Statement By The Premier And Minister Of Finance Dr. The Honourable D. Orlando Smith, OBE During The Third Sitting Of The Fourth Session Of The Second House Of Assembly Of The Virgin Islands
On Thursday, February 12, 2015
Madame Speaker, with your kind permission, I would like to make the following Statement:
Madame Speaker, the BVI continues to be a well-known and recognised international finance centre. This status comes with certain obligations and responsibilities including, in particular, ensuring compliance with established international standards on regulation, law enforcement and cooperation.
It is therefore essential that the BVI continually monitors current and emerging standards to ensure that our legal, regulatory, law enforcement and tax regimes stand up to appropriate scrutiny. Coupled with this is the need to continually review the financial services sector of the BVI to ensure appropriate synergy with established international standards, while at the same time protecting and promoting that sector.
It is precisely for this reason, Madame Speaker, that when my Government took office in 2011 we organized in January 2012, a public – private sector consultation to bring together experts in the private and public sectors to discuss how the BVI needs to grow its financial services sector, especially amid continuing pressures from international organizations.
These efforts have led to many consultations with concrete proposals now being put to execution.
My Government will continue to champion the cause of the BVI as a reputable international finance centre. In doing so, we shall continue to engage our international and local partners in meaningful dialogue to efficiently and effectively preserve and protect the Territory’s interests.
Madame Speaker, while we continue in this endeavour, we recognise at the same time that we have to contend with the external pressures that are being brought to bear on the Territory, in particular the financial services sector.
But, we cannot relent; we must soldier on and persevere, for our people expect nothing less of us as their leaders.
We have always maintained that the BVI is a well-regulated jurisdiction. We must continue to demonstrate that through necessary reforms and effective implementation processes. We continue to welcome periodic reviews and assessments of the Territory, as these only help us to strengthen our existing regimes.
From these assessments, evaluations and reviews, the BVI’s regimes have received positive reports with regard to the Territory’s level of compliance with established international standards of regulation, law enforcement and cooperation.
Any recommendations that arose from the assessments, evaluations and reviews were considered and implemented, as appropriate.
My Government continues to make every effort to bring about an effective tax regime in relation to facilitating international cooperation in keeping with new standards.
For instance, the BVI had within the last 12 months signed agreements with the United States and the United Kingdom to exchange tax information on an automatic basis. This is in addition to the BVI becoming one of the signatories to the Multilateral Competent Authority Agreement comprising over 50 countries, and also one of the early adopters of the Common Reporting Standards pursuant to the multilateral Convention on Mutual Administrative Assistance in Tax Matters.
Madame Speaker, the BVI should be noted that as a Territory we have never been averse to any external assessment or review of our regimes to establish the Territory’s level of compliance with established international standards; we have always found this process helpful in carrying out necessary reforms to our regimes, as we believe that good compliance is good for business growth and development.
Each government in the BVI in the last several years has recognised the importance of financial services to the lives and livelihoods of our people and, consequently, the subject has always received unity across the political spectrum. By continuing that unity, we preserve the continued stability of the industry we have all joined hands in building over the many years.
Additionally, we recognise, Madame Speaker, we recognise that modern-day criminal activities take place across borders and, to successfully combat such activities and stem the tide of nefarious activities on our shores and beyond, we must cooperate with relevant authorities in other countries and territories through the process of investigation and exchange of information.
As a Territory, we remain committed in our resolve to be a leader and a meaningful partner in the global efforts in fostering cooperation through the exchange of information.
Madame Speaker, it would be recalled that, as part of its G8 Agenda before assuming Presidency of the G8 in 2013, the United Kingdom championed the cause of trade, tax and transparency and called on all the Crown Dependencies and Overseas Territories to establish central registers of beneficial ownership that were accessible to the public.
This was followed in June 2013 by a meeting between the UK Prime Minister, David Cameron, and leaders of the Crown Dependencies and Overseas Territories. The Overseas Territories spoke with one voice and agreed to support the UK’s G8 Agenda.
They further undertook to conduct public consultations to gauge public opinion in their respective Territories on the issue of establishing a central register of beneficial ownership which would guide them in making appropriate decisions on the way forward.
In furtherance of our continued commitment to UKs agenda on transparency, my Government issued a public consultation document in November 2013 essentially seeking public opinion on whether or not the BVI should adopt a central register of beneficial ownership and, if so, whether such a register should be made public.
The consultation process concluded in March 2014 and this was followed by a review and analysis of the submissions.
Madame Speaker, responses to the public consultation document came from registered agents, law firms, accountants, domestic and international NGOs, trust companies, insurance companies and other multiple service providers.
In effect, the responses were many and came from all the key stakeholders within the Territory’s financial and social services sectors and from external sources as well.
All the responses have been properly and comprehensively reviewed by my Government.
