BVI Due Diligence Procedures, Know Your Client... and ours

December 2001

Know Your Client ("KYC") verification procedures are at the very heart of the due diligence obligations required under the British Virgin Islands (“BVI”) anti-money laundering statutes.

The Anti-Money Laundering Code of Practice 1999 and the Anti-Money Laundering Guidance Notes for the BVI Financial Services Sector set out, inter alia, the parameters by which KYC verification procedures are to be conducted.

Before verification procedures can commence, it is vital that the subject or the principal of the verification be identified and established. The term “principal” is taken in its widest context to include, for example; beneficial owner; settlor; controlling shareholder; director; major beneficiary, etc.

Once the principal has been identified, the verification process can continue. Where the principal is an individual (i.e. a person) end user client, the following information and documentation is required:-

• Full name;

• Date and place of birth;

• Nationality;

• Full physical and postal address, telephone and fax numbers and email address;

• Social security number (if appropriate);

• Copy of passport or national identity card duly certified by a banker, lawyer, other professional or an AMS staff member;

• One original reference letter from the individual's banker, lawyer or accountant confirming the existence of a satisfactory business relationship with the principal;

• Occupation;

• Name, address and telephone number of employer (if appropriate);

• Confirmation that the initial funding is from a legitimate source; and

• A signed statement affirming the nature of the business to be conducted along with an estimate of the annual value of proposed transactions.

Where the principal is not an individual person but a partnership or a company, then the verification procedure centers on confirming information on the partnership or company itself. Such information may include: copies of memorandum and articles of association; details on the shareholders, directors and partners; brochures; websites; and any published annual reports and accounts. The information and documentation garnered is retained within the AMS BVI Office.

In circumstances where AMS deals with a professional intermediary or introducer, the Guidance Notes permit verification information to be retained in the intermediary’s office providing certain conditions are met.

The BVI and AMS regard the existence of KYC procedures and anti-money laundering measures in a positive light. These measures are necessary if the jurisdiction and AMS intend to maintain their respective good reputations within the industry. Neither is the BVI unique in enforcing KYS procedures. All reputable offshore centres have similar legislation and requirements in place.

Whilst verification or KYC procedures are thorough, they are not draconian. There is nothing in the KYC process to cause any legitimate business person or organization any undue concern. With clients, professional advisers and AMS executives working together, KYC obligations, both yours and ours, may be fulfilled with the minimum of fuss. After all, the information being sought is no more than is asked for by your local banker when you open a humble checking account.

Please feel free to contact us for further information.