The important changes have been introduced in the legislation of the British Virgin Islands (BVI) at the end of 2015.
I. The first set of amendments concerns the company law (Business Companies Act, 2004 and Business Companies Regulations, 2012).
1. Directors’ details will be filed with the Registrar.
According to the new section 118А of the Business Companies Act, companies shall file for registration by the Registrar a copy of their register of directors. A company that has filed a copy of its register of directors shall, within 14 days of any changes occurring, file the changes in the register by filing a copy of the register containing the changes. (This applies to both changes of directors and changes in their details – e.g. name, address etc.)
A copy of a company’s register of directors filed to the Registrar shall not be made available to any person, however it can be disclosed:
- on an order of the Court;
- on a written request of a competent authority in the BVI (regulator of financial services business, tax administrator or law enforcement agency or authority acting pursuant to its obligations to a mutual legal assistance) or foreign competent authority acting for the same purposes.
Besides this, a registered agent or any other person acting pursuant to a legal or contractual obligation in relation to a company shall have access to the register of directors filed with the Registrar that relates to it.
2. Updated rules for keeping records and underlying documentation.
In accordance with the revised section 98 of Business Companies Act, a company must:
a) keep at the office of its registered agent or at such other place or places, within or outside the Virgin Islands, as the directors may determine, the records and underlying documentation of the company;
b) retain the records and underlying documentation for a period of at least five years from the date of completion of the transaction to which the records and underlying documentation relate; or the company terminates the business relationship to which the records and underlying documentation relate.
The term “records and underlying documentation” includes accounts and records (such as invoices, contracts and similar documents) in relation to:
- all sums of money received and expended by the company and the matters in respect of which the receipt and expenditure takes place;
- all sales and purchases of goods by the company; and
- the assets and liabilities of the company.
The records and underlying documentation of the company shall be in such form as are sufficient to show and explain the company’s transactions; and will, at any time, enable the financial position of the company to be determined with reasonable accuracy.
Where the records and underlying documentation of a company are kept at a place or places other than at the office of the company’s registered agent, the company shall provide the registered agent with a written
a) record of the physical address of the place at which the records and underlying documentation are kept;
b) record of the name of the person who owns or controls the place or places at which the company’s records and underlying documentation are kept; and
c) undertaking advising that the registered agent shall, at any time it so requests, have access to and be provided with the company’s records and underlying documentation without delay.
Where the place at which the records and underlying documentation of the company are kept, or the name of the person who owns or controls such place, change, the company shall provide its registered agent with the physical address of the new location of the records and underlying documentation or the name of the new owner or controller of the new location, as the case may be, within 14 days of the change of the place.
The registered agent shall keep records, which shall comprise
a) the name of the company;
b) the address or addresses of the place or places at which the company’s records and underlying documentation are kept;
c) the date the written undertaking was given to the registered agent (see above); and
d) the name of the person who owns or controls the place or places at which the company’s records and underlying documentation are kept.
Whenever required to do so by the Commission or any other competent authority in the Virgin Islands, the registered agent shall request and obtain from the company, records and underlying documentation in respect of the company.
A person who contravenes this section commits an offence and is liable on summary conviction to a fine of USD 75,000 (earlier – USD 10,000) (sec. 98(8) Business Companies Act).
3. The fines for other offences have also been considerably raised, in particular:
- Issue bearer shares, conversion of registered shares to bearer shares, or exchange of registered shares for bearer shares (unless expressly authorized to do so by company’s memorandum) – fine USD 75,000 (earlier – USD 10,000) (sec. 38(4));
- Failure to keep or improper keeping of register of members (shareholders) of a company – fine USD 50,000 (earlier – USD 1,000) (sec.41(5)).
II. The second set of amendments concerns the anti-money laundering rules (Anti-Money Laundering Regulations 2008 and Anti-Money Laundering and Terrorist Financing Code of Practice 2008).
1. The term “beneficial owner” has been introduced: it is defined as “natural person who ultimately owns or controls an applicant for business or a customer or on whose behalf a transaction or activity is being conducted”.
2. The new requirements to relations between registered agents and professional intermediaries (introducers) have been established.
Regulated person in BVI (e.g., a registered agent) may rely only on those professional intermediaries (who introduce clients for them), who are:
- regulated persons;
- foreign regulated persons; or
- members of a professional body whose rules of conduct or practice embody legal requirements for the detection and prevention of money laundering consistent with the FATF Recommendations generally; and who, in relation to customer due diligence and record keeping procedures specifically, is regulated, supervised or monitored by that body for compliance with those requirements.
