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2013.05.29 - British Virgin Islands: Due Diligence standards to be applied during document certification in accordance with the principle "Know Your Customer".

 

The British Virgin Islands, like many other countries of the world, strictly monitor the compliance with Due Diligence rules and the principle of "Know Your Customer". The requirements of the British Virgin Islands in this respect are amongst the highest in the world.

These British Virgin Islands standards are regulated by the iBritish Virgin Islands Anti Money Laundering Regulations 2008, which were adopted on 22nd February 2008, with further amendments to the Regulations being made in 2010 and 2012. Additionally, the customer identification rules are detailed in the accompanying regulation Anti Money Laundering and Terrorist Financing Code of Practice of 2008 as amended in 2009, 2010 and 2012.

Some of the standards to be applied during document certification and customer identification procedures under the above laws of the British Virgin Islands are described below:

  1. Section 30 of the Anti Money Laundering and Terrorist Financing Code of Practice of 2008 states that:
    A copy of a document is properly certified if on the face of that document:
    1. the person certifying the document indicates that:
      • I. he has seen and compared the original document verifying the identity and residential address of the customer;
      • II. the copy of the document which he certifies is a complete and accurate copy of the original;
      • III. where the document contains a photograph of the customer, the photograph bears a true likeness to the individual to whom the certification relates;
    2. the certificate:
      • I. bears the date of the certification;
      • II. bears the signature and seal of the person certifying the document;
      • III. provides adequate information to enable the person certifying the document to be contacted in the event of a query or further clarification being required.

    Taking into account the above standards, it is important that copies of passports and utility bills should be certified by a special certification wording which is accepted in the British Virgin Islands.

    Unless the certification text complies with the above standards, it may be declined in the British Virgin Islands.

  2. Another aspect of the legislation relates to reference letters given by the banks or the professionals such as law or accounting firms (i.e., Professional Reference). Each bank and each professional firm may have their own standard of such a reference with the text of reference letters having no strictly regulated standard in the British Virgin Islands. However, it is important that the reference letter states the length of time the professional firm or bank has known the customer.
  3. It is important also to note that the due diligence standards applied to the beneficial owner of the company in the British Virgin Islands refer equally to each director and shareholder of the company.

    Accordingly:

    1. In case of individual directors and shareholders, such persons are required to submit the same documents (namely a certified copy of the passport, a utility bill and a reference letter) as the beneficial owner of the company.
    2. In case of corporate directors and shareholders (namely legal entities), copies of corporate documents stating the names of actual directors and shareholders of such legal entities are required.
    3. Where a legal entity is a shareholder of the company and the beneficial owner is not a shareholder of such a legal entity, this legal entity is required to submit a trust declaration in favour of the beneficial owner to prove the beneficial owner’s status as the actual shareholder of the British Virgin Islands company to be incorporated.

International Overseas Services comments:

The British Virgin Islands have developed one of the most detailed and well-thought pieces of corporate legislation to be found in all the classical offshore jurisdictions (namely the British Virgin Islands Business Companies Act 2004, as amended in 2006, 2007, 2009, 2011 and 2012).

The British Virgin Islands is also one of the leading jurisdictions in terms of Anti Money Laundering legislation and Due Diligence rules. The related laws being the British Virgin Islands Anti Money Laundering Regulations 2008, as well as the Anti Money Laundering and Terrorist Financing Code of Practice of 2008, are among the most detailed and elaborate anti money laundering pieces of legislation in the world.

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