The report evaluates the risks legal entities in the BVI may face from money laundering, terrorist financing, proliferation financing, and sanctions evasion. It serves two core purposes:

• Helping organisations understand their exposure to these risks.
• Assisting regulatory and law enforcement agencies in implementing strategies to mitigate them effectively.

The LPLA Risk Assessment reflects a collaborative approach, integrating input from key local and international stakeholders. A working group composed of representatives from the Royal Virgin Islands Police Force, the Financial Services Commission, the Ministry of Financial Services, the Attorney General’s Chambers, the Financial Investigation Agency, and others spearheaded this initiative. This team followed an established methodology aligned with international Financial Action Task Force (FATF) guidelines and consulted practitioners on the ground for practical insights.

In the BVI Financial Services Commission (FSC) press release on the same, Kenneth Baker, the Managing Director and CEO is noted to have emphasised the importance of this assessment for regulated entities, including financial institutions, Designated Non-Financial Businesses and Professions (DNFBPs), and law enforcement agencies. It was highlighted that familiarity with the report should guide institutional and customer risk assessments, enabling better controls and preventive measures against financial crimes.

Adding further depth to these efforts, the BVI FSC and the Financial Investigation Agency (FIA) recently published Guidance on Institutional Risk Assessments (IRA). Released in December 2024, the Guidance is designed to assist financial institutions supervised by the FSC and DNFBPs overseen by the FIA in applying a risk-based approach to their operations. It reinforces provisions within the Anti-Money Laundering Regulations (AMLR) and the Anti-Money Laundering and Terrorist Financing Code of Practice (AMLTFCOP), setting out clear steps for conducting thorough and effective IRAs.

This Guidance provides valuable tools for understanding and addressing risk factors, ranging from products and services to customer, geographic and delivery channel exposure. For each of these risk areas, entities are encouraged to consider:

• A set of data points and key questions to evaluate risk comprehensively.
• Practical examples of higher-risk scenarios to aid in real-world application.
• Recommendations for developing policies and procedures to mitigate identified risks, including risks from new products, evolving business practices, and emerging technologies.

Key features include a process for scoring and weighting risks to determine an overall risk level for the business, coupled with a checklist of questions and practical takeaways to streamline the IRA process. It also highlights specific triggers, such as changes in business operations, markets, or regulatory requirements, that necessitate updates to an IRA, ensuring institutions proactively adapt to new risks.

Likewise, Mr Errol George, Director of the FIA, has previously underscored the importance of continuous, proactive risk management, stating that a top-down approach to risk can protect both business operations and the financial system's integrity.

The findings of the LPLA Risk Assessment and the Guidance on Institutional Risk Assessments collectively strengthen the BVI’s position as a compliant and secure financial hub. Together, they offer a comprehensive toolkit for stakeholders to incorporate enhanced risk management practices into their frameworks.

Organisations are strongly encouraged to integrate the insights from both the LPLA Risk Assessment and the Institutional Risk Assessment Guidance into their compliance strategies. Both documents can serve as a roadmap for regulated entities, offering actionable steps to refine their risk management approaches in line with global standards.

You can access the full report here and the press release here.

The Guidance on Institutional Risk Assessments can be found here and Circular 47 here.