Here are the key highlights:

The FSC’s Compliance Inspection Unit (CIU) is intensifying its scrutiny of licensed entities, with thematic, focussed, and full-scope inspections planned throughout 2025 into early 2026. With a strong emphasis on mitigating risks tied to money laundering, terrorist financing, and proliferation financing, inspections will target sectors deemed to have higher exposure.

Inspections will primarily focus on Trust and Corporate Services Providers (TCSPs), Investment Businesses, and Virtual Asset Service Providers (VASPs). Key areas of assessment include internal controls, compliance with anti-money laundering and counter-terrorism financing policies, and staff training. For instance, TCSPs will be evaluated on customer categorisation and transaction monitoring, while VASPs will face scrutiny on adherence to Travel Rule requirements and monitoring mechanisms for client transactions.

The FSC aims to inspect a minimum of 45 licensed entities, with adjustments based on emerging risks. Follow-up inspections will also ensure remediation of previously identified deficiencies.

Entities will be notified three weeks prior to their inspection, outlining the areas of focus and necessary documentation. Post-inspection, findings and corrective measures will be detailed in a Compliance Inspection Report, with aggregated results shared to provide industry-wide guidance.

These inspections underline the FSC’s commitment to maintaining a robust compliance framework and ensuring that entities adapt to evolving regulatory demands.

The FSC has formalised the establishment of a VASP Advisory Committee (VASPAC), a public-private collaboration designed to enhance oversight in the virtual assets sector. This initiative builds on the Virtual Assets Service Providers Act, 2022, which regulates VASPs in alignment with international standards.

The VASPAC brings together private sector experts and FSC representatives to address regulatory challenges, foster market innovation, and ensure transparency. The committee’s initial priorities include addressing AML/CFT (Anti-Money Laundering/Combating the Financing of Terrorism) compliance, managing supervisory risks, and promoting sustainable growth within the VASP ecosystem.

This step reflects the FSC’s proactive approach to adapting to emerging financial technologies, providing regulatory clarity, and supporting the Territory’s competitive advantage in the global financial landscape.

Recent legislative amendments demonstrate the FSC’s ongoing commitment to aligning with international best practices and enhancing regulatory capabilities. Key updates include the Financial Services Commission (Amendment) Act, 2024, and the Financial Services (Exceptional Circumstances) (Amendment) Act, 2024.

• Consumer duty framework: The term “consumer duty” replaces “consumer protection,” introducing new measures to enhance the standard of care provided by financial services entities.
• Risk-based supervision: The FSC must employ a formal risk-based approach to its oversight, ensuring resources are directed to entities posing higher risks to the jurisdiction.
• International cooperation: The FSC’s authority now extends to collaborating with foreign non-counterpart regulatory bodies, improving information exchanges in line with Financial Action Task Force (FATF) standards.

The amendment also grants the FSC greater flexibility to act in exceptional circumstances without requiring prior ministerial orders, streamlining decision-making during critical situations.

Further, changes to related legislation, such as the Banks and Trust Companies (Amendment) Act, 2024, and Insurance (Amendment) Act, 2024, reinforce compliance obligations for financial entities and enhance the regulatory standards governing trust business and foreign insurers.

The initiatives and legislative changes outlined in the Q1 2025 newsletter signify a heightened regulatory environment in the BVI. Licensed entities must ensure their policies and internal controls align with the updated compliance expectations, particularly those in high-risk sectors.

The establishment of the VASP Advisory Committee also highlights the FSC’s forward-looking approach, creating opportunities for stakeholders to engage in shaping the regulatory framework for virtual assets.

For financial services providers, these developments underscore the importance of staying responsive to evolving legal and regulatory standards. By proactively enhancing compliance practices, entities can better position themselves for long-term success within the Territory’s dynamic financial ecosystem.

To prepare for compliance inspections or legislative shifts, licensed entities should revisit internal policies, conduct risk assessments, and ensure staff training is up to date. Collaboration with the FSC and industry bodies like the VASPAC can also provide valuable insights and guidance for navigating this evolving landscape.

The BVI FSC newsletter can be found here.