BVI pushes back on beneficial ownership registries

Thursday, 11 July 2013
Despite UK pressure, the British Virgin Islands (BVI) is insisting that it will only create a central registry of beneficial owners when international money-laundering standards require all countries to do the same.

Last month, the UK Prime Minister David Cameron summoned leaders of all British Overseas Territories and Crown Dependencies to a meeting in London. There he demanded they produce national action plans aimed at making beneficial ownership of companies more transparent. This included the setting-up of national registries of beneficial owners, whose contents would be open to law enforcement bodies and tax collectors, and perhaps even to the general public.

Most of the jurisdictions have duly published their action plans to comply with the UK demands. However, the BVI's plan appears to be the first from an Overseas Territory to explicitly reject the suggestion of a central registry, at least for the moment, following similar statements from Crown Dependencies Jersey and Guernsey.

Its plan draws attention to its impressive record in complying with international standards of company regulation, including money laundering. Companies and similar legal entities can only be formed through a licensed trust and company service provider who is in turn required to obtain and maintain the requisite beneficial ownership information, notes the BVI government paper. This information, it says, is made available to appropriate authorities when required.

However, the BVI authorities are clearly worried that the UK and its peers are trying to impose on them standards of corporate regulation that are not applied to other countries, thus handicapping the BVI's ability to attract business. In the published plan, it agrees only to adopt international standards on beneficial ownership information ‘that are of universal application, as opposed to selective application which may result in arbitrage and loss of business’.

While being prepared to amend its legislation to comply with the 40 FATF recommendations as amended last year ‒ in particular recommendations 24 and 25 on legal persons and legal arrangements ‒ it is refusing to go further unless the same rules are applied to everyone.

‘If at any time in the future this requirement [the keeping of beneficial ownership information] is elevated to a need to maintain such information in a central registry accessible to law enforcement and tax authorities and applied universally, the British Virgin Islands will review its regime accordingly,’ it says. The likelihood of this happening soon is small, given that at least one very important jurisdiction ‒ the USA ‒ has no such domestic legislation and is unable to force it through against opposition from its individual states.

In the meantime, the BVI undertook to ‘further strengthen the current supervisory and inspection regime to ensure that beneficial ownership information is being maintained and properly tested in a manner that assures timely availability to competent authorities ... on an ongoing basis.’

The jurisdiction also promised to continue discussions with the UK government regarding international cooperation, provided the BVI's interests of are protected in a ‘fair and consistent manner’.


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