Press Release 4 of 2025 - BVI FSC and BVI FIA Issue Guidance Focused on Effective Ongoing Monitoring

BVI FSC AND BVI FIA ISSUE GUIDANCE FOCUSED ON 
EFFECTIVE ONGOING MONITORING

Tortola, British Virgin Islands; 24 January 2025 - The BVI Financial Services Commission (the FSC) and BVI Financial Investigation Agency (the FIA) have issued guidance on ‘An Effective Approach to Ongoing Monitoring’.  The Guidance informs on how financial institutions (FIs) and designated non-financial businesses and professions (DNFBPs) can fulfil their responsibility to conduct ongoing monitoring of customers, including legal persons and arrangements, in order to identify elevated risks, unusual or suspicious transactions, and breaches of financial sanctions.  The Guidance also highlights the importance of complying with the monitoring obligations set out in the Territory’s anti-money laundering, counter-terrorist financing and countering proliferation financing (AML/CFT/CPF) laws and regulations.

As with previous joint publications, this Guidance is aimed at assisting Financial Institutions regulated by the FSC and DNFBPs supervised for AML/CFT/CPF purposes by the FIA, to mitigate risks associated with money laundering (ML), terrorist financing (TF), and proliferation financing (PF) by employing effective and ongoing monitoring of transactions and business relationships.

The Guidance speaks to the need to create a base profile as a prerequisite for ongoing monitoring. This can be achieved by taking steps to collect proper due diligence on customers, taking steps to achieve a clear understanding of the customer's business activities, and identifying connections that increase risks. The prerequisite criterion calls for transaction monitoring for activities that may indicate changes in customer circumstances which are inconsistent with the known customer profile, complex or unusually large or which form an unusual pattern, or are representative of higher risk for ML, TF, or PF.  Where a licensee elects to outsource and/or contract a third-party to conduct the monitoring function, the Guidance outlines the responsibility of the FI or DNFBP to ensure that the third party effectively performs the function in compliance with legislation and that measures for testing and mitigating deficiencies are incorporated into the outsourcing contractor’s functions.

The Guidance as well reminds FIs and DNFBPs that, an effective monitoring system includes a robust framework, a culture of risk awareness, meaningful integration with broader AML/CFT/CPF controls, and active oversight by boards and senior management.

The Guidance also makes it clear that customers can present in different forms, including legal persons and legal arrangements, and as such, the monitoring requirements should be tailored for each customer grouping. It also identifies trigger events and red flags, such as payment methods and transaction volumes, that may indicate a need for more in-depth monitoring and that these suspicions may require further assessment or filing of a suspicious activity report (SAR).

This, as with previous Guidance, reflects the ongoing commitment of the FSC and FIA to helping supervised entities identify the risks associated with their businesses and arming them with instructions on the best practices for proper risk mitigation and accompanying transparency, which are required to be employed as part of the Territory’s aim to attract and maintain legitimate business.

Managing Director/CEO of the FSC, Mr Kenneth Baker, stated: “The issuing of this Guidance signals the importance that the FSC and FIA place on the need for our supervised entities to engage in effective and ongoing monitoring of their customers and their business activities. FSC licensed entities must properly position themselves to identify and collect quality and reliable data, which can help to identify changes that would allow them to adjust their clients’ risk profiles to mitigate against money laundering, terrorist financing, and proliferation financing risks.  Effective monitoring can be achieved through the employing of adequate systems, proper staff training and supervision, and maintaining data integrity.  As such, I implore our licensees to remain vigilant against evolving threats by adhering to relevant legislative requirements and utilising all issued guidance to improve their processes, procedures and controls as they work toward continual improvement.”         

The Director of the FIA, Mr Errol George, commented, “Both the FIA and FSC recognise that comprehensive monitoring processes and procedures are mandatory requirements that should be viewed as integral features of proper business conduct.  Defining what constitutes unusual behaviour or transaction patterns is the ultimate responsibility of each DNFBP and must be determined based on their understanding of their customer’s profile and ensuing risks.   As outlined in the Guidance, obligations transcend reporting suspicious activities and require introspection on whether the business relationship should be retained based on the risk presented by the customer.  We hope this Guidance will help compel all supervised entities to increase the degree and nature of scrutiny required to effectively monitor their customers.”

The Guidance on an Effective Approach to Ongoing Monitoring is available here on the FSC's website and here on the FIA’s website.

Questions concerning this Press Release may be directed to [email protected] or [email protected].