BVI FSC – British Virgin Islands Financial Services Commission. The financial regulator created in 2001 year is still under the full control of the state. Any investment company, broker, go through mandatory registration in the Commission and obtain BVI FSC license. Its primary goal – the fight against money laundering. The powers of the regulator is very extensive – in the area of control there are investment and insurance companies, banks, financial advisors.
British virgin Islands is probably one of the most popular jurisdictions among the brokers. Simple registration conditions, moderate control from the regulator, the BVI FSC license have almost a third of Russian brokers and investment companies. Jurisdiction itself is a small country in the Caribbean Islands with a population of 25 thousand people and currency in the form of U.S. dollar.
At the head of the financial regulator is the Board of commissioners, headed by the Director and 4-6 of his deputies. The task of leadership – policy development Commission, monitoring of its implementation and the results.
The peculiarity of financial regulation is the fact that the BVI FSC is guided by UK legislation that promotes the fair and equitable control. If the financial disputes affect not only the company (subsidiary), incorporated in the British virgin Islands, but also its parent structure with a registration in another jurisdiction, the BVI FSC is turning for help to the FCA, that has more powers.
- Inspection, registration and licensing of financial companies;
- continuous full-scale check of activity of financial markets participants;
- protection of rights and interests of customers of financial companies;
- development of standards, rules and regulations to facilitate a more successful and efficient regulation of the financial sector;
- development, organization and participation in various events (conferences, round tables, seminars), dedicated to improving the financial literacy of the population;
- financial investigations, settlement of financial disputes, and their investigations.
One of the disadvantages of the regulator is a lack of compensation Fund in case of bankruptcy of a financial company. However, taking into account the sums of the refunds to customers given from other regulators, this is not the biggest obstacle. And here is another, more serious BVI FSC drawback – is a lack of function for providing the public with the information about the companies licensed (like, for example, NFA has). On the one hand, there is a confidentiality of data that is inherent in the offshore, on the other – to some extent, the opacity. However, information about fraudulent companies and the companies, the assets of which imposed by sanctions are with public access.
But the regulator is quite good at resolving financial conflicts. BVI FSC has a Department of 18 people, which reviews and investigates the complaints and claims of customers from the legislative point of view. Decisions taken by the BVI FSC, are mandatory, otherwise the company loses the license. If the dispute goes to the criminal phase the investigation materials are transferred to court.
One of the largest brokers of Russia having some relation to the consortium (FPG), until the fall of 2015, had BVI FSC license. However, as for such level the broker it was not quite reputable, and also other structures of FPG had other registration. So the broker moved to Cyprus (CySEC) – also offshore, but with the higher rating.
Obtaining BVI FSC license is rather simple:
- no need to open local office;
- there is a need to ensure the capital adequacy ratio (to ensure liquidity) and to insure the company’s activities;
- to open an account in a safe Bank (though the requirements of the Bank’s reliability are moderate. But the account opening is very fast, whereas in the UK or the US, this procedure is quite complex);
- provide financial statements and disclose the company’s structure and internal risk management system.
In future, the company will have to provide the independent audit report. However, such a system as unscheduled audit by the regulator or the monitoring of online transactions as it is in the UK or Australia, the BVI FSC does not provide.
The BVI FSC attracts by its simplicity and speed of registration of documents (application processing – 20 days, total – 3-4 months). Low tax rate – an additional advantage for brokers and investment companies, however, the level of risk insurance for clients of such companies is almost zero. Because the license of the regulator for Russian companies we will refer more to the symbolic: a theoretical FSC BVI license is present and that meets the minimum requirements of the legislation, but in fact it can be attributed to marketing move to attract customers – but it has no practical use for a customer in Russia. And it will not indicate a serious reliability of a broker.
Official BVIFSC website: http://www.bvifsc.vg