WILL THE FACT THAT HAMAS AND HEZBOLLAH FAVORED TRON, A CRYPTOCURRENCY NETWORK (AND A BVI COMPANY), FOCUS FURTHER ATTENTION ON THE BRITISH VIRGIN ISLANDS?

 

The focus of terrorist financing attention upon TRON, a platform for crypto transfers associated with  HAMAS and HEZBOLLAH, may again focus regulatory attention upon the British Virgin Islands (BVI) as  a completely opaque jurisdiction where the identity of Beneficial Ownership continues to be hidden from compliance officer access.Reports that Israeli law enforcement has concluded that Hamas has favored Tron over the use of BITCOIN, confirmed through an increase in wallet seizures, appear to have dominated financial crime news today, appearing in a number of reports. Crypto transfers to Hamas from Malta have been the subject of several of our previous articles on terrorist financing.

Whether this linking of the routine abuse of BVI  entities to financial crime, by terrorist financiers, results in designation of British Virgin Islands corporations as high-risk vehicles that require enhanced due diligence ab initio of all related aspects of a transaction we cannot say, but BVI companies have been the subject of much compliance negative attention of late. Given the fact that one simply cannot verify anything that smacks of authoritative beneficial ownership data, compliance officers operating a risk-based compliance program are justified in being concerned.

 I consider the fact that a bank client, or even a counterparty, is employing a BVI company for any purpose a Red Flag that requires further inquiry, which generally means enhanced due diligence, which of course means additional delays for necessary relevant investigation in depth. This is usually not regarded as good news by frontline bank staff engaged in operations, and they often seek to apply pressure on compliance departments to quickly complete their EDD tasks, which usually require responses  from third parties. If there was official data on BVI company beneficial ownership, it would greatly facilitate due diligence, but then dodgy clients,  tax evaders, terrorist financiers, international sanctions evaders, corrupt PEPs, and financial criminals we lump together under the  label of The usual Suspects, would not be spending their money on BVI corporations.

IMHO as a compliance officer, there's usually a hidden reason someone wants to purchase a BVI company, and it's often not a legitimate business one.