Update on BVI compliance inspections 2025 / 2026

The BVI Financial Services Commission recently published its Q1 2025 newsletter, which includes some helpful background to the areas of assessment that will be considered in its upcoming compliance inspections.

The newsletter noted that the BVI Financial Services Commission's (FSC) Compliance Inspection Unit (CIU) will, during 2025 and the first quarter of 2026, be conducting at least 45 compliance inspections on licensed entities, with a significant focus on licensees within sectors presenting higher prudential, money laundering, terrorist financing or proliferation financing risks.

In this regard, the FSC's 2025 Inspection Plan will focus on entities that are licensed as Trust and Corporate Service Providers, Investment Business licensees, and Virtual Asset Service Providers. The FSC has noted that as additional risks are identified, additional licensed entities will be added to the Inspection Plan. A stated objective of the inspection process is to assess risks and determine the level of compliance within key areas.

In this briefing, we outline the key aspects that will be considered with each compliance inspection, the actions that licensees should take in preparation for an inspection and the key areas of focus by sector, as set out in the FSC's 2025 Inspection Plan.

Areas of assessment and key actions for licensees

The BVI FSC has said that each inspection will encompass a review of a licensee's internal control systems, noting the importance of such established controls as the foundation for ensuring compliance. 

The review of internal control systems will be holistic to determine whether identified internal controls are appropriate and up to date, have been regularly reviewed and tested, and have been communicated to key staff. 

Three aspects will be considered within each inspection:

• Internal controls – which will assess the establishment of appropriate anti-money laundering (AML) / combating the financing of terrorism (CFT) / countering proliferation finance (CPF) policies. This includes policies and procedures relating to sanctions handling and suspicious activity reporting, of which the established policies and procedures must reflect the updated amendments to the AMLTF Code of Practice and consider the risks relating to each entity and the specific nature of its business.
  
  Licensees should therefore ensure that their AML / CFT / CPF policies are up-to-date, robust and allow for effective implementation.
  
  

• Internal audit – which will assess whether regular reviews (and internal audits) of the established controls are conducted to ensure that policies and procedures are appropriate for the nature, size, and complexity of each entity, and relevant actions are taken to remediate deficiencies to ensure policies are effective.
  
  Licensees will therefore need to be able to demonstrate that their existing policies and procedures are appropriate for their businesses and subject to regular review and internal audit.
  
  

• Staff training – which will assess whether established policies and procedures have been communicated to staff and whether training is tailored to the relevant roles performed by the licensee's staff.
  
  Licensees will therefore need to be able to demonstrate their ongoing staff training programme.

The FSC also said that it will be assessing implementation and effectiveness of the established controls, which will be done through inquiry, demonstrations and sample testing of client files.

Sector focus

The BVI FSC has provided guidance in relation to the focus of their inspections for each sector.

Trust and Corporate Service Providers

Compliance inspections will focus on:

• the implementation of verification measures to identify and verify beneficial owners

• an assessment of the suitability of third-party relationships, beneficial ownership information requirements, maintenance of agreements and whether such agreements have been periodically tested in accordance with AMLTF Code of Practice

• sanctions handling, through an assessment of the mechanisms implemented to conduct sanctions screening and identify designated persons (including beneficial owners) and the implementation of sanctions monitoring and reporting procedures

Investment Business Licensees

Compliance inspections will focus on:

• risk assessments and categorisation of customers and transactions which may pose higher money laundering, terrorist financing, or proliferation financing risks

• the implementation of ongoing monitoring controls to appropriately monitor customer profiles and transactions to ensure risks are effectively monitored and anomalous patterns or transactions within customer profiles are identified

• sanctions handling, through an assessment of the effectiveness of mechanisms implemented to conduct sanctions screening to identify designated persons and the implementation of sanctions monitoring and reporting procedures

Virtual Assets Service Providers

Compliance inspections will focus on:

• Customer Due Diligence / Enhanced Customer Due Diligence assessments to assess a licensees’ ability to gather initial customer due diligence of each customer, inclusive of source of funds and wealth, and the conduct of verification to ensure the accuracy and legitimacy of information provided

• an assessment of compliance with Travel Rule requirements and the rate of collection of originator and beneficiary information, which in turn would allow for the identification of higher risk customers

• the implementation of ongoing monitoring controls to allow for effective monitoring, flagging, investigation, and escalation of client transactions or activities, given the complexity and volume of services offered

Follow-up inspections

The FSC have also noted that the CIU will conduct follow-up inspections on selected licensed entities. Follow-up inspections will encompass a broader review and aim to focus on areas previously identified as deficient or areas impacting overall compliance. Such inspections may also include prudential assessments of corporate governance, responsibilities of the board and other key areas.

Compliance inspection process

The FSC has said that selected licensees will have at least three weeks' prior notice of their inspection. Such notice will advise of the scope of the inspection and indicate the specific areas of assessment.

Entities subject to this inspection will be required to submit all relevant information to the FSC within the timeframe stipulated in the notice. The inspection process will consist of discussions with senior management, interviews, a review of processes and procedures and client file reviews.

To efficiently conduct the inspection, all identified files and other supporting documentation are required to be uploaded to a secure portal for review by the CIU. Additional requests for information and documentation may also be made throughout the inspection process.

Subsequent to the inspection, each entity will receive a Compliance Inspection Report outlining the inspection findings, along with relevant corrective actions. To ensure appropriate feedback relating to the inspection process, a post-inspection feedback form will be provided in conjunction with each report.

The FSC has said that at the end of the inspection cycle, they intend to aggregate information on the findings and potential recommended actions which will be shared with the industry to provide added guidance on how licensees can improve compliance going forward.

How Ogier can help

If you need any BVI legal or regulatory assistance in anticipation of a potential inspection, such as a review of your existing policies and procedures,  contact one of our BVI team. Their contact details can be found below.

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Disclaimer

This client briefing has been prepared for clients and professional associates of Ogier. The information and expressions of opinion which it contains are not intended to be a comprehensive study or to provide legal advice and should not be treated as a substitute for specific advice concerning individual situations.

Regulatory information can be found under Legal Notice