  • preparing the application to the Commission to have the corporate entity as well as the individual compliance officers approved; and
  • preparing the necessary business plans to satisfy the requirements outlined above when corporate entities are considering submitting an application to the Commission for approval to conduct compliance function services.

If you need any assistance, please do reach out to us.