Provisional Guidance Notes on Compliance Regime

Summary

This is provisional guidance issued by the BVI Financial Services Commission setting out a framework for the appointment, status, duties and approval of Compliance Officers for regulated persons under the Financial Services Commission Act, 2001. It came into force on 8 April 2008 and is described as an interim measure pending its transformation into binding provisions under a future Regulatory Code. It applies to every regulated person (any entity authorised, licensed, registered or recognised, or required to be so, under BVI financial services legislation) unless exempted.

• Appointment: Every non exempt regulated person must appoint one of its senior officers as Compliance Officer, subject to the Commission's approval under section 34(3) of the FSC Act.
• Seniority and independence: The Compliance Officer must be sufficiently senior, qualified and independent, with unrestricted access to directors, senior management and auditors, and must not be subject to undue influence or restricted resources.
• Resources: The regulated person must provide the Compliance Officer with sufficient human and financial resources, including additional staff where the business is substantial.
• Temporary absence: Arrangements must be made for an approved person to cover the Compliance Officer during absences; absences beyond the defined temporary absence period require Commission approval for the interim appointee.
• Compliance manual: The Compliance Officer must establish, maintain and file with the Commission a manual of compliance procedures covering all legal and regulatory obligations, following the guidance in Appendix A.
• Duties: Duties include liaison with the Commission, developing a compliance culture, establishing staff training, handling required returns, conducting reviews and assessments, producing an annual compliance report, and establishing a complaints procedure.
• Dual role with AML Reporting Officer: A Compliance Officer may also act as Money Laundering Reporting Officer under the AML Regulations and Code, but only with separate specific Commission approval; this is not automatic.
• Application and fit and proper test: Regulated persons must submit a written application for approval of a Compliance Officer, and the proposed officer must meet the Commission's fit and proper test; approval is not conclusive of future approval.
• Exemptions: Certain regulated persons (e.g. Class I/II licensees without a BVI physical presence, or Class III trust licensees below a certain size) may apply for exemption from appointing a Compliance Officer using the declaration form in Appendix F.
• Complaints handling: Regulated persons must maintain a complaint register recording complainant details, dates, investigation and action taken, retain full records for at least five years, and have senior management review and sign off on each complaint.

The Guidance Notes also include detailed appendices covering the content of the compliance manual, the Compliance Officer application form, the fit and proper test, reporting requirements, complaint management guidance, and the exemption declaration form.

Key obligations

• A regulated person that is not exempt must appoint a senior officer as Compliance Officer, subject to Commission approval under section 34(3) of the FSC Act.
• The regulated person must ensure the Compliance Officer has independence, unrestricted access to directors, senior management and auditors, and sufficient human and financial resources.
• The regulated person must arrange for an approved person to cover the Compliance Officer during temporary absences, and must obtain Commission approval if the absence exceeds the specified temporary absence period (more than four consecutive weeks or twelve weeks in a twelve month period).
• The Compliance Officer must establish, maintain and file a manual of compliance procedures with the Commission, covering all legal and regulatory obligations.
• Non-compliance matters identified by the Compliance Officer must be recorded and reported to the Commission and made available for inspection.
• The Compliance Officer must produce an annual compliance report and establish a complaints procedure.
• A person wishing to serve as both Compliance Officer and AML Reporting Officer must submit a specific application for that dual capacity approval.
• Regulated persons must maintain a complaint register with specified details, retain full complaint records for at least five years, and have senior management review and sign off on each complaint.
• Regulated persons seeking exemption from appointing a Compliance Officer must submit a declaration form (Appendix F) demonstrating eligibility (e.g. licensee class, lack of BVI physical presence, or employee numbers).

Applies to

regulated persons, Compliance Officers, Money Laundering Reporting Officers, Class I licensees, Class II licensees, Restricted Class II licensees, Class III trust licensees, Restricted Class III trust licensees

Deadlines

• 8th April, 2008: Coming into force and publication date of the Guidance Notes.
• four (4) consecutive weeks or a total of twelve (12) weeks in a consecutive twelve (12) month period: Definition of temporary absence of a Compliance Officer; beyond this period, Commission approval is required for the person acting in the interim.
• at least five years after the date of the last response: Minimum retention period for full complaint records.