British Virgin Islands added to the FATF AML grey list

On 13 June 2025, the Financial Action Task Force (FATF) published its updated list of jurisdictions under increased anti-money laundering (AML) monitoring (the so called 'grey list') - this now includes the British Virgin Islands (BVI).

As the FATF statement notes, countries on the grey list are actively working with the FATF to address strategic deficiencies in their regimes in order to counter money laundering and terrorist financing.

Furthermore, "[w]hen the FATF places a jurisdiction under increased monitoring, it means the country has committed to resolve swiftly the identified strategic deficiencies within agreed timeframes and is subject to increased monitoring."

In a positive step, the FATF statement confirms that the BVI has made a high-level political commitment to work with FATF to strengthen the effectiveness of its AML regime.

What are the immediate implications of this?

Being on the FATF grey list in and of itself does not have many direct consequences, although client due diligence on BVI entities can be expected.

(a) The position for BVI AIFMs

We do not envisage that inclusion on the FATF grey list will change the position for BVI AIFMs marketing to EU investors using an NPPR under the existing Article 42 of AIFMD (but see the section on future implications, below).

As is the case for any non-EU AIFM, a BVI AIFM would currently be unable to market within the EU under a Member State's NPPR if either the AIFM's or the non-EU AIF's country is listed by FATF as a Non-Cooperative Country and Territory (NCCT).

However, the NCCT initiative is no longer in operation - FATF has not reviewed any new jurisdictions under it since 2001 and there have been no NCCTs in the context of this initiative since October 2006.

Our view remains that being on the FATF grey list does not equate to being on its NCCT list, so the restriction under the current Article 42 of AIFMD does not apply by virtue of a jurisdiction being on the grey list.

(b) The EU AML blacklist

However, it is possible – perhaps likely - that the BVI will also be added to the EU's list of countries deemed 'high risk' under the Anti Money Laundering (AML Directive (the EU AML blacklist) in due course.

The EU AML blacklist sets out those jurisdictions whose AML regimes have strategic deficiencies which pose a significant threat to the EU's financial system - it is highly aligned with, but not identical to, FATF's grey list and inclusion on the latter more often than not leads to inclusion on the former.

In the longer term, though, once the BVI has met FATF's concerns and is removed from its grey list, removal from the EU AML blacklist would follow relatively soon thereafter.

Note: the EU AML blacklist should not be confused with the EU's blacklist for non-cooperative tax jurisdictions. BVI was added to that blacklist in February 2023 - see our article here - but has now been moved to the list of jurisdictions that don't yet comply with all international tax standards but have committed to implementing reforms to address tax deficiencies identified by the EU.

What are the future implications?

Assuming the BVI is added to the EU AML blacklist, this may well have some consequences under AIFMD 2.0, depending on how long it remains on the list.

When the changes to AIFMD come into effect in April 2026, a non-EU AIFM will be able to market non-EU AIFs into the EU through a Member State's NPPR but only if (among other things) neither the jurisdiction of the AIFM nor that of the AIF is on the EU AML blacklist.

So, if the BVI is on the EU AML blacklist in April 2026, this would be likely to restrict the ability to market BVI AIFs into the EU under Member States' NPPRs.

On the other hand, there don't appear to be any immediate tax implications as a result of inclusion on the EU AML blacklist.

Why is the BVI on the grey list?

FATF notes that since November 2023, when it adopted a mutual evaluation report (MER) - an in-depth report which analyses the effectiveness of a country's AML measures - BVI has made "significant progress" on the actions which were recommended actions including increasing requests for international cooperation.

BVI is continuing to work with FATF to implement its FATF action plan by (among other things):

• ensuring that accurate and up-to-date beneficial ownership information is available to competent authorities and breaches to obligations are sanctioned

• improving the quality of SARs and ensuring that reporting is in line with risk

• systematically pursuing AML investigations and prosecutions in line with risk

• increasing the seizure and confiscation of criminal proceeds and

• operationalising the new BVI asset management framework.

BVI expects to meet targets to increase the effectiveness of its risk-based supervisory and reporting regime and to systematically pursue AML investigations and prosecutions within the next two years.