Effective Enhanced Customer Due Diligence Measures

Summary

This is joint guidance from the BVI Financial Services Commission (FSC) and the Financial Investigation Agency (FIA) explaining how licensees should conduct Enhanced Customer Due Diligence (ECDD) under the Anti-Money Laundering and Terrorist Financing Code of Practice (AMLTFCOP) and AML Regulations. It does not create new legal rules but clarifies existing ECDD obligations, common implementation failures, and expectations for effective compliance.

• Who must apply ECDD: All FSC-supervised financial institutions (banking, insurance, TCSPs, investment business, financing business/MSBs, insolvency services, VASPs) and FIA-supervised DNFBPs (legal practitioners, notaries, accountants, real estate agents, dealers in precious metals/stones, high value goods dealers, vehicle dealers, boat dealers), collectively termed licensees.
• When ECDD is triggered: Foreign PEPs, higher-risk domestic/international organisation PEPs, complex or unusual business activity/ownership/transactions, customers or transactions linked to high-risk or sanctioned countries, non-face-to-face relationships, introduced customers, and any other higher ML/TF/PF risk scenario.
• Common deficiencies flagged: Lack of differentiation between standard CDD and ECDD, weak Risk Assessment Frameworks, insufficient verification of identity and beneficial ownership, failure to verify source of wealth/funds, and inadequate ongoing monitoring or reassessment of existing customers.
• Expected measures: Obtaining and verifying additional customer information, senior management approval/sign-off for higher-risk relationships, enhanced monitoring, documented source of wealth/funds verification, and prompt escalation to ECDD when risk profiles change.

The guidance also reiterates that licensees must file Suspicious Activity Reports with the FIA where suspicious activity is identified during CDD or ECDD, and that due diligence on introduced customers must still be conducted despite reliance on third-party introducers.

Key obligations

• Licensees must conduct enhanced customer due diligence (ECDD) whenever a customer, transaction, or relationship presents higher ML/TF/PF risk, including PEPs, complex or unusual transactions, high-risk country links, and non-face-to-face relationships.
• Licensees must maintain compliance procedures and manuals that clearly differentiate between simplified CDD, standard CDD, and ECDD requirements.
• Licensees must obtain and verify additional information on source of wealth and source of funds for higher-risk customers, including evidentiary documentation.
• Licensees must obtain senior management approval before commencing or continuing business relationships with higher-risk customers, and require senior management sign-off for related transactions.
• Licensees must conduct ongoing monitoring and periodically reassess customer risk profiles, applying ECDD immediately once a customer or beneficial owner is determined to be high risk.
• Licensees must verify the identity and beneficial ownership of customers, including guarding against nominee or straw-man arrangements.
• Licensees must conduct due diligence on customers introduced through third parties and apply ECDD where introduced relationships present elevated risk.
• Licensees must file a Suspicious Activity Report with the FIA where suspicious ML, TF, or PF activity is identified during CDD or ECDD.

Applies to

Financial Institutions (banking, insurance, Trust and Company Services Providers, investment business, financing business, Money Service Businesses, insolvency services, Virtual Asset Service Providers), Designated Non-Financial Businesses and Professions (legal practitioners, notaries public, accountants, real estate agents, dealers in precious metals and stones, high value goods dealers, vehicle dealers, boat dealers)