Updated BVI guidance for entities regulated by the Financial Services Commission

At Harneys, we are aware of the various pieces of legislation which continue to be issued by financial services centres, including the BVI, in order to meet the continually changing requirements of the international regulatory landscape.

The BVI has recently issued the following pieces of guidance/legislation which will affect all entities regulated by the Financial Services Commission:

• Financial Services (Prudential and Statistical Returns) (Amendment) Order 2021
• Data Protection Act 2021
• Regulatory (Insurance Code of Conduct) Code 2021
• Financial Investigation Agency (Amendment Act) 2021

The Prudential and Statistical Returns Order is a newly amended order which took effect on 15 February 2021 and now requires all licensees to submit AML/CFT returns for each annual reporting period. The Data Protection Act, which came into force on 9 July 2021 should also be paid particular attention to. In particular, it will require updates to the fund documents of BVI funds, compliance manuals of licensees, employment contracts and various other commercial agreements. Also, entities classified as BVI financial institutions need to ensure they have AEOI (FATCA/CRS) policies and procedures in place and that their AEOI policies and procedures are filed with the International Tax Authority pursuant to BVI FATCA and CRS legislation. The Financial Investigation Agency Act, 2003 was also recently amended (the FIA Act). The Act expounds further on the authority of the Financial Investigation Agency (FIA) in matters relating to combatting money laundering, terrorism, terrorist financing or proliferation financing and in particular, has brought non-designated financial services businesses and professions (NDFBP) and NPOs fully within its scope. We are also expecting virtual asset service providers legislation (the VASPA) to be introduced in the BVI by the first quarter of 2022 pursuant to Recommendation 15 of the FATF. The VASPA will cover many activities in the digital asset space and most importantly will bring any virtual asset service carried on from in or within the BVI within its remit. We will provide a separate update on the VASPA closer to the expected coming into force date. The Governor’s Office has also published updated guidance on BVI financial sanctions which also need to be considered by regulated entities.

Amendments were also made earlier in 2021 to the Beneficial Ownership Secure Search System Act, 2017 (the BOSS Act) and the Economic Substance (Companies and Limited Partnerships) Act, 2018 which are relevant to all companies and limited partnerships registered in the BVI. The key high-level points to note are the inclusion of limited partnerships without legal personality in the regime and an express carve-out clarifying that “investment fund business” is not a relevant activity requiring economic substance. Further amendments to the BOSS Act and the schema for reporting the prescribed economic substance information to the International Tax Authority (ITA), as well as revisions to the ITA’s Rules and Explanatory Notes on economic substance in the BVI, are expected this year and we will be publishing further guidance at that time. We are also able to add you to our mailing list to receive updates regarding BVI economic substance specifically.

We know it is a lot to digest but it need not be overwhelming. We are here to simplify compliance for you and to improve your overall compliance culture. In addition to providing general advice on any financial services legislative or regulatory regime, we can:

• Review and update fund documents to include, inter alia, data protection provisions
• Review and update compliance manuals to reflect, inter alia, data protection provisions and amendments to the BVI sanctions regime
• Advise on your BVI entity’s compliance and reporting obligations under the economic substance legislation and, where necessary, assist with putting in place BVI substance via our affiliate Harneys Fiduciary
• Advise on your BVI entity’s beneficial ownership reporting obligations under the BOSS Act
• Provide and update existing outsourcing agreements
• Provide AEOI policies and procedures
• Provide annual compliance training
• Provide advice to NDFBP
• Provide advice to NPOs in relation to compliance manuals and continuing obligations under the NPO Act and the FIA Act
• Assist with annual filings
• Provide advice in relation to sanctions
• Create a full compliance monitoring program tailored to each fund, licensee, DBFBP and NPO

We also offer a concierge service for certain clients and services. Ask us about these services and we can discuss them further with you.

Please contact Ayana Hull, Joshua Mangeot, Kimberly Seagojo or your usual Harneys contact for more information or assistance.