Statement
30 April 2018 - 5:08pm

STATEMENT BY PREMIER AND MINISTER OF FINANCE DR. THE HONOURABLE ORLANDO SMITH, OBE
ON MONDAY 30 APRIL, 2018
at 3:00 pm

United Kingdom Sanctions and Anti-Money Laundering Bill

Good Afternoon Ladies and Gentlemen:

On Thursday in the House of Assembly, I made a statement about the legislative progress of a United Kingdom Parliamentary Bill, the Sanctions and Anti-Money Laundering Bill and its impact on the BVI.  The Report Stage and final stages of this bill are scheduled to be debated in the House of Commons tomorrow, Tuesday.

This Bill is United Kingdom national legislation which seeks to provide for and regulate the imposition of sanctions generally by the United Kingdom Government. However, both in the House of Lords and now in the House of Commons, United Kingdom Parliamentarians have sought to include an amendment which would impose, through an Order in Council, public registers of beneficial ownership in the Overseas Territories.

On 17 January, a similar amendment was defeated in the House of Lords. And for that, we express our gratitude to our London team, the members of the House of Lords who spoke with conviction on our behalf, the Foreign and Commonwealth Office team passionately led by Lord Ahmad and to our team here in the BVI for all their hard work in achieving that outcome.

The Bill has now come to the House of Commons with an unexpected level of support from Conservatives.  As it reaches its final stages we once again face opposition from those who do not understand the nature of financial services business.  As a result, the amendment to impose public registers of beneficial ownership has been tabled again.  This time it has picked up support even from Members of Parliament who have traditionally staunchly supported the constitutional maturity of the Overseas Territories and encouraged our economic self-sufficiency.

As I said in my statement in the House of Assembly on Thursday, I reject the idea that our democratically elected Government should be superseded by the United Kingdom Parliament, especially in the area of financial services which has been formally entrusted to the BVI people. It is repugnant to the constitutional arrangements that United Kingdom made when our new Constitution was approved in 2007 and would certainly undermine the constitutional relationship and destroy any trust between the BVI and the United Kingdom.

Ladies and Gentlemen, the Capital Economics Report in June 2017 found that the BVI is a sound and reliable financial centre which has worked harder than many bigger countries to meet international standards, and that through its direct employment, trade and most importantly, facilitation of cross-border business, the BVI supports jobs, prosperity and government revenues worldwide. Locally, over two-thirds of all jobs in the local financial services industry are held by BVIslanders and it is no secret that in the aftermath of last years’ catastrophic natural disasters, we have become even more reliant on the financial services industry to provide financial support for the Territory’s obligations as the tourism industry and indeed the entire Territory struggles to regain its footing.

Ladies and Gentlemen, my Government has always said that should public registers become the global standard, then BVI will comply. In the absence of a global standard, such an imposition by the United Kingdom is not only unfair and discriminatory but we believe that it would result in a material loss of jobs, output and government revenue in the Territory and impede Government’s ability to viably support its residents.

The BVI has always striven to be at the forefront of international and standard setting in the areas of due diligence, anti-money laundering and financial crime and regulation. In fact, for over 20 years, it has been a standard requirement for BVI financial services businesses to verify the identity of their clients in accordance with BVI laws. In turn, BVI competent authorities can, by law, access this information in appropriate circumstances for mutual legal assistance, information exchange and other aspects of domestic and international cooperation.

We have also established specialist bodies such as the Financial Services Commission which deliver stringent oversight of the financial services industry through the regulation of corporate service providers, banks, insurance companies and the Financial Investigation Agency which is a member of the Egmont Group.  The latter is a group of international regulators who cooperate in the fight against money laundering and financing of terrorism.                 

We are also signatories to the major international treaties on tackling organised crime, illicit drugs, corruption and terrorism and actively participate in the main international standard setting bodies involved in the global financial services industry such as FATF, CFATF, IOSCO, the OECD and the OECD Global Forum.

Ladies and Gentlemen, the BVI has met 40 of the 49 FATF requirements for combating money laundering, terrorist financing and the financing of nuclear arms proliferation. In fact, the BVI is ahead of the United Kingdom, which has met 37 recommendations, and the United States- 39.

The BVI also works with tax authorities worldwide to help them crack down on tax offences. We were an early adopter of the Common Reporting Standard for the automatic exchange of tax information and we provide information under the United States Foreign Accounts Tax Compliance Act. We have adopted and implemented the European Union Directive on the Taxation of Savings Income and have signed 28 tax information exchange agreements. We are also part of the Multilateral Convention on Mutual Administrative Assistance in Tax Matters, which provides a platform for the exchange of information with over 90 countries worldwide.

Following an Exchange of Notes with the United Kingdom, the BVI developed the Beneficial Ownership Secure Search System (BOSSs) - the most advanced beneficial ownership register in the Overseas Territories and Crown Dependencies. BOSSs makes it possible for the beneficial ownership information of BVI companies to be immediately available to BVI authorities, and for onward transmission to United Kingdom law enforcement; if required, within one hour. This puts BVI at the cutting edge of facilitating effective law enforcement against those who might seek to use our companies for nefarious purposes.  Indeed, the United Kingdom itself, at this point, does not verify companies which join the United Kingdom register.

Ladies and Gentlemen, while we meet all global standards in the area of beneficial ownership, it would seem that a significant number of Parliamentarians are determined to support this amendment, despite the fact that this runs counter to the democratic principles which govern the relationship between the United Kingdom and the BVI.

As you would expect, since learning of the proposed amendment on Thursday, we have been making our case to the United Kingdom Government, members of the United Kingdom Parliament and the media. We are gratified by the support we have received from our friends across the Caribbean.  My fellow leaders recognise the fundamental damage this does to the constitutional relationship as well the adverse impact on the economic fabric of the Caribbean.  Caricom and the OECS have both issued statements in support of our position and we are also engaged with leaders of the other Overseas Territories and the Crown Dependencies.

Finally, Ladies and Gentlemen you will be asking what my Government will do if the amendment passes. The vote tomorrow does not determine the future of the BVI Financial Services Industry and I can assure you that our absolute focus will be on our right to self-determination and the protection of our economy.

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