Financing and Money Services (Exemptions) Regulations (Revised 2020)

Summary

These Regulations set out a licensing exemption under the Financing and Money Services Act for foreign companies that carry on financing business (i.e. providing credit under financing agreements) without being licensed in the Virgin Islands. The exemption is conditional and capped, and it creates specific procedural steps for both the lending company and the borrower.

• Basic exemption: A company incorporated or registered outside the Virgin Islands is exempt from the section 7(1) licensing requirement for financing business if it is not prohibited under its home jurisdiction's laws from providing credit to borrowers resident outside that jurisdiction.
• Lending to VI residents: An exempted company may extend credit to a Virgin Islands resident borrower only if the borrower cannot obtain a loan from a bank licensed in the VI, the financing does not exceed $1,000,000, and the company is from a recognised jurisdiction (one listed in Schedule 2 of the AML/TF Code of Practice that regulates financing business).
• Borrower cap: An exempted company may not provide credit under financing agreements to more than 5 borrowers in the Virgin Islands in total.
• Affidavit requirement: To be treated as unable to secure a VI bank loan, a borrower must provide a notarized affidavit explaining the inability and lodge it with the Commission before entering into the financing agreement or receiving credit, whichever comes first.
• False affidavit offence: Providing an affidavit that is inaccurate or false in a material particular is an offence, punishable on conviction by a fine of up to $20,000 or imprisonment of up to 2 years.

Key obligations

• A company relying on the exemption must not be prohibited under its home jurisdiction's laws from providing credit to borrowers resident outside that jurisdiction.
• An exempted company must limit financing to VI resident borrowers to no more than $1,000,000 and must be from a recognised jurisdiction listed in Schedule 2 of the AML/TF Code of Practice.
• An exempted company must not provide credit under financing agreements to more than 5 borrowers in the Virgin Islands.
• A VI resident borrower seeking to rely on the inability-to-secure-a-loan basis must lodge a notarized affidavit with the Commission before entering into the financing agreement or receiving credit.
• A person who provides a false or materially inaccurate affidavit commits an offence liable to a fine of up to $20,000 or imprisonment of up to 2 years.

Applies to

companies carrying on financing business incorporated or registered outside the Virgin Islands, borrowers resident in the Virgin Islands, banks licensed to carry on business in the Virgin Islands

Deadlines

• prior to entering into any financing agreement or receiving credit pursuant to a financing agreement, whichever comes first: Borrower must lodge the notarized affidavit of inability to secure a bank loan facility with the Commission