BVI Business Companies Act Under Consultation to Align with FATF Recommendations

The British Virgin Islands (BVI) Financial Services Commission (FSC) has initiated a consultation process regarding further adjustments to the BVI Business Companies Act. This move is aimed at aligning with recommendations outlined in the recent evaluation of its anti-money laundering (AML) practices by the Financial Action Task Force (FATF).

Among the proposed reforms are those pertaining to FATF Recommendation 24, which focuses on legal entities. These proposed changes primarily revolve around imposing stricter regulations on the utilization of nominee shareholders and directors, as well as ensuring consistent filing of registers of members with the registrar. The FSC considers this approach the most effective long-term strategy for complying with Recommendation 24.

Alongside maintaining a register of members, each company will be required to disclose the identities and addresses of nominee shareholders and their nominators, along with details regarding the cessation of nomination and membership. Similar obligations are extended to foreign companies, mandating them to maintain registers of members, with specified information to be filed with the registrar.

The current practice, where companies choose to file their register of members with the registrar, is being phased out. Instead, all companies will be obligated to submit a copy of their register of members to the registrar.

Additional measures include revisions to rules concerning the collection, retention, and upkeep of crucial information, a reduction in the timeframe for appointing initial directors of incorporated companies, and a requirement for companies to cooperate with competent authorities in fulfilling their statutory duties. Furthermore, ensuring that penalties are both deterrent and proportional is emphasized.

A new section necessitates companies to gather, maintain, and update beneficial ownership information, to be filed with the registrar either upon incorporation or within 14 days thereafter. Similar obligations apply to companies being continued in the BVI or foreign companies, albeit without the 14-day grace period.

The penalty framework is being revamped, replacing specific offense provisions with a more streamlined contraventions regime. This new regime will introduce fixed penalties, administrative penalties, and criminally punishable offenses. Provisions are also made for late penalty payments in certain instances, with an opportunity for representations to be made to the registrar before administrative penalties are enforced. Additionally, the FSC is empowered to mandate the submission of returns by companies.

Transitional arrangements are outlined for existing companies and those previously struck off and dissolved. Nonetheless, all companies incorporated, registered, or continued after the commencement date are mandated to comply with the amended requirements regarding the filing of their register of members and beneficial ownership information.

The consultation period for feedback ends on May 6, 2024.