banking

Who is caught

The Banks and Trust Companies Act (BTCA), Revised Edition 2020, is the core statute for this topic and is administered by the BVI Financial Services Commission. It regulates banking business, trust business and related company management business carried on in or from the Virgin Islands, and a valid Commission licence is required before any such business is conducted.

• Banking business: No person may carry on banking business in or from the Virgin Islands without a valid licence issued by the Commission (BTCA section 3(1)).
• Trust business: No company may carry on trust business without a licence. The definition of trust business has been progressively expanded by the 2023 and 2024 amendment Acts, including to cover equivalent functions for other legal arrangements.
• Company management business: No company may carry on company management business without a licence under the BTCA or the Company Management Act. This covers company formation, registered agent and registered office services, and providing directors, officers or nominee shareholders for BVI or foreign companies for profit or reward.
• Bridge banks and systemically important banks: The 2022 amendment Act introduces a bridge bank licence category for temporarily taking over a failed bank, and allows the Commission to designate a licensee as a systemically important bank with additional prescribed requirements (status: commencement by Ministerial notice).
• Group entities: Under the Consolidated Supervision Policy, BVI banks and fiduciary providers that form part of a wider group may be supervised on a consolidated basis, whether the Commission acts as home or host supervisor.

The FSC's AML/CFT Guidelines for the Banking Sector apply specifically to banks licensed under the BTCA and supplement the underlying AML/CFT legislative framework. Separate licensing regimes for financing and money services businesses appear in the indexed documents but sit under the Financing and Money Services Act rather than the banking statute.

Sources: BVI FSC Consolidated Supervision Policy · Anti-Money Laundering & Combatting Terrorist Financing Guidelines for the Banking Sector · Banks and Trust Companies Act (Revised Edition 2020) · Banks and Trust Companies (Amendment) Act, 2022 · Banks and Trust Companies (Amendment) Act, 2023 · Banks and Trust Companies (Amendment) Act, 2024 · Company Management Act (Revised 2020)

Key duties

Licensees' obligations begin with holding the correct licence and extend to fixed governance, notification and reporting duties, several of which carry deadlines. Applications must be made in writing to the Commission on the approved forms, and a licence must be prominently displayed at the licensee's head office and every branch.

Notifications and approvals

• Change of particulars: A licensee must notify the Commission within fourteen days of any change to the particulars given in its licence application (BTCA section 8(1); Company Management Act equivalent).
• Principal office and agents: A licensee must maintain a designated principal office in the Virgin Islands and two Virgin Islands resident authorised agents, and obtain the Commission's prior written approval before changing either (BTCA section 9).
• Directors and senior officers: Appointment of a director or senior officer requires the Commission's prior written approval; the 2023 amendments to the BTCA and the Company Management Act restate this requirement.
• Ownership changes: Acquisition or disposal of a significant interest (and, following later amendments, a controlling interest) in a licensee is subject to Commission approval or control.
• Audit report concerns: Under the 2022 amendment Act, a licensee that receives a qualified audit report or one containing an auditor's emphasis of matter must forthwith notify the Commission.
• Financial distress: Under the Financial Services Commission (Amendment) Act, 2022, a licensee showing early indicators of financial distress must forthwith notify the Commission (and, for banks, VIDIC) and initiate recovery plans.

Financial reporting and returns

• Records and statements: Licensees must keep financial records, prepare and submit financial statements to the Commission (including quarterly statements for certain licensees), and appoint an approved auditor (BTCA sections 17 to 17K).
• Bank prudential returns: Banks must file the Prudential Return quarterly. The base Order requires filing by the last day of the month following the quarter; the 2021 amending Order restates the requirement as within 15 days after the end of each quarter.
• Fiduciary services returns: Trust licensees and company management licensees must file the Fiduciary Services Business Annual Return within one month after the end of each calendar year (2021 amending Order).
• Accuracy and correction: Returns must be accurate and complete; a filer that discovers an inaccuracy must notify the Commission and provide correct information within 5 days (7 days where the Commission identifies the error).

Fees, deposit insurance and other duties

• Annual fees: Fees under the BTCA and Company Management Act are due no later than 31 January each year, in the amounts set by the Financial Services (Fees) Regulations as amended.
• Deposit insurance undertaking: Under the 2022 and 2024 amendment Acts, an applicant for a banking licence must give a written undertaking to provide the Commission with a copy of its deposit insurance policy under the Virgin Islands Deposit Insurance Act within 6 months of the licence being issued.
• Complaints handling: Regulated persons must maintain a complaints register, aim to send a substantive response within four weeks, keep records for at least five years, and have senior management sign off on each complaint (Banks and Trust Companies Regulations).
• AML/CFT programme: Banks must operate a risk-based AML/CFT programme, appoint an MLRO, conduct customer due diligence and ongoing monitoring, report suspicious activity, keep prescribed records, and provide AML/CFT training at least annually.
• Group information: Regulated entities that are part of a group must submit and keep updated an organisational chart and provide group information on request under the Consolidated Supervision Policy.

