A recent report has found that the Virgin Islands has made “significant” headway in addressing the technical deficiencies that helped land the territory on the Financial Action Task Force’s so-called “grey list” in June.

But a leading financial expert cautioned that the VI still has much to do before it is restored to its previous status.

The Second Enhanced Follow-Up Report by the Caribbean Financial Action Task Force — which works with the Paris-based FATF to evaluate jurisdictions in this region — follows up on a sharply critical Mutual Evaluation Report the CFATF released in February 2024.

The 2024 report raised serious concerns about the VI’s ability to deal with money laundering and other financial crime, and it helped trigger the FATF’s June decision to add the territory to its “grey list” of jurisdictions that require enhanced monitoring.

The move put the VI in the same ranks as countries with battered reputations such as Haiti, Venezuela and Syria.

Reform plan

At the time, VI leaders blamed the deficiencies on the 2017 hurricanes and the Covid-19 pandemic, and they pledged to money laundering, counter-terrorist financing and counter-proliferation financing framework.

No ‘exit party’ yet

But Tom Keatinge, director of the Centre for Finance and Security at the Royal United Services Institute — one of Britain’s most respected think tanks — said the question is now how the VI behaves going forward.

“It’s a good effort, no doubt, but remember these are fixes to the technical standards,” Mr. Keatinge told the Beacon this month.

“The proof will be in the use of the standards — a.k.a., effectiveness.”

He suggested that the territory could still be a long way from leaving the list.

“The leading indicator of when a country will exit the grey list is when the assessors return for a so-called ‘on-site visit,’” he said. “This is the last box to tick. So … the question is ‘When do you expect an on-site visit?’ as that is the moment to prepare the exit party.”

He added that it is still hard to say how long the territory is likely to remain on the FATF list.

“Most countries are on the grey list for plus or minus two years,” Mr. Keatinge said. “Cayman, for example, went on in February 2021 and came off in October 2023 — two and a half years.”

The CFATF said the next follow-up report will be released in November 2026.

Financial Services and Economic Development Junior Minister Lorna Smith said the latest report is a sign the VI is moving forward on combating money crime.

“This achievement reflects the Virgin Islands’ unwavering commitment to maintaining a transparent and trusted financial services environment,” she said in a statement. “We are proud to have reached this level of compliance.”

Moving forward, she added, the government will continue working on such reforms.

“We are fully committed to working closely with the CFATF, FATF and all relevant stakeholders to ensure that the Virgin Islands’ anti-money laundering, counter-terrorist financing and counter-proliferation financing regime remains effective and responsive to a range of evolving global threats,” she said.

Attorney general

Attorney General Dawn Smith spoke similarly.

“Our focus now is on ensuring that we maintain the current pace of progress, implementing measures which will strengthen our financial system and allow us to more effectively tackle financial crime,” Ms. Smith said.