An Effective Approach to Ongoing Monitoring

Summary

This is joint AML/CFT/CPF guidance from the BVI Financial Services Commission (FSC) and the Financial Investigation Agency (FIA) explaining how licensees should design and operate an effective ongoing monitoring system for customers, transactions, and business relationships, with particular focus on legal persons and legal arrangements administered by trust and corporate service providers (TCSPs). It supplements existing obligations under the Anti-Money Laundering and Terrorist Financing Code of Practice (AMLTFCOP), the AML Regulations, the Regulatory Code, the FIA Act and the FSC Act, rather than creating new statutory requirements.

• Transaction monitoring: Licensees must monitor all customer transactions and activity to detect unusual, complex, unusually large, or higher-risk transactions, examine and record findings on flagged transactions, and file an internal suspicious activity report with the MLRO where suspicion arises.
• Policies and procedures: Establish risk-based procedures for reviewing customer activity, train staff on transaction monitoring, implement automated monitoring where appropriate, and periodically review and remediate the monitoring programme.
• Outsourcing controls: Where monitoring is outsourced (including to group entities), licensees must test the third party's performance, document findings, remediate deficiencies, and terminate/replace the provider (with a risk assessment of affected customers) if deficiencies are not corrected in a timely manner.
• Legal persons and arrangements: TCSPs and other licensees providing value-added services (directorship, nominee shareholder, corporate secretarial) must monitor transactions and changes in business activities of legal persons/arrangements, using qualified personnel familiar with these structures.
• Governance: Boards and senior management must actively oversee monitoring functions, set risk appetite and tone from the top, and promptly resolve deficiencies in monitoring outputs.
• Red flags: The guidance sets out extensive red flag/warning sign indicators for legal persons and legal arrangements that licensees should incorporate into monitoring procedures.

The guidance applies to entities the FSC and FIA jointly refer to as 'licensees' - covering both FSC-regulated financial institutions and FIA-supervised DNFBPs - and is intended to be read alongside Section 21 of the AMLTFCOP and its Explanatory Notes. It does not impose new deadlines but reinforces existing continuing obligations to maintain, document, and periodically review ongoing monitoring systems.

Key obligations

• Licensees must carry out ongoing monitoring of customers, including legal persons and legal arrangements, throughout the business relationship.
• Licensees must monitor all customer transactions to identify unusual, complex, unusually large, or higher-risk transactions and those inconsistent with known customer profiles.
• Licensees must examine and enquire into the background and purpose of flagged transactions and record findings in writing.
• Licensees must file an internal suspicious activity report with their money laundering reporting officer where there is knowledge or suspicion of questionable transactions.
• Licensees must establish written policies and procedures for risk-based transaction review, staff training on monitoring, and (where appropriate) automated monitoring systems.
• Licensees must periodically review the effectiveness of their transaction monitoring programme and remediate identified deficiencies.
• Where ongoing monitoring functions are outsourced, licensees must test the third party's performance, record findings, and terminate the arrangement (including conducting a risk assessment of affected customers) if deficiencies are not corrected in a timely manner.
• TCSPs and licensees providing directorship, nominee shareholder or corporate secretarial services must actively monitor transactions and changes in business activities of legal persons and legal arrangements they administer.
• Boards and senior management must actively oversee monitoring functions and promptly resolve process, staff, or system failures affecting monitoring outputs.
• Licensees should incorporate identified red flag indicators for legal persons and legal arrangements into their ongoing monitoring and due diligence procedures.

Applies to

banks, insurance, trust and company services providers (TCSPs), investment business, financing business (FB), money service businesses (MSBs), insolvency services, virtual asset service providers (VASPs), legal practitioners, notaries public, accountants, real estate agents, dealers in precious metals and stones (DPMS), high value goods dealers (HVGD), vehicle dealers, persons engaged in the business of buying and selling boats