Sources: BVI FSC Consolidated Supervision Policy · Anti-Money Laundering & Combatting Terrorist Financing Guidelines for the Banking Sector · Banks and Trust Companies Act (Revised Edition 2020) · Banks and Trust Companies (Amendment) Act, 2022 · Banks and Trust Companies (Amendment) Act, 2023 · Banks and Trust Companies (Amendment) Act, 2024 · Banks and Trust Companies Regulations (Revised 2020) · Company Management Act (Revised 2020) · Financial Services Commission (Amendment) Act, 2022 · Financial Services (Fees) (Amendment) Regulations, 2023 · Financial Services (Fees) Regulations (Revised 2020) · Financial Services (Prudential and Statistical Returns) (Amendment) Order, 2021 · Financial Services (Prudential and Statistical Returns) Order (Revised 2020)

Exemptions and carve-outs

Several instruments carve entities out of the BTCA and Company Management Act licensing or reporting requirements, generally subject to conditions or a written application to the Commission.

• Private trust companies: A private trust company is exempt from needing a trust licence if it carries on only unremunerated or related trust business, provided it has at all times a registered agent holding a Class I trust licence and does not solicit trust business from the public. Loss of qualification requires it to amend its memorandum forthwith.
• Bare trustees: A company acting solely as a bare trustee is not required to obtain a trust licence under the BTCA, subject to any Regulatory Code criteria for determining bare trustee status.
• Director/officer/nominee-only entities: A company or person providing only directors, officers and nominee shareholders is exempt from the relevant licensing requirement unless it is a subsidiary of a Class I, II or III trust licensee or of a company management company, and provided it undertakes no other company management business.
• Restricted Class II/III trust applicants: These applicants are exempt from providing certain particulars in their licence application and from the auditor appointment requirement under section 17G of the BTCA.
• BTCA-licensed company management: Entities already licensed as Class I, III or V under the BTCA fall outside the scope of the Company Management Act.
• Run-off and liquidation: Licensees in run-off, solvent liquidation or insolvent liquidation may apply for exemption from obligations such as maintaining an auditor, audited financial statements, a compliance officer and prudential returns, subject to conditions and ongoing annual declarations.
• Compliance officer and audit relief: The Miscellaneous Exemptions Regulations allow certain small trust and company management licensees to be exempt from appointing a compliance officer, and allow dormant or qualifying licensees to apply for exemption from audited financial statements; publicly traded licensees are exempt from share-transfer approval.

Sources: Exemption Guidelines for Licensees in Run-off, Solvent Liquidation or Insolvent Liquidation · Company Management Act (Revised 2020) · Financial Services (Exemptions) Regulations (Revised 2020) · Financial Services (Miscellaneous Exemptions) (No.2) Regulations (Revised 2020) · Financial Services (Miscellaneous Exemptions) Regulations (Revised 2020)

Enforcement and penalties

The primary statutes create criminal offences for unlicensed activity and breaches of licensing conditions, and the Commission also imposes administrative penalties for filing and approval failures.

• Unlicensed banking, trust or company business: Carrying on unlicensed banking, trust or company management business is a criminal offence; the BTCA carries fines up to $50,000, and the Company Management Act carries fines up to $50,000 and up to 2 years imprisonment.
• Other BTCA contraventions: Contravening notification and other requirements under the BTCA is an offence carrying fines and/or imprisonment, and specific breaches under the Company Management Act attract summary offences with fines and, in some cases, imprisonment.
• Prudential return penalties: The Prudential and Statistical Returns Order imposes administrative fines, including from $400 for failure to file (plus $100 per additional month), $600 for failure to file within an extension, $300 for failure to ensure accuracy, and $700 for failure to notify or correct inaccurate information.
• Recorded enforcement actions: Published notices record administrative penalties imposed on trust licensees, including $1,500 and $2,500 for late audited financial statements (section 17C(1)), $1,750 for incorporating a subsidiary without approval (section 18(1)), $2,000 for changing relevant trusts without approval (section 10(5)), and $2,500 for appointing an authorized agent without prior approval (section 9(3)(b)).
• Resolution powers: Under the 2022 amendment Act, the Commission may place a bank into resolution in the public interest and exercise resolution powers under the Financial Services Commission Act (commencement by Ministerial notice).

The FSC also issues public advisory warnings identifying named entities that are not licensed or registered to conduct banking business in or from the Virgin Islands, cautioning the public against dealing with them.

Sources: International Investment Monetary Fund (Amended and Re-issued) - Advisory Warning No. 16 of 2012 (2013-06-20) · VIP BANK, INC. - Advisory Warning No. 3 of 2010 (2010-07-26) · A.M.B. Ltd., A.M.B. Amerbank Limited, Amerbank Limited, Antilles Merchant Offshore Bank - Advisory Warning No. 4 of 2009 · Mainlandexpress Bank - Advisory Warning (2002-12-18) · AMB Amerbank - Advisory Warning · Administrative Penalty $1,500.00 - Abacus Trust & Management Services Limited (2014-07-10) · Administrative Penalty $2,500.00 - Bonhôte Trust Corporation Limited (2014-07-10) · Administrative Penalty $2,500.00 - Portcullis TrustNet (BVI) Limited (2013-10-14) · Administrative Penalty $2,000.00 - Inter-Continental Trust Limited (2012-12-20) · Administrative Penalty $1,750.00 - Overseas Management Company Trust (BVI) Ltd (2011-11-28) · Banks and Trust Companies Act (Revised Edition 2020) · Banks and Trust Companies (Amendment) Act, 2022 · Company Management Act (Revised 2020) · Financial Services (Prudential and Statistical Returns) Order (Revised 2020)