The Financing and Money Services Act, 2009

2014年 7月 29日

The Financing and Money Services Act, 2009

As part of its commitment to maintaining the British Virgin Islands (the “BVI”) as a leading offshore financial centre, while providing a modern and flexible legislative framework, the jurisdiction has introduced several new pieces of legislation over recent years.  One such example is the Financing and Money Services Act, 2009 (“FMSA”), which came into force on 21 March 2010, to provide a legislative framework for the licensing, registration and supervision of persons carrying on financing and money services business.

What types of business activity are regulated under FMSA?

1)  Financing Business

The definition of 'financing business' covers:

(a)   leasing property under a financing lease or providing credit under financing agreements to borrowers resident in the BVI; and

(b)   providing credit under a financing agreement, in an amount or to a value exceeding $50,000, to a borrower in the BVI in the course of any business conducted in the BVI.

2)  Money Services Business

The definition of 'money services business' includes the provision of any of the following services:

(a)      Money transmission services;

(b)      Cheque cashing services;

(c)      Currency exchange services;

(d)      The issuance, sale or redemption of money orders or traveller’s cheques;

(e)   Other services as may be specified in the regulations[1]; or

(f)   Operating as an agent or franchise holder of a person carrying on any business specified in (a) – (e).

To whom does it apply?

FMSA is applicable to:

(a)  a foreign company carrying on Financing Business or Money Services Business in the BVI;

(b)  a BVI Business Company carrying on Financing Business or Money Services Business in the BVI; or

(c)  a BVI Business Company carrying on Financing Business or Money Services Business outside of the BVI (as the legislation characterises any business being carried on by a BVI Business Company as being carried on within the BVI).

FMSA does not apply to licensees who already hold a licence under the Banks and Trust Companies Act, 1990.

Those providing finance but who are not carrying on business in the BVI should not be affected by FMSA.  However it should be noted that FMSA does not define the term “resident in the BVI”.  We are hopeful that the regulations, which have not yet been published, will clarify the meaning of the term.  It is possible that the regulations could extend the logic applied to how FMSA is applicable to a BVI Business Company carrying on Financing Business or Money Services Business outside of the BVI and consider a BVI Business Company to be resident in the BVI in the same way it is considered to be doing business in the BVI. 

What additional obligations will be imposed on a licensee?

Anyone requiring an FMSA license must apply to the BVI Financial Services Commission (the "FSC").  Following the granting of a license, an FMSA licensee will be subjected to a number of ongoing obligations and restrictions as a condition of their license.  These include, but are not limited to the following:

(a)  Significant interest holders, directors and senior managers must satisfy the FSC 'fit and proper' criteria;

(b)  Obtaining the prior approval of the FSC for the appointment of directors and senior managers;

(c)  Obtaining the prior approval of the FSC before a significant interest in an FMSA licensee can be disposed of or acquired;

(d)  Maintaining prescribed capital resources and maintaining its business in a financially sound condition (i.e. remain solvent);

(e)  Maintaining systems and controls that are appropriate to its business (including such controls as may be required under the BVI's Regulatory Code);

(f)  Preparing financial statements for each financial year that comply with the BVI's Regulatory Code and prescribed accounting standards;

(g)  Appointing an FSC approved auditor;

(h)  Submitting financial statements (signed by a director) and an auditor's report to the FSC within six months of the end of each financial year;

(i)  Maintaining professional indemnity and other insurance as may be prescribed by the FSC; and

(j)  Taking reasonable steps to protect customers and ensure that customers are treated fairly at all times, including complying with any market conduct rules as may be specified by the BVI's Regulatory Code.

Non-compliance by an FMSA licensee is an offence that renders the licensee liable to a fine and in certain circumstances imprisonment.

What are the fees?

The current government fees for obtaining a financing business licence are US$1,000; a money services licence is US$2,000 and a combined licence for the provision of both financing business and money services is US$3,000.

If you are considering providing Financing Business or Money Services Business in or to the BVI and would like further guidance on how FMSA will apply to you, more detailed information on the licensing requirements or assistance in obtaining an FMSA licence please contact your usual Maples and Calder contact. 

[1] FMSA provides that regulations may be produced by the Cabinet on the advice of the Commission however these have not yet been published.

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