The Virgin Islands is headed for increasingly intense international scrutiny despite a government drive to push through a raft of anti-financial-crime measures in the coming weeks, experts have warned.

Deputy Premier Lorna Smith has promised far-reaching reforms by the end of September, but observers said these measures could be too little, too late to avoid the territory being put on the so-called “grey list” of economies of concern by the global Financial Action Task Force watchdog.

Ms. Smith, who is also minister of financial services, labour and trade, has insisted that the VI is on course to comply with demands from the Caribbean wing of the Paris-based FATF by the end of next month.

“August doesn’t do it,” she told the House of Assembly at the end of July.

“We have to go right through to the end of September, because we have about 14 pieces of legislation that have to be passed by the end of September if we are to meet the requirements of the Financial Action Task Force. So we are going to be very busy for the next few months.”

‘Grey-listing’ threat

But even if the HOA meets those deadlines, the VI may not be headed for smooth sailing, according to Tom Keatinge, director of the Royal United Services Institute’s Centre for Financial Crime and Security Studies.

“Any positive legislative reform is of course welcome but is almost certainly too late to stave off grey-listing,” Mr. Keatinge said. “There is an almost certain inevitability to the grey-listing. The die was cast over the past two to three years. Of course, any reforms enacted in the coming months that contribute to remediation will be important steps on the financial integrity journey ahead for the BVI.”

If the VI is added to the grey list, he said, it will likely happen in the first half of next year.

“The FATF updates its grey list at the end of each year’s plenary — the FATF plenary happens in February, June and October each year,” Mr. Keatinge explained.

“If countries are added to the grey list, this normally happens one year after their report is published. BVI’s report was published in February 2024, so if they are added to the grey list, it would likely be announced after the February or June plenary in 2025.”

Such concerns were echoed by Dr. Peter Clegg, a professor at the University of the West of England who specialises in the overseas territories’ relationship with the United Kingdom.

“There is a significant level of scrutiny on the BVI’s financial services sector and a perception — rightly or wrongly — that regulation has fallen behind other similar jurisdictions,” he said. “The BVI has been dealing with a heavy legislative load, but it is important that the assembly acts quickly to head off any potential grey-listing.”

Dr. Clegg warned the VI would be joining a motley crew if it is grey listed.

“The BVI would not want to join the present list of grey-listed countries, which include Haiti, Syria and Venezuela,” he stated. “Of course, the issue of public registers of beneficial ownership remains a hot political topic, and grey-listing would not help the BVI’s efforts to resist the full application of public registers.”

A February report by the CFATF found the VI was lagging behind rival regional business hubs like the Cayman Islands and Bermuda and performing poorly in seven of 11 key indicators for fighting fiscal crime that the qatchdog investigated.

The CFATF, an organisation of 24 states and territories in region, evaluated the territory against anti-money laundering requirements and other standards set by the Paris-based FATF.
Mr. Keatinge has previously warned that grey-listing is a serious situation for an economy.

“International Monetary Fund data suggests that grey-listed country economies suffer,” he said.

The government also has an Aug. 31 deadline to comply with Commission of Inquiry reforms.