Mr. Speaker, I wish to update this Honourable House on certain developments as regards to publicly accessible registers of beneficial ownership. In an update to the financial services industry in July, 2020, I mentioned that your Government had recently written to the Government of the United Kingdom to remind them of our continued commitment to the exchange of beneficial ownership information under the Exchange of Notes signed in 2016.
Noting that we were getting closer to significant milestones in the area of beneficial ownership, I advised the industry at that time that your Government was continuing to take note of developments in this sphere. As we have said before, we acknowledge and recognize that the continued success of our financial services industry requires that we continue to align ourselves with the appropriate standards as they emerge, taking the informed and nuanced decisions required as circumstances develop.
The British Virgin Islands (BVI) is honoured to be a premier international finance centre. We embrace the responsibility that comes with this reputation, which is to adhere to global standards in combatting money laundering and countering the financing of terrorism. The Government of the Virgin Islands has always acknowledged that it is duty-bound to be proactive and to act whenever it can to avoid the misuse of its companies, products and offerings for the furtherance of illicit or nefarious deeds.
From decades past, in order to achieve this mandate, the BVI has worked alongside various standard-setting bodies such as Organisation for Economic Co-operation and Development (OECD) and Financial Action Task Force (FATF) and other relevant bodies – not only on anti-money laundering and countering the financing of terrorism but also on related issues such as information exchange, beneficial ownership and economic substance.
The BVI’s commitment to international cooperation in the fight against financial crime was augmented with the introduction in 2017 of the best-in-class, renowned Beneficial Ownership Secure Search System®, BOSSs® – a searchable portal where the verified beneficial ownership information on BVI companies is held, accessed and, where appropriate, shared with competent authorities, including in the United Kingdom. Further evidence of BVI’s voice in the fight against financial and economic crime includes the following:
- BVI is a long-standing member of the Egmont Group of financial intelligence units;
- BVI is currently ranked as largely compliant with the Global Forum;
- BVI is an Early Adopter jurisdiction with the OECD;
- BVI is party to the Exchange of Notes on the exchange of beneficial ownership information;
- BVI is currently ranked as largely compliant with the FATF.
These examples of our achievements underlie the BVI’s mantra of the BVI doing what is best for the BVI on terms that are best for BVI as a responsible player in the global financial market. In continuation of that mantra, BVI acknowledges that publicly accessible registers of beneficial ownership is an evolving standard that it behooves us to work towards in an appropriate manner.
Therefore, Mr. Speaker, subject to our reservations below on the format that the publicly accessible registers of beneficial ownership is to take, your Government commits to work in collaboration with Her Majesty’s Government (HMG) towards a publicly accessible register of beneficial ownership for companies, in line with international standards and best practices as they develop globally and, at least, as implemented by EU Member States by 2023 in furtherance of the EU Fifth Anti-Money Laundering Directive (AMLD5).
I wish to emphasise as stated above, this undertaking is subject to our reservations which include that the format must be in line with international standards and best practices as they develop globally and, at least, as implemented by EU Member States. In advancing this commitment, we will be informed at all times by global best practice at the time within a timeframe that we consider deliverable.
It is of paramount importance that your Government emphasises that this commitment is made with all due regard to the protection of, and proportionate safeguards for, all rights secured under our Territory’s Constitution, and without prejudice to any interpretation of our Constitution expounded by a Court of law, whether in the past, pending, or in the future.
It is my strong view, Mr. Speaker, that these legal protections would include those provided under the principle of the Rule of Law as well as under the umbrella of Human Rights. One must not lose sight of the Rule of Law and legal protections afforded under Human Rights.
In communicating this to the Honourable Minister for Sustainable Development and the Overseas Territories, by letter dated 17 September, 2020, I have highlighted to the Honourable Minister that there needs to be prudence and balance in the systems. While it is a noble objective to seek the prosecution of terrorists, tax evaders and money launderers, the net that will be cast by the model of publicly accessible registers, as is being presently proposed, is disproportionate, since it can be used to breach the rights of the law-abiding and tax-paying individuals who are far greater in number than the targeted law-breakers.
The innocent could also be deprived of their safety and enjoyment of their legitimate property as they and their families could be exposed, through the publicly accessible registers, to their personal information being easily accessible by persons with ill intent such as kidnappers. The Government of the Virgin Islands is firmly of the view that it must also be kept in mind that some of these innocent potential victims are children who are beneficiaries of trusts. Extreme care must also be taken to ensure that minors and other vulnerable categories of persons are not exposed to danger.
There is need for concern that publicly accessible registers could be of more use to the prurient and ill-intentioned than those we seek to assist, and in the BVI we do not believe that outsourcing supervision of corporate ownership to the public is a sustainable or legitimate policy. It is important to note that issues like these are being deliberated in many places with the aim of establishing the most prudent balance between the various interests that must be sought and protected as the global industry searches for an appropriate solution to more efficiently and effectively support law enforcement.
The standards that the global industry eventually adopts will be informed by these factors. You would agree, Mr. Speaker, that in a highly competitive industry such as financial services where the stakes are high enough to make or break a national economy – such as that of the BVI, in an instant, it is prudent to be cautious not to prematurely adopt policies that would compromise the BVI’s competitive advantage and endanger the economy.
Further, there are available models that allow access to the various levels of data with built-in safeguards such as warrants approved by the court based on the demonstration of probable cause.
These pose significantly less risk to the financial services industry while satisfying the objectives of law enforcement to identify and prosecute terrorists, tax evaders and money launderers, while not disproportionately infringing on the rights of the innocent and law abiding. It is the BVI’s submission that such models are worth exploring in the meantime.
Mr. Speaker, your Government will continue to closely monitor the developments in the international financial services industry and ensure that we remain in compliance with all the relevant requirements as this is important to the Territory’s competitive position.
Within 12 months of the AMLD5 Implementation Review (presently slated for January 2022), the Minister of Finance will provide a statement to the House of Assembly on the state of play of publicly accessible registers of beneficial ownership at that time. In closing, I wish to reiterate that the Government of the Virgin Islands remains committed to collaborating with HMG towards a publicly accessible register of beneficial ownership for companies, in line with international standards and best practices as they develop globally and, at least, as implemented by EU Member States by 2023 in furtherance of the EU Fifth Anti-Money Laundering Directive.
I emphasize again, this undertaking is subject to our reservations which include that the format must be in line with international standards and best practices as they develop globally and, at least, as implemented by EU Member States. In advancing this commitment, we will be informed at all times by global best practice at the time within a timeframe that we consider deliverable. We believe that the Rule of Law and the legal protections afforded under Human Rights must be respected and upheld. The implemented system must be proportional and balanced, and must sufficiently protect the innocent from harm due to the potential abuse of publicly accessible registers.
