British Virgin Islands

Saturday, Oct 24, 2020

BVI Supports Initiatives to Fight Financial Crime: Elise Donovan

BVI Supports Initiatives to Fight Financial Crime: Elise Donovan

Elise Donovan
The description of the BVI in Bloomberg Businessweek bears no resemblance to the innovative and forward thinking jurisdiction into which the BVI has developed over recent decades. We appreciate the corrections that have already been made. However, there are still a number of misleading statements and inaccuracies:

  • The concepts of public registers and transparency are conflated. One does not equate to the other, as recognized by law enforcement authorities. To clarify, the BVI is not against publicly accessible registers of beneficial ownership. Our position has always been that the BVI will adopt such an approach once it becomes the global standard. Currently it is not. Moreover, the BVI shares company beneficial ownership information with both its own and U.K. law enforcement authorities.

  • Throughout the article, it is suggested that the BVI is against transparency stating that the BVI is “one of the most vocal opponents of the worldwide transparency drive.” This is false. The BVI was an early adopter of the OECD’s Common Reporting Standard (CRS) for the automatic exchange of tax information; the BVI adopted and implemented the EU Directive on the Taxation of Savings Income and has signed 28 tax information exchange agreements; the BVI has signed a FACTA agreement with the U.S. and U.K.; the BVI is a member of the BEPS Inclusive Framework; the BVI is a respected and active participant in all relevant international bodies including the Financial Action Task Force and Financial Stability Board regional bodies, the global standard setter for the securities sector (IOSCO) and the Egmont Group, the global grouping of 158 Financial Intelligence Units which share expertise and intelligence to combat money laundering and terrorist financing. The jurisdiction was one of the first movers when it came to anti money laundering legislation which has, in turn, benefited other finance centers. The BVI is therefore clearly and demonstrably a supporter of initiatives to improve international co-operation in the fight against financial crime and the sharing of necessary information.

  • The article states the EU has threatened the BVI with ‘blacklisting’. In fact, the BVI was assessed by the EU alongside 91 other countries, including the U.S., for the purposes of creating a list of non-cooperative jurisdictions. Subsequently, the BVI committed to economic substance requirements and implemented the required legislation. The BVI has been deemed compliant and is not and was never on an EU ‘blacklist’.

  • The representation of the Beneficial Ownership Secure Search system (BOSSs) platform fails to take numerous key points into consideration. For instance, whilst BOSSs is accessible by only two people, this is done for security of the information and to close off access. Those who access it are responding to requests. BOSSs is an innovation that has been widely applauded and recognized by the U.K. Government as a world class example of its type.

  • The reference to loopholes “allowing, for instance, trusts and corporations listed on stock exchanges to escape scrutiny” is inaccurate. Having companies which are owned by listed companies is not a loophole to avoid disclosure of beneficial ownership information. Listed companies have many shareholders. Plus, share registers of listed companies are public documents and therefore easily accessible. The jurisdiction is proud that blue chip companies listed on the world’s major stock exchanges use BVI companies within their corporate structures. As far as Trusts are concerned, again there are no loopholes. If the trustee of a trust is a BVI company it must be licensed by the Financial Services Commission, the BVI’s financial services regulator.

  • The original article stated that the cost to incorporate a company with less than 50,000 shares is $450 with the cost to renew the same. This has now been corrected to state that this is only the Government fee. However, it must be noted that the government fee can never be the total cost of incorporation. A BVI business company can only be incorporated through a licensed corporate services provider which must, through its own due diligence procedures, identify and confirm the beneficial owner, unlike the UK for example where no such verification take place. If the provider fails in this duty it can be severely penalized, with the removal of its license as the ultimate sanction. This means that the actual cost of incorporation in the BVI is around $1500 with the cost of renewal around $700 – significantly more than in the U.K., for example. The article further states that the BVI hosts around a third of the world’s offshore companies. This ignores that as of 2017 many more companies were registered in London (3.9m); Hong Kong (1.34m) and Delaware (1.18m).

  • The mentions of different options for a public register in the BVI are hearsay. The BVI Government ultimately decides its position on public registers, no one else.

  • Instead of utilizing the content provided by those interviewed who are practicing in the BVI today, the reporter has instead disproportionately relied on tales from the 1970s when the global financial regulatory architecture was in its infancy and attitudes were very different. The information significantly skews the article presenting the BVI in a wholly negative light, taking no account of the contribution the BVI now makes to the global financial regulatory framework.

The BVI was leveled by two catastrophic category five hurricanes only 18 months ago. It should be commended for getting so quickly up on its feet, albeit with continuing infrastructure challenges which we of course recognize and will continue to remedy. We, in the BVI, always try to engage, to inform and educate, even with those who have a different point of view.

Elise Donovan
Chief Executive Officer, BVI Finance


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P. J. O'Rourke
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