How to Apply for a BVI VASP Licence

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Maggie Kwok, Aki Korsoni-Hussain and Mirza Manraj are counsel at Global Offshore Law Firm Harney’s and expert in digital asset regulation.
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British Virgin Islands (BVI) Virtual Asset Service Provider Act 2022 (VASPA) came into force on 1 February 2023. Any person who is carrying on Virtual Asset Service (VAS) business prior to the enactment of VASPA must be registered with it. BVI Financial Services Commission (BVI FSC) within a transitional window of 6 months expiring on 31 July 2023.

All applicants should make every effort to submit complete and complete VAS applications to the BVI FSC within the transitional deadline. Incomplete VAS applications risk not being processed by the BVI FSC.

it is important that regulator Advice should be sought by persons carrying on a VAS business to ensure that the VAS regime applies to them. Once it is determined that an individual is a Virtual Asset Service Provider (VASP), it is important to start working on a registration application to be filed with the BVI FSC.

Applicants for registration under the VAS regime need to consider the following:

(A) governance issues: Always having 2 individual directors, may require the appointment of a local resident director as well as a VASPA approved authorized representative based in the BVI who must also have sufficient knowledge of the applicant’s VAS related business. as an auditor;

(b) ownership structure: Full information on the ultimate beneficial ownership structure of the VASP will need to be disclosed, including all intermediary structures (if any) – complex structures may be delayed;

(C) business plans: Will be required to submit a detailed business plan taking into account matters relating to corporate governance, capital reserves, technical audit, liquidity, risk management strategies, consumer protection provisions, related parties and public disclosure, custody and security, escrow and lock up . provisioning, interoperability, business termination and succession planning, implementation of travel rules;

(D) policies and procedures: An applicant will need to have strong internal controls, including risk assessment framework, AML/CFT/CPF and sanctions compliance procedures, outsourcing agreements and policies, data protection and cyber security framework, details of technical infrastructure, business continuity plan, custody and safe are included. maintaining asset infrastructure, complaints handling procedures, technology audit framework and appropriate insurance requirements;

(I) AML/CFT/CPF Requirements: A VASPA would be considered a “Relevant Person” carrying on a “Relevant Business” under the AML/CFT/CPF Laws, thus, a VASPA would need to ensure that as a part of the AML/CFT/CPF governance procedures in relation to new and ongoing business relationships in which it is identifying, establishing and maintaining verification procedures, where there is a reliance on third parties to verify the identity of customers, as a means of maintaining records Appropriate channels are in place for obtaining identification documents and underlying documents, necessary compliances and appointment of Money Laundering Reporting Officers, conducting annual training, etc.

It is imperative that all VASPs, once registered under VASPA, ensure that they comply with all ongoing regulatory requirements applicable to VAS arrangements, for example:

(a) remainder fit and properThus, meeting the BVI FSC’s assessment that all VASPs are competent and that they conduct their business in line with the regulatory principles in the Regulatory Code 2009;

(b) Notification / Pre-Approval RequirementsFor example, change in information provided, change in name, maintaining a financially sound position, appointment of directors, appointment of authorized representative and auditor, submission of audited financial statements, maintenance of records, important in a VASP or disposal or acquisition of controlling interest, client assets, AML/CFT/CPF and sanctions compliance;

(d) maintain adequate human and technical resources and policies, procedures and mechanisms to ensure compliance; And

(e) to consider and optimize resources and processes for any change in business scope and legislative development.

Failure to comply with the requirements under VASPA or the AML/CFT/CPF regime can lead to various criminal offenses which include both monetary penalties and custodial sentences. The BVI FSC will also have an administrative penalty mechanism in place for any administrative violations by VASPs. These will be mechanisms that the BVI can use as part of any enforcement action taken by the FSC.

As with any new legislative regime, it is important that existing VASPs and potential VASPs work closely with their service providers to understand VASPA and its supporting legislation and guidance to ensure that VASPs comply with the VAS framework. Ensuring full regulatory compliance. ,