A government official with the British Virgin Islands concedes it could take two years to escape the anti-money laundering grey list of jurisdictions “under increased monitoring”, after being placed there by the Financial Action Task Force this month.

Lorna Smith, Junior Minister for Financial Services has also publicly stated that the BVI relegation did not come as a surprise, it has been reported by bvinews.com.

A revised national action plan, due next month, will set out BVI’s strategy for exiting the list and Ms Smith last week broke with other legislators, strongly rejecting claims that the territory would suffer economic fallout due to its grey list status.

“I do not expect that we will lose any business,” she was quoted by bvinews.com. “When we consider other jurisdictions throughout the Caribbean which have been grey listed, none of them lost any business.”

She pointed to the Cayman Islands, which was on the grey list until 2023, noting “their business increased.”

While the FATF acknowledged the Caribbean island has made significant progress in strengthening its AML, counter-terrorism financing, and proliferation financing regimes, their action was taken, they said, pending the completion of a few remaining recommended actions.

Ms Smith described the development as expected following months of close collaboration with the international watchdog, stating: “We only became aware that the BVI would be on the grey list shortly before it was confirmed on [June 13].

“However, I should say that, given our close collaboration with the FATF over the last year, it was no surprise.”

Meanwhile, an Appleby statement said that: “The inclusion on this list should have no direct consequences for investors or clients using BVI structures.”

That statement is in alignment with several other international law firms.

Walkers quoted BVI and FATF statements that the task force and the jurisdiction were working together to implement an action plan enhancing risk-based supervision of trust and company service providers, investment businesses and virtual asset service providers.

The plan includes ensuring that accurate and up-to-date beneficial ownership information is available to competent authorities, and breaches to obligations are sanctioned.

It also includes improving the quality of suspicious activity reports and ensuring that reporting is in line with risk. It means systematically pursuing money laundering investigations and prosecutions in line with risk.

Improving jurisdictions are also expected to increase the seizure and confiscation of criminal proceeds as well as operationalise the new asset management framework.

Taking a harsher view is the advocacy group Transparency International UK, whose principals welcomed the FATF action.

The anti-corruption group released a statement: “Under the UK’s money laundering regulations, this means British banks, lawyers and other regulated businesses have to undertake additional checks on transactions involving companies from the BVI.

“Corporate secrecy provided by the BVI’s financial services sectors has long provided cover for high-level corruption, money laundering and sanctions evasion.

“Previous Transparency International UK research found that more than 1,100 companies from the BVI had been used in 213 corruption and money laundering cases globally, amounting to billions of pounds worth of economic damage.

“Over 90 per cent of suspect funds invested into the UK via an Overseas Territory went through the British Virgin Islands, equivalent to £5.5 billion ($7.55 billion) in value.

“This figure is likely the tip of the iceberg, with BVI companies featuring regularly in economic crime investigations by law enforcement agencies and journalists.

“FATF’s greylisting of the BVI follows the territory recently missing its legislative deadline for providing greater access to company beneficial ownership information.”

Duncan Hames, director of policy, for the organisation said: “The Government of the British Virgin Islands is yet to address the enabling of corruption, money laundering and sanctions evasion globally, by its corporate secrecy providers.

“During the Islands’ previous review, inspectors found a financial services sector that did not recognise its role in economic crime and faced next to no challenge from regulators.

“FATF’s greylisting of the BVI is a significant step which should have wide-ranging consequences; the only surprise is that it did not happen sooner.”

Margot Mollat, senior policy and research manager for the group, added: “It is hard to keep track of how many companies incorporated in the BVI end up being used to steal vast amounts of wealth from some of the world’s poorest people.

“Despite promising to open its corporate registers to greater scrutiny, the BVI has shown little ambition and missed deadline after deadline for delivery.

“Hopefully, this announcement will encourage the Virgin Islands Government to take its commitments more seriously, and make amends for breaking past pledges on company transparency.”

BVI officials insist that their financial services industry is among the world’s best and continues to work towards establishing the highest global standards.