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9 January 2014
Despite criticism of its regulatory regime, the British Virgin Islands is working hard to keep its house in order, says Terrence Williams
Robust regulation and effective enforcement are the cornerstones of maintaining investors’ confidence in our financial system. Despite criticism from some quarters, the British Virgin Islands (BVI), through words and deeds, is committed to taking appropriate legal action to maintain the integrity of our offshore operations.
In May, a UK House of Commons Public Accounts Committee report criticised the capacity of the UK Overseas Territories to deal with money-launderers. It said the absence of any money laundering convictions (the Cayman Islands excepted) showed an institutional inability to carry cases forward after an initial report.
It is ironic that as this report aired, a joint BVI-Bermuda investigation ended in convictions of BVI and Bermuda corporations with fines, costs and confiscation orders totalling well over $45m (£27.8m).
This investigation and the reent IPOC Fund case cost both territories over
$3m (£1.85m) and engaged lawyers, investigators and accountants for almost three years.
The convictions may not, however, satisfy the strict money laundering statistician as the counts were for fraud and perverting justice in an attempt to conceal the origin of funds paid into court, and not for money laundering offences.
A month earlier we had also successfully prosecuted our largest civil forfeiture case, worth just over $100,000 (£61,780), which, while small in comparison to IPOC, highlighted our continued efforts to foster intra-agency cooperation and thwart currency smuggling across our borders.
Are these cases aberrations or is the claim of incapacity justified? A common lawyer will recognise the features of our criminal justice system given its English origins.
The courts are composed of a Supreme Court and a Magistracy, the Supreme Court being part of the Eastern Caribbean Supreme Court, which has jurisdiction over the nine independent states and colonies of the Leeward and Windward Islands.
The Chief Justice of the Eastern Caribbean Supreme Court is appointed with the unanimous agreement of the Heads of Government and judges of the Court by an independent commission. The UK Judicial Committee of the Privy Council serves as our final appellate court.
The office of the Director of Public Prosecutions was granted constitutional powers by the 2007 Constitution, reposing in this officer all the prosecutorial function formerly held by the Attorney General.
The BVI has, therefore, adopted a model quite common to British Caribbean constitutions featuring an independent, non-political law officer deciding whether to charge or discontinue criminal proceedings.
In 2004 a Financial Investigation Agency (FIA) was launched to receive, investigate, analyse and disseminate information relating to financial offences or relating to requests from appropriate foreign authorities concerning offences committed in those foreign jurisdictions. A unit of the Royal Virgin Islands Police Force previously performed these duties but increased demands led to the creation of this purpose-built unit.
The Criminal Code includes the fraud offences similar to the UK Theft Act.
money laundering and terrorist financing are criminalised, the former by statutes similar to the UK’s Proceeds of Crime Act and the latter by imperial legislation. Suspicious financial transactions must be reported to the FIA.
Various statutes also permit us to provide assistance to overseas prosecutors, investigators and courts.
The relevant institutions are, therefore, vested with the requisite independence and a statutory regime that complies with the UK Financial Action Task Force’s recommendations. Millions of dollars have been spent to fund investigations, train officers and resource agencies.
Why no money laundering convictions?
So why has there been no money laundering convictions? First, as the IPOC case shows, it may be misleading to record only money laundering convictions and not consider convictions for other offences and civil forfeiture orders that deal with laundering operations.
Second, BVI business companies, while domiciled in the BVI, do not normally operate in or from the BVI and, as criminal jurisdiction is not generally based on the nationality of the suspect but on where the offence was committed, the BVI could not be expected to charge a corporation for ;offences committed abroad. Cayman, by contrast, operate a more banking focused operation, perhaps explaining their money laundering prosecutions.
The BVI processes and investigates an average of 30 money laundering cases a year for foreign prosecutions, executing hundreds of warrants, production orders and statutory requests for information. In the past four years the Courts have granted 11 restraint orders to preserve assets for overseas prosecutions, ensuring the victims of fraud may benefit from restitution. We aim to respond to a properly drafted letter of request within five days of receipt and to have the information leave our shores within 30 days, all things being equal.
Local investigations continue and we currently have two money laundering cases awaiting trial. Indeed, no local investigation has been discontinued because of inability or incapability of pursuing it. In one instance an ;investigation ;that ;started locally was terminated in favour of US proceedings as the predicate crime and its victims were in that jurisdiction.
We appreciate that the battle is a continuing one and also criticism, as it drives us to improve. But, without hubris, we remain proud of what we have achieved thus far.
Terrence Williams is director of public prosecutions for the British Virgin Islands (UK)