BVI FSC | Financial Regulator Of The British Virgin Islands

Description and functions of the BVI FSC

The British Virgin Islands Financial Services Commission was established in 2001. The regulator was initially created to counteract money laundering. Later, the BVI FSC assumed control of brokers, banks, and insurance and investment companies. The Commission is an independent organization and operates in the British legal framework, which is considered to be one of the strictest in the world. But at the same time, the BVI FSC has signs of an offshore regulator, e.g., superficial control of licensees and minimal requirements for information disclosure and registration.

Tasks and purposes of the BVI FSC in the Forex market

• Grant licenses and keep a record of companies registered in the Islands.

• Protect consumers’ rights.

• Monitor licensees’ operations and help investigate financial crimes.

• Take measures in relation to those who don’t fulfill requirements. The BVI FSC can issue warnings, impose fines, and initiate legal proceedings.

• Uphold domestic and international trust in the financial system of the British Virgin Islands.

• Participate in the consideration of draft bills that regulate the jurisdiction’s financial field and the interaction between all its participants.

• Ensure education of financial services specialists.

The BVI FSC is an offshore regulator that serves as a backup for the National Bank. The jurisdiction covers approximately 25-30 thousand people. But minimal tax rates attract numerous companies. As of January 1, 2021, there were over 600 thousand companies registered in the British Virgin Islands, while the Commission only has a few dozen full-time employees. The BVI FSC can only put a stop to obvious violations and does not continuously conduct in-depth monitoring of its licensees.

To obtain a BVI FSC license, a broker has to

• Confirm the availability of its registered capital. TU couldn’t find an exact minimum amount of registered capital on the regulator’s website or in open sources;

• Open an account at a reliable bank. However, it’s unclear which banks or jurisdictions it means and whether it’s possible to open an account at a British bank, in particular;

• Show transparency and confirm the efficiency of the risk management system. No details were readily available;

• Provide an auditor’s report and then pass audits every year. The Commission does not perform full audits, unlike the FCA (the Financial Conduct Authority, UK or CySEC (the Cyprus Securities and Exchange Commission).

• Provide a complete financial statement. After that, a broker only has to provide statements of its balance, income and expenses, and account activity if required.

Documents are reviewed in 20-30 days. A license issued by the BVI FSC is more like a formality. The Commission does not aim to strictly control every step of a broker. The fulfillment of basic requirements is sufficient. The rest of the information is considered to be a commercial secret and may not be shared with the regulator. The BVI FSC stops obvious violations of the law and performs superficial control.

Official website and available information

The Commission’s website has a simplified structure, but due to limited non-transparency, not all information is made publicly available. The website’s structure is as follows:

• The main menu is at the top;

• The central part has buttons for quick access to the most important information.

  

  BVI FSC website section — Current information

• The footer contains the regulator’s contacts and a map of the website.

  

  BVI FSC website sections — Footer

Main sections of the upper menu:

• About Us. This section describes the regulator’s divisions, mission, and functions, as well as offers useful links to the websites of other regulatory bodies;

• Regulated Entities. Here you can find information about legal entities registered by the Commission. Based on the type of their activity, the companies are divided into groups such as banks, insurance funds, etc. Brokers belong to investment companies;

• AML/CFT (Anti-Money Laundering / Countering the Financing of Terrorism laws) is a section with various documents, including those describing risk management;

• Sandbox contains regulatory documents on the interaction between “Sandbox” members who can test their financial products and services in this community;

• International Sanctions is a database of sanctions against legal entities and private individuals worldwide;

• Library. Theoretical discussions, publications, laws, etc;

• News. Current newsfeeds;

• Annual Returns. A guide for brokers on how to submit annual documents for review.

The main sections for traders are International Sanctions, Regulated Entities, and Certificate Verification.

In International Sanctions, you can find a list of sanctioned brokers.

BVI FSC website sections — Sanctioned brokers list

The Regulated Entities section features the regulator’s licensees.

BVI FSC website sections — Licensed brokers list

Certificate Verification is most likely for searching for valid licenses. But somehow, the Site Map doesn’t work. And to search for a license in the search box, you have to enter a certificate ID. But it’s unknown where to get a broker’s certificate ID if you only have a license number.

BVI FSC website sections — Searching for a brokerage license

How to confirm a broker’s license on the BVI FSC website

Searching for a license on the Commission’s website is complicated and inconvenient. Entering a license number in the search box on the homepage gives you nothing. You either get no information or links to publications from previous years where this license is mentioned.

BVI FSC Review — Brokerage license number

On their websites, some brokers create links to their licenses that take you to the “Regulated Entities/Investment Business” section of the Commission’s website. But license numbers are not there, either. An alternative option is to address the regulator directly.

How to confirm a broker’s license on the BVI FSC website:

• 1

  On the broker’s website, find its license number and legal name in the British Virgin Islands jurisdiction;

  

  BVI FSC Review — License details on a broker’s website

• 2

  On the BVI FSC website’s homepage, enter the broker’s full name in the search box;

  

  BVI FSC Review — Searching for a license

• 3

  Analyze the search results.

  

  BVI FSC Review — Scrutinize the search results

In this case, the regulator confirms that the broker is registered and holds a valid license, but the license number is not included. One way to finally make sure that the broker is indeed a licensee of the BVI FSC is to contact the regulator’s support service.

BVI FSC’s basic requirements for brokers

Basic requirements to obtain a license:

• Comply with the requirements. Having obtained a license, a broker must keep its registered capital at a set level and meet liquidity requirements and other criteria;

• Open an account at a reliable bank. The list of accredited banks is revised and may change;

• Pass an external audit every year. A broker submits an auditor’s report to the Commission, based on which the BVI FSC prepares recommendations;

• Disclose the risk management system;

• Disclose information about the management team;

• Get professional liability insurance.

All holders of BVI FSC licenses must meet the above requirements. A license guarantees that a broker has sufficient proprietary funds to provide brokerage services and fulfill clients’ financial demands.

BVI FSC’s jurisdiction

A license granted by the Commission only covers the British Virgin Islands. Although the Islands abide by British laws, brokers need an FCA license to operate in the UK. The BVI FSC does not require having an office in the jurisdiction; legal registration is sufficient. BVI FSC-licensed brokers provide the same services to both residents and non-residents on the condition that the law of a non-resident’s country is not violated. For example, BVI FSC-licensed brokers cannot operate in the USA and several Asian countries without licenses from local regulators.

Submission and consideration of complaints

Information on the BVI FSC website is mostly introductory. You can find theoretical and legal content that explains the interaction between participants in financial markets. However, there is no complaint submission form. Therefore, TU recommends writing complaints in a free form that includes the following information:

• 1

  In the subject:

  • The word “complaint” and the name of the broker.

• 2

  In the body:

  • Essence of the complaint with a date of every event and a reference to every clause of the agreement that was violated by the broker;

  • Screenshots proving that you deposited funds;

  • Screenshots confirming the violation;

  • Screenshots of your conversations with the broker;

  • Screenshots of the offer and client agreement.

Before you send the letter, enable read notification. Send a copy of the letter to the broker (sometimes this helps to settle the issue quicker).

BVI FSC-licensed brokers | How to check on a broker

To be able to operate in as many jurisdictions as possible and to attract as many clients as possible, brokers can acquire several licenses. It allows them to increase profits and confirms that they are reliable partners. Every month, TU’s analysts check if the licenses are still valid and monitor regulators’ websites for warnings or fines. All information is updated monthly in the brokers’ rating section.