BVI Leader and Minister for Finance, Premier Dr. the Hon. D. Orlando Smith announced that the situation with the security breach at the banks are being remedied, and that Government is taking strides to insure bank deposits.
At a press briefing on 25 November, Premier Smith mentioned that within the past few days the VISA debit cards issued by a couple of banks operating in the British Virgin Islands have been compromised.
He told the media: “Our banking regulator the Financial Services Commission, has moved swiftly to address this problem, and as of this date we can confirm that appropriate action has been taken to ensure that the requisite steps to safeguard the accounts of the customers of these banks have been taken.”
The Minister for Finance stated that some customers within the British Virgin Islands have been affected, although the numbers are quite low. Nonetheless, the Premier said that he was assured that the banks will take the actions necessary to ensure that compromised accounts will be reinstated to their correct balances.
“the protection of the financial assets of the citizens of this society is of highest priority for this Government, and we believe that each and every person in this Territory who has accounts in the banks here, must be assured that their deposits are always secure,” Hon. Smith announced.
The Premier further noted that although the banks in the BVI are closely regulated, and although deposits in their main branches are insured by the likes of the Federal Deposit Insurance Corporation (FDIC). These deposits are not, and have never been insured in the BVI.
As such the BVI Leader noted that in the event of the very highly unlikely event of a failure of a bank in the Territory, the individual account holder is not protected. To address this matter, and also to implant the mechanisms that would prevent a bank failure, the Premier announced that he has been pursuing this matter for several years, and that Governments worldwide generally go a step further that mere regulation and implement deposit insurance programmes.
Hon. Smith stated that the Territory now have in draft, legislation to insure the deposits of account holders in the BVI for up to $100,000.00) per account. This, he said will happen through the establishment of the deposit insurance system, much like that of the FDIC and the CDIC and is scheduled to be brought into effect in 2015.
Hon. Smith also mentioned that late last week he held discussions with senior officials in the International Association of Deposit Insurers (IADI) and the CDIC with a view to having a Virgin Islands Deposit Insurance Corporation (VIDC) up and running. He further mentioned “we are already associate members of the IADI.”
Since the onset of the global financial crisis in 2007, the USA has seen the closing of some 400 retail and investment banks which resulted in the loss of trillions of dollars of privately-held wealth around the world. In fact, the world is still struggling to recover from the catastrophic financial debacle started under former president George W. Bush.