Smith: Money-crime report not ‘damning’

The Virgin Islands is not facing a crisis in combating financial crime despite a recent report by international watchdogs which some experts viewed as scathing, Deputy Premier Lorna Smith said April 4.

“I would not consider it to be damning,” Ms. Smith said of the Feb. 26 report by the Caribbean Financial Action Task Force, adding, “It looks at our level of compliance, and it looks at our effectiveness. In terms of our compliance, if you look at the technical side of it, we did well. In terms of the effectiveness, we did not do so well.”

Following a much-anticipated mutual evaluation into the VI’s handling of money laundering and terrorism financing, the CFATF report assessed the territory’s compliance with standards set by the Paris-based Financial Action Task Force.

The CFATF gave the territory the lowest score for “effectiveness” in seven of 11 areas of fighting money crime. This compared with five for the Cayman Islands and just one for Bermuda during their most recent reviews in 2019 and 2020, respectively.

Asked during a press conference last Thursday why the VI had ranked lower than competing financial services jurisdictions, Ms. Smith said, “As a policy, the BVI does not compare itself with other jurisdictions.”

Pressed on whether the CFATF findings suggest that the territory is in crisis, she responded: “Crisis? Absolutely not. The answer is no. We welcome the report and its recommendations, and we are committed to the implementation of the recommendations. So we are not in crisis.”

Gov’t actions

Ms. Smith also said the central government and other agencies are on top of the situation.

“A number of the departments — [Financial Investigation Agency], police and so on — have started to do whatever is required within the confines of the report,” she said. “We have started to move on our policy as it relates to the Financial Action Task Force anti-money laundering recommendations.”

Already, she said, the government has implemented major steps that will address concerns raised in the report.

“We have a Sanctions Unit established in the attorney general’s office,” she said. “We have already hired … one consultant to lead on making sure that the recommendations are implemented. And we will be hiring another very renowned firm to support us in the implementation.”

RUSI response

Ms. Smith also took issue with comments from a senior member of a London-based think tank, who said the study showed the VI still has “a mountain to climb” in combating financial wrongdoing.

Referring to the remarks by Tom Keatinge, director of the Royal United Services Institute’s Centre for Financial Crime and Security Studies, the deputy premier said, “He is somebody I respect, but he is entitled to his opinion.”

Adding that his comments were a “matter of opinion,” Ms. Smith claimed that “the facts don’t bear out what he says at all times.”

Mr. Keatinge has claimed that the “effectiveness” ratings are an important part of the CFATF report.

The CFATF uses four rankings to rate effectiveness in dealing with financial crime: high effectiveness, substantial effectiveness, moderate effectiveness, and low effectiveness.

The seven fields where the VI received a “low effectiveness” score were in supervision of financial arrangements; preventative measures; financial intelligence; money laundering investigation of prosecutions; confiscation from money laundering and terrorism financing activities, sanctions regarding terrorism financing; and proliferation financing sanctions.

The territory was viewed to have achieved “moderate effectiveness” in four areas; the identification and understanding of risks; international cooperation and operational structures; prosecutions of terrorism financing; and legal persons and arrangements.

The day the CFATF report was released, the VI government insisted it was ahead of the curve and announced an action plan to deal with the situations highlighted.

At the time, Premier Dr. Natalio “Sowande” Wheatley said he was committed to “rigorously” implementing the recommendations of the body, which is an organisation of 24 countries and territories in the region.