I therefore advise Honourable Members that of the total responses received, over eighty one (81) percent of the respondents did not support the BVI establishing a central register, preferring the current regime which has been shown to work. Seventy nine (79) percent of the respondents rejected the idea of allowing public access to a register of beneficial ownership.
Some of the key reasons cited against the establishment of a central register essentially relate to compliance costs that could actually damage the competitive position of the BVI vis-à-vis other international finance centres (the call for the establishment of a central register of beneficial ownership – and one that is accessible to the public – is not an imperative international standard); concerns about data security; the increased potential for fraud and the infringement of constitutional rights to privacy (in circumstances where a register of beneficial ownership is made public).
Madame Speaker, on the other hand, there was an overwhelming opinion (46 percent) that registers of directors should be filed with the Registry of Corporate Affairs; 24 percent agreed that any filing should be in accordance with the FATF Standards, which effectively translates to the same idea of having registers of directors filed with the Registry of Corporate Affairs (as that is the current FATF Standard).
Madame Speaker, I should reiterate the fact that the primary objective of the public consultation was to elicit views on this very important subject of beneficial ownership in order to enable the formulation of an appropriate policy on a way forward on the subject. With the statistics I have just outlined, it is clear where public opinion lies.
The results show that there is very strong confidence throughout the industry in our existing regime. It is the view of my Government at this stage that resources should be focused on implementing appropriate reforms to the existing regimes to buttress their effectiveness.
BVI has long been committed to meeting international standards on transparency. Together the systems we have in place to require the maintenance of beneficial ownership information, to regulate our company service providers, and to share information with global partners effectively achieves this.
However, we recognise that, we must continue along the path of carrying out necessary reforms in order to strengthen our systems. We believe that this is an appropriate way to properly and effectively balance obligations arising from established international standards, on the one hand, and the legitimate interests of the financial services industry and the Territory’s reputation, on the other hand.
In this context therefore, Madame Speaker, my Government considers the following as appropriate next steps to adopt in full consultation with our private sector stakeholders:
- Improve the transparency surrounding the control of BVI business companies, including a commitment to compliance with the revised international standards adopted by the FATF;
- Review and revise, as necessary, regulations surrounding ‘legal persons’, ‘legal arrangements’ and ‘third party introducers’, respectively;
- Implement new standards for reduced timeframes for efficient and effective sharing of beneficial ownership information in line with the emerging global standard;
- Improve regulatory oversight and monitoring of Registered Agents by the Financial Services Commission;
- Consult further on the details of the subject of filing of registers of directors in the Registry of Corporate Affairs as a way of supporting greater transparency; and
- Complete our National Risk Assessment to identify and implement measures to strengthen our anti-money laundering and counter terrorist financing regime and the system of beneficial ownership information.
Madame Speaker, my Government and indeed this Honourable House, recognises that international initiatives and standards will continue to evolve and, as they evolve, we must be ready and prepared to adapt and reform. It is not inconceivable that in the future standards on beneficial ownership will shift whereby centralized registries become the norm and equally applicable to all countries and territories globally.
Its important Madame Speaker, to reiterate that the BVI is not alone on this issue: each of the Caribbean Overseas Territories and Crown Dependencies have been urged by the UK to introduce Central registries of Beneficial Owners. Both the CD's and the COT's are currently reviewing their laws and seeking to strengthen them where necessary to ensure that they meet the international standard.
That notwithstanding, Madame Speaker, the BVI continues to value its relationship with Her Majesty’s Government in the United Kingdom and believes that a meaningful partnership for cooperation must continue to characterize that relationship. This is why I have worked tirelessly together with my fellow OT leaders to engage the UK on this issue.
As a Government, we will continue the dialogue on beneficial ownership and other related matters, while at the same time engaging the United Kingdom on the fundamental issues of the subject. I am confident that the cooperation that shapes the BVI’s relationship with the United Kingdom will continue to bear good fruits, both for the BVI and the United Kingdom.
I take this opportunity therefore, Madame Speaker, to express my Government’s satisfaction with the level of engagement between our officials and at the level of the leaders.
The United Kingdom Government has been extremely engaging and supportive of initiatives that would bring about greater transparency and has been exemplary in sharing information on the efforts being taken within the United Kingdom. This level of engagement, Madame Speaker, creates an appropriate learning platform for mutual understanding.
I should also like to thank all those who took the time to submit responses to the public consultation document on beneficial ownership. They have demonstrated genuine partnership with the Government and indeed with the BVI generally and their efforts are truly appreciated as we continue to grow and strengthen our financial sector together.
Madame Speaker, I am pleased to share with Honourable Colleagues in this House, copies of the Report on the results of the public consultation document.
As I do so, I call on all Members to stand together in unison and engage in meaningful dialogue to ensure that we continue to play an important role in combatting any illicit use of international business vehicles, but also that we preserve and protect the status of the BVI as a leading international finance centre which facilitates trade and investment in the global economy
I thank you Madame Speaker.