How The British Virgin Islands Stand Over Beneficial Ownership
We talk to the CEO of BVI Finance about the jurisdiction's approach to publicly accessible registers of beneficial ownership - a thorny issue as it can raise questions about the boundaries of legitimate financial privacy.
The government of the British Virgin Islands, an international financial centre that has come under pressure to roll back privacy in the name of beneficial ownership disclosure (BO), recently said that it supported access to such information, although with certain reservations. The BVI commented on a report issued by the UK-based Royal United Services Institute for Defence and Security Studies.
This is a major international issue – the US Senate last week voted to ban anonymous “shell companies”, for example, while some lawyers argue that without controls, public disclosure would threaten legitimate privacy.
This news service recently spoke to Elise Donovan, chief executive of BVI Finance, the organisation representing the BVI’s financial services sector. BVI Finance has been spreading the word about the jurisdiction’s advantages to regions such as Asia in recent months.
WealthBriefing: The BVI’s
Premier recently spoke about the BVI’s commitment to beneficial
ownership, but also mentioned his continued “reservations.” Can
you spell out what those reservations are?
Donovan: As you know, the discussion on publicly accessible registers of beneficial ownership has become an ever-evolving standard. The BVI Government committed to work towards a publicly accessible register of beneficial ownership in a format that must be in line with international standards and best practices as they develop globally and, at least, as implemented by European Union Member States by 2023, in furtherance of the EU Fifth Anti-Money Laundering Directive (AMLD5)
The Premier elaborated by saying that the BVI’s commitment is made with all due regard to the protection of, and proportionate safeguards for, all rights secured under our Territory’s Constitution, and without prejudice to any interpretation of our constitution expounded by a court of law, whether in the past, pending, or in the future.
The RUSI report talked about a number of steps that
should be taken by international financial centres, such as
harmonising standards between IFCs on beneficial ownership;
external validation of standards, and so on. What in your view is
the most important of RUSI’s recommendations, and
The RUSI report provides a range of important recommendations that Governments and policymakers can consider when looking to implement the most effective systems of beneficial ownership disclosure. Perhaps the most significant of these recommendations is the assertion that public accessibility of beneficial ownership information is rarely, if ever, held out as an end in itself.
The report is clear in stating that what does matter, however, is understanding what the users of such information require, securing its accuracy and ensuring it does not acquire a totemic status which obscures other meaningful efforts against financial crime.
I am particularly pleased to see that the domestic verification of data is one of the key principles advocated in the report. For beneficial ownership information to be credible and accurate, the report clearly states that one of the ways is through placing the burden of verification on the state, and centralised through a registrar or other state authority.
The BVI has been at the forefront of this field for close to three decades. Currently, all companies incorporated in the jurisdiction have to be verified by licensed and regulated corporate service providers. In practice, this means that the British Virgin Islands is better placed than most jurisdictions to provide accurate beneficial ownership information to competent authorities and global law enforcement agencies. The report is a step in the right direction.
In the BVI’s case, our Beneficial Ownership Secure Search system (BOSSs) represents a unique database without equal. BOSSs is a fully searchable platform that holds verified data on the beneficial owners of companies incorporated in the BVI and enables direct access by BVI competent authorities to beneficial ownership information on corporate entities incorporated in the BVI. This information is subject to meeting strict due diligence guidelines governed by the FATF, including know your customer (KYC) and anti-money laundering (AML) checks in line with global standards. Furthermore, the platform demonstrates the BVI’s ability to innovate and adapt to evolving standards without serious detriment to its clients.
What further steps at an international level do you think
need to be taken to provide an objective measure of whether BO
public registers are effective?
For public registers of beneficial ownership to be fully effective, they must be in line with international standards and best practices as they develop, and they must be adopted globally. The Premier has pointed out alternative models which allow access to the various levels of data (that would be contained in a register), but that contain built-in safeguards such as the use of court-approved warrants based on the demonstration of probable cause-to-grant access to sensitive personal information. These models pose significantly less risk to the financial services industry while satisfying the objectives of law enforcement to identify and prosecute terrorists, tax evaders and money launderers, while not disproportionately infringing the rights of the innocent and law-abiding. BVI’s BOSSs is an example that has been lauded by law enforcement authorities as being effective.