STATEMENT BY PREMIER AND MINISTER OF FINANCE DR. THE HONOURABLE D. ORLANDO SMITH, OBE DURING THE EIGHTH SITTING OF THE FIRST SESSION OF THE THIRD HOUSE OF ASSEMBLY OF THE VIRGIN ISLANDS
Monday, April 18, 2016
BVI Financial Services – BVI REMAINS WELL-REGULATED, INTERNATIONALLY COMPLIANT
Madam Speaker we are all aware that BVI is home to a Financial Services Industry that is of global pre-eminence. The core of this industry is our company incorporation business which is revered the world over as it is used to facilitate a myriad of international business transactions.
BVI’s corporate structures are used from Latin America to Asia, from North America to Europe and everywhere in between.
We have built, together with our industry partners both here and globally, a competence and credibility that is second to none in this business across the rest of the world.
Indeed we have built a solid industry which helps to facilitate global trade and international capital-flows the world over.
The importance of what we do as financial services jurisdiction cannot be under estimated.
Equally, the importance of the benefits that accrue to our country as a result of our financial services industry, cannot be underemphasised.
You see every man, woman and child in this country is touched in some way by the opportunities and value of the industry to our country. The Government's revenues largely depend on this industry which in turn is spent on our economic and social development.
And this is why, it behoves every man woman and child to be fully aware of and understand the threats to this industry and their implications.
One such threat Madame Speaker we have confronted head on over the last two (2) weeks.
This perhaps has been two of the most turbulent weeks in the history of the British Virgin Islands financial services industry.
This is because Madame Speaker, the recent so called Panama Papers data leak has cast International Financial Centres in a very negative light with very particular focus on BVI.
On Monday April 4, the International Consortium of Investigative Journalists (ICIJ) started to release a number of media stories resulting from a massive amount of data that was illegally obtained from Mossack Fonseca.
The media stories allege that offshore companies were used to facilitate criminal activity including corruption, money laundering, tax evasion and the like.
The stories have dominated the mainstream media - both print, electronic, television and virtually every major news service has carried some version of the stories daily.
While the stories initially focused on Panama and Mossack Fonseca, BVI has been directly implicated as a number of companies tied to the allegations were formed in the BVI by the Trust Company, Mossack Fonseca.
Madam Speaker, I am gravely concerned by the issues that the stories raise, particularly if the evidence establishes abuse or misuse of BVI structures.
The BVI has always maintained, and I stated as much in this very House on several occasions, that this jurisdiction is only interested in legitimate business. Indeed this is why we have over the past 30 years built a regulatory regime that is of world class standards.
It is, therefore, unfortunate and disheartening that much of the coverage has sought to discredit international financial centres such as the BVI and failed to acknowledge the high standards of regulation and transparency are in place – all of which are internationally compliant, and in many cases exceed those in 'onshore centres'.
But Madam Speaker, we also recognise that there are some specific cases alleging wrong doing that on the surface appear compelling.
To this end, I have previously announced and reiterate that the Government of the Virgin Islands will establish beyond doubt whether there has been any circumvention of our regulatory framework.
The Financial Services Commission, the regulators who are independent of the Government, have already indicated that as soon they became aware of the allegations, an investigation was initiated. The Commission has a fine reputation as a serious, strong and competent regulator and I am confident that they will take any appropriate action commensurately.
Equally, I should make clear that in addition to the fact that the BVI actively investigates issues of non-compliance, we work routinely and regularly with foreign competent authorities to detect, prevent and prosecute illegal activities. This circumstance is no different.
We strongly believe that if individuals are prepared to lie or cheat their way using a BVI company; then the BVI will do its utmost to detect and prevent this.
We will continue to ensure that our laws are enforced and action is taken transparently when we identify any wrongdoing.
Regrettably much of the coverage failed to acknowledge the fundamental and legitimate role that the BVI plays in facilitating the global flow of capital and investments.
I am nevertheless heartened that some of the coverage readily admits that conducting business using offshore companies is not in of itself wrong or illegal.
I wish to strongly endorse that notion, so let me be clear; it is neither wrong, immoral nor unethical to own, manage or control BVI registered companies.
Madam Speaker, this Honourable House and the people of the the British Virgin Islands should be confident and proud that that the BVI is a jurisdiction of the highest integrity. That is not just mere talk, but rather a well-known fact.
One of the important outcomes of the stories, is that they have sounded a clarion call for greater transparency in the offshore financial services industry.
I am proud to say that BVI far exceeds the pack, including many well developed nations as it relates to transparency.
It is a fact that is anchored in a longstanding reality that we are a highly regulated jurisdiction that has complied with every rule set by the international standard setters pertaining to transparency and exchange of information for these companies.
Our robust system of regulation promotes the highest standard of conduct among our licensees.
Our regulatory regime is rigorous and adheres to every initiative of the Organisation for Economic Co-operation and Development (OECD), the Financial Action Task Force (FATF) pertaining to transparency, information exchange and antimony laundering.
It also complies with the regulatory standards set by other international standard-setting organisations for banking, investment funds, insurance and other financial services products.
So Madam Speaker, it is important for this House and the people of the Virgin Islands to hear and bear these messages in defence of our industry.
We have ourselves been using those very messages to defend our good name.
I have established a crisis team comprising senior personnel in my Ministries and our financial services units, who have been working tirelessly with our public relations experts to tackle this head on. Madam Speaker I want to thank them for their commitment and dedication to managing this matter.
We have been monitoring, briefing, responding and in some cases proactively engaging with local and international media to influence the dialogue.
I want to also thank our several industry partners, both here and abroad who have been working in the trenches with us, defending BVI’s name and its proposition, as well as the role of 'offshore' generally.
It is undisputed that centres like BVI play a fundamental and important role in the global economy and I am pleased that in the wake of this leak, academia, politicians, businessmen and industry practitioners feel compelled to explain as much.
Madam Speaker, you know, we know, the people of the BVI know; that there is hardly a period of a sitting in this House for the past decade or so where some improvement to our Financial Services regime is not passed by this Honourable House.
BVI has worked for over 30 years to carefully and legitimately build an industry that is well regarded and trusted by our clients and international partners, and we will not tolerate any abuses of our structures that could undermine our reputation and trust.
I can assure this Honourable House and the people of this Territory that we will continue to develop our regulatory framework and strengthen our financial services regime to respond to any challenge that arises, and which seek to undermine our industry.
Madam Speaker, let me make this unequivocally clear, the BVI represents an essential and legitimate component of global trade and world finance.
I want to reassure our clients and stake-holders that BVI remains a safe, secure, stable, competent and flexible jurisdiction to service your needs.
Indeed, we have continually demonstrated that when issues have arisen, we have always resolved them with forthrightness, compromise and mutual understanding and we have found solutions that not only meet international standards and the requirement of our global clientele but which safeguards the Territory’s business and maintain our competitive edge.
Finally, Madame Speaker, the BVI will remain a jurisdiction of the highest integrity and we will continue to do so by ensuring that our financial services industry remains well-regulated, internationally compliant and serves an important and lawful purpose for global economic prosperity.