BVI Promotes Higher Standards Among Licencees
A new penalty regime has been instituted at the British Virgin Islands Financial
Services Commission (FSC) in order to promote higher standards among licensees. The BVI FSC said that penalties are a modern feature of the FSC’s comprehensive
regulatory toolkit. They are intended to deter those who have breached regulatory
laws from committing further contraventions, and to demonstrate the overall benefits
of regulatory compliance. The Financial Services (Administrative Penalties) Regulations, approved by
Executive Council under the Financial Services Commission Act, 2001, came into
effect on 15 January, 2007. The penalties vary depending on the severity
of the contravention. Overall, the lowest penalty that may be imposed is $100,
and the highest is $20,000. In developing the administrative penalty framework, the Commission said that
it was guided by the overarching principles of simplicity, fairness and transparency.
Furthermore, the Commission sought to establish penalties that act as meaningful
deterrents but that also recognise the significant differences in the size and
resources of licensees. The following guidelines apply in determining the appropriate level of a penalty:
the nature and seriousness of the contravention; whether the licensee has previously
contravened the Act or any regulatory legislation; whether the contravention
was deliberate or reckless or caused by the negligence of the licensee; whether
any loss or damage has been sustained by third parties as a result of the contravention;
and the ability of the licensee to pay the penalty, including any gain resulting
to the licensee as a result of the contravention. The Commission must first give notice to a licensee of its intention to impose
a penalty. The proposed penalty notice must be in writing and must state the contravention
in respect of which the Commission proposes to impose the penalty, the amount
of the proposed penalty and the entitlement of the licensee to make representations
to the Commission. The licensee is given 21 days to make factual representations
to the Commission and those representations are taken into consideration before
a penalty is imposed. After a final decision to impose a penalty is made, a
penalty notice is then issued setting out the amount of the penalty. Penalties
may be appealed to the Financial Services Appeal Board. A comprehensive report in our Intelligence Report series looking at offshore and onshore corporate structures and their tax implications is available in the Lowtax Library at http://www.lowtaxlibrary.com/asp/subs_reports.asp and a description of the report can be seen at http://www.lowtaxlibrary.com/asp/description_report7.asp
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