Leading the way

Sunday, 01 September 2013
Dr the Honourable D Orlando Smith OBE, the BVI’s Premier and Minister of Finance, speaks to Hannah Downie about the financial services industry and the BVI’s role in the global economy.

The UK and the G8 have been developing a far-reaching transparency agenda. How do you see this affecting international finance centres (IFCs) such as the BVI?

IFCs, and the BVI in particular, believe in transparency. We support the agenda of the G8; however, there must be a level playing field. The UK and G8 proposals should apply universally. What the governments of the G8 are asking of countries such as the BVI, they must commit to doing themselves. We also do not want their proposals to impact any IFC adversely.

The BVI plays a significant role in the global economy and we remain highly committed to the transparency and international cooperation agenda. We recognise that regulatory standards must be adhered to across the globe. It is in this spirit that we will continue to cooperate with our international partners to ensure that we maintain and enhance the quality of our regulatory regime.

BVI companies are used by parties and investors from all over the world, in a broad variety of industries

Do you think the financial services industry in the BVI is well prepared for the Foreign Account Tax Compliance Act?

The BVI is currently engaged in progressive discussions around FATCA. We have announced a commitment to conclude an intergovernmental agreement (IGA) with the US Treasury, and are entering into a similar agreement with the UK government.

We have been conducting an assessment of what FATCA means, its effect, and how we could deal with these effects. We have already agreed with our financial services industry as to how we are going to move forward with the IGA, and are in discussion with the industry to ensure they are aware of all implications.

Having a viable, sustainable and above all compliant financial services industry is important to the long-term development of the BVI. As such, we have clear obligations to both the global regulatory system and the legitimate private sector that operates within the BVI.

The Financial Action Task Force (FATF) is launching a new mutual evaluation process to judge national anti-money laundering processes. Is the BVI well placed to meet the new standards?

The BVI was one of the first jurisdictions to introduce anti-money laundering (AML) legislation, back in 1999. We have implemented comprehensive AML laws and adopted stringent rules on know-your-customer due diligence, consistent with FATF’s 40 + 9 Recommendations. We are having ongoing discussions with FATF with regard to their new mutual evaluation process.

We recently saw a leak of client data covering, among others, some clients of BVI-based companies. What lessons do you take from that leak?

The BVI recognises and subscribes to the common-law principle of confidentiality and the individual’s right to privacy, especially in relation to personal and business transactions. This is particularly important in today’s transnational business environment.

The leak has demonstrated that the BVI also respects the argument for transparency, as is apparent from the information exchange treaties that we have signed. For companies, it has highlighted that protection of client records is of the utmost importance, and for us, it has underscored that we need to put measures in place to ensure data protection. For example, ownership information should not be kept in one location, but should be segmented so there is less risk that all information can be accessed at the same time.

What are the new markets that hold most promise for the financial services industry in the BVI?

The traditional markets of Asia, but we are also now looking at South America. We strive to be the preferred market for Asia, and have quite an established relationship there already, but we are looking to reinforce our presence there and plan to open an office in Hong Kong. We are also looking into South Africa as the gateway to Africa. We will be exploring all opportunities in terms of the market.

In a highly competitive environment internationally in financial services, what do you believe are the BVI’s most attractive selling points to clients?

We operate in a politically stable country under English common law, and offer tax neutrality backed by an efficient and respected court structure. We have a neutral, low-risk legal environment designed to meet the needs of cross-border investment and capital raising. As a result, BVI companies are used by parties and investors from all over the world, and in a broad variety of industries and structures. Beyond the industrial and commercial sphere, BVI companies are also used extensively as family and personal wealth management tools. While the tax advantages of BVI companies are important, the efficiency and flexibilities of BVI company and trust laws, including unique innovations such as the Virgin Islands Special Trust Act, and the clear legal framework and enforcement process offered by the BVI, are often afforded the same weight in wealth planning decisions.

People who have strong business acumen, for example the Asian business market, prefer to do business in the BVI. This is because we operate a business-friendly environment. There is a symbiotic relationship between the Asian business market and the BVI; Asia has the fastest-growing economy in the world, which is closely tied to their use of BVI structures.

The BVI’s public and private sector have a very strong partnership. The private sector monitors the business environment and feeds back information to the regulator and government. The government then responds swiftly and decisively to this information.

We have always been, and remain, in constant dialogue with international regulators and organisations to ensure that our standards consistently meet the highest possible benchmarks. The BVI strives to adhere and adapt to best-practice standards at all times. This proactive mindset has ensured that the BVI is recognised as a whitelisted jurisdiction by the OECD. On top of this, our compliance to international standards has been recognised by the governments of several G8 and G20 countries, and by international organisations such as the International Monetary Fund, FATF and the Caribbean FATF.

In ten years’ time, what do you think the financial services industry in the BVI will look like?

Over three decades, the BVI has become a progressive, professional financial centre offering a broad range of services and products underpinned by some of the toughest regulation in the world. In ten years’ time we will still be a jurisdiction of choice for professionals because we will do what is necessary to facilitate business. We will seek to diversify our product, add more value and increase our presence in overseas territories. We are going to go from strength to strength, and we expect to see progress, prosperity and growth in the next ten years. We have confidence in this projection.

Is there a lot of scope for cooperation and cost sharing between Caribbean jurisdictions on issues like regulation and standards?

Yes; the BVI’s modus operandi is to be open, and to share our expertise with other jurisdictions. The BVI is at the fore in terms of regulatory and compliance standards. We are a member of the Caribbean FATF, and Cherno Jallow, who is Director of Policy, Research and Statistics at the BVI Financial Services Commission, is the incumbent chair of the Caribbean FATF. Cherno has been highly commended for the job he has been doing by FATF’s worldwide leadership.

We have provided expertise, in terms of getting ready for FATF evaluations, to a number of countries. In addition, the BVI’s Financial Investigations Agency provides assistance, through the Egmont Group, to various countries to help them get their Financial Investigations Agencies or Financial Intelligence Units up to speed. We are very much cooperating on the compliance and regulatory front. Robert Mathavious is the Managing Director of the BVI’s Financial Services Commission, and is regarded as a tremendous leader in the region. Many people see the BVI Financial Services Commission as a model regulatory agency. 

STEP in the BVI

We are extremely proud that Hélène Anne Lewis TEP is the Chair of STEP. Hélène is the first Chair from the Caribbean region. She gained her experience in the BVI’s financial services industry, as did Vanessa King TEP, who is Chair of STEP BVI, and Christopher McKenzie TEP, who is Chair of the Caribbean and Latin America Regional Committee. They are all strong advocates of STEP, as are many other BVI practitioners.

STEP has helped develop the skills and knowledge base of the professionals who operate in the BVI’s financial services industry through its specialist training programmes. A number of BVI practitioners are currently studying for their STEP qualifications, and enrolment of BVI practitioners in STEP’s courses will continue. We have a strong relationship, and great appreciation of STEP in the BVI.

Author block
Right
Dr the Honourable D Orlando Smith OBE, Hannah Downie

Dr the Honourable D Orlando Smith OBE, the British Virgin Island's Premier and Minister of Finance.
Hannah Downie is Managing Editor of STEP Journal and its supplements.

The content displayed here is subject to our disclaimer. Read more