Reporting Authority Appointed Under Money Laundering Legislation

The much awaited Reporting Authority has now been appointed pursuant to the Proceeds of Criminal Conduct Act, 1997 (the "Act") which BVI Newsletter first reported on in its September 1997 edition.

To fully appreciate the relevance of the Reporting Authority it is necessary to refer back to section 28 of the Act which provides in part that a person commits an offence under the Act if he enters into or is otherwise concerned in an arrangement whereby:

1. "the retention or control by or on behalf of another person of that other person's proceeds of criminal conduct is facilitated, whether by concealment, removal from the Territory, transfer to nominees or otherwise, or

2. the proceeds of criminal conduct of that other person mentioned in paragraph (a) are used
   1. to secure that funds are placed at that other person's disposal, or

   2. for that other person's benefit to acquire property by way of investment,

      knowing or suspecting that other person is a person who is or has been engaged in criminal conduct or has benefitted from criminal conduct."

However, where a person discloses to the Reporting Authority a suspicion or belief that any funds or investments are derived from or used in connection with criminal conduct or discloses to the Reporting Authority any matter on which such a suspicion or belief is based, then (section 28(3)):

1. "the disclosure shall not be treated as a breach of any restriction upon the disclosure of information imposed by statute or otherwise and shall not give rise to any civil liability; and

2. if he does any act in contravention of subsection (1) and the disclosure relates to the arrangement concerned, he does not commit an offence under this section if
   1. the disclosure is made before he does the act concerned; or

   2. the disclosure is made after he does the act, but is made on his initiative and as soon as it is reasonable for him to make it."

The Reporting Authority has been created by virtue of the Reporting Authority (Constitution and Procedure) Order 1998 (the "Order") which was made by the Governor on the 18th day of March, 1998 and Gazetted on the 9th of April, 1998. The Authority will comprise of:

1. The Director of Financial Services as Chairman;

2. A Senior Crown Counsel in the public service who is to be appointed under the hand and seal of the Governor; and

3. The head of the Financial Investigation Unit of the Royal Virgin Islands Police Force.

The Order goes on to provide that a quorum shall be constituted by the presence of the Chairman and any other member and that decisions shall be made by a majority vote of the members present at any given meetings. The Chairman shall have a casting vote in the case of deadlock. It is important to also note that the Act prohibits the Reporting Authority from disclosing any information to any institution or person outside of the territory unless it has the consent of the Attorney General, who, before giving such consent, must take into account the purpose for which the further disclosure is to be made and the interests of third parties including the person making the report and that person's client in relation to whom the report has been made.

It is also useful to note whenever considering the Act that in order for a person to be guilty of an offence under section 28 it must be established that the funds in question are the proceeds of criminal conduct and that the alleged offender knew or suspected that the "other person" was a person who was or had been engaged in criminal conduct or had benefitted from criminal conducts. Of great importance also to service providers and clients of the Virgin Islands is the fact that the definition of "criminal conduct" under the Act does not include tax or financial offences and therefore doubts about the intricate tax laws of other states ought not to cause concern.

Still to come is the Code of Practice foretold by section 27 of the Act.