If a registered agent in BVI relies on such a professional intermediary when accepting a client, a registered agent must immediately obtain from such intermediary:
a) client’s identification data;
b) beneficial owner’s identification data;
c) if a client is a body corporate – the ownership and control structure of the body corporate;
d) information on the purpose and intended nature of the business relationship.
At the same time, an intermediary is not required to provide a registered agent with copies of documents immediately. A registered agent must take adequate steps to ensure that copies of all identification and verification data and other relevant documentation held or maintained by the intermediary will be made available by the intermediary upon request without delay
Besides this, a registered agent must ensure that professional intermediary has in place procedures to establish and maintain identification of applicants for business and update identification information based on the risk profile of the applicants for business.
The revised edition of Anti-Money Laundering Regulations obliges registered agents in BVI to obtain all the required customer information from their intermediaries before the 31 of December 2016 (“compliance date”).
A registered agent cannot rely on an intermediary to conduct and maintain information on the customer due diligence of an applicant for business where such intermediary is relying on another intermediary or several intermediaries.
Despite all mentioned above, it is the registered agent in BVI who bears the ultimate responsibility for obtaining and verifying customer’s and beneficial owner’s identity information.
A registered agent in BVI must enter into a written agreement with professional intermediaries for the period at least five years. Such agreement must remain valid for a period of at least five years from the date of termination of the business relationship between the registered agent and the client.
The revised edition of Anti-Money Laundering and Terrorist Financing Code of Practice (sect. 31А) provides obligatory requirements to contents of such agreement. It must contain the following conditions:
- the professional intermediary undertakes to provide the customer information referred to in regulation 7 (2) of the Anti-money Laundering Regulations, 2008 at the time of entering into a business relationship;
- the professional intermediary undertakes, at the request of the registered agent to provide copies of all identification data and other relevant documentation concerning a customer whenever required by the Agency, Commission or other competent authority in the Virgin Islands;
- the professional intermediary undertakes to provide the registered agent with the requested information without any delay and, in any case, within a period of forty eight hours, but not exceeding seventy-two hours (calculated from the time of dispatch of the request);
- the professional intermediary confirms that it is regulated, supervised or monitored in the country or territory in which it is based by a competent authority (who must be named);
- the professional intermediary confirms that it has in place measures that comply with customer due diligence and record keeping requirements that are at least equivalent to the FATF Recommendations;
- the laws of the country or territory in which the professional intermediary is based and regulated, supervised or monitored do not prohibit or restrict the professional intermediary from providing to the registered agent without delay copies of identification data and other relevant documentation concerning the customer due diligence carried out by the professional intermediary pursuant to any agreement with the customer;
- the registered agent undertakes to inform the professional intermediary immediately of any change in the laws or practices of the Virgin Islands which will or is likely to affect the business relationship between them in the context of the agreement;
- the professional intermediary undertakes to inform the registered agent immediately of any change in the laws or practices of the country of the professional intermediary which places prohibition or restriction on the ability of the professional intermediary to provide the registered agent copies of identification data and other relevant documentation concerning the customer due diligence;
- the professional intermediary undertakes to immediately notify the registered agent of any legal, criminal or regulatory action taken against the professional intermediary or any of its members or senior officers including, where the professional intermediary is licensed, authorized, approved or a member of a professional body, whether the license, authorization, approval or membership has been suspended, cancelled, revoked or withdrawn or in any other way restricted;
- the professional intermediary agrees to, and the registered agent undertakes to conduct a periodic test of the business relationship between them, including the terms and conditions of the agreement to establish compliance therewith;
- the professional intermediary undertakes not to amend or in any way modify any agreement it may have with a customer so as to defeat the professional intermediary’s obligations to the registered agent under the written agreement between them;
- the professional intermediary undertakes to immediately notify the registered agent if the business relationship between the professional intermediary and the customer is terminated for whatever reason;
- in a case where the business relationship between the professional intermediary and the customer is terminated, the professional intermediary undertakes to provide the registered agent, within seven days of the date of termination, with all the customer due diligence information and other relevant documents maintained by the professional intermediary in respect of the customer.
The agreement compliant with the above requirements must be signed not later than by the 31 of December 2016.