July 5, 2020

Through The Eye of the Storm – BVI Exec Director speaks out following data leak


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027 - PHOTO - IFC HEAD REAFFIRMS ROLE TO ENHANCE AND PROMOTE BVI'S REPUTATIONElise Donovan, Executive Director – BVI International Financial Centre

From WealthBriefing

A recent data leak has thrust the British Virgin Islands under the scrutiny of those out to harm so-called tax havens. Here, Elise Donovan, the executive director of the BVI International Financial Centre, discusses the jurisdiction’s efforts to protect client confidentiality while upholding international law.

The leaking of confidential information from two trust companies connected to the British Virgin Islands to the media has put the jurisdiction at the centre of a wider discussion about global taxation and cross-border finance. The spotlight has fallen on financial centres across the world, from those deemed “onshore” to others commonly referred as “offshore”.

The BVI welcomes the high-level discussion; we see it as an opportunity to put the record straight on a number of key issues and to show the world that the BVI is a progressive, professional financial centre offering a broad range of services and products underpinned by some of the toughest regulation in the world.

For instance, much of the media attention has been focused on the issue of “secrecy”; the BVI is not a secrecy jurisdiction. In 2002, the BVI signed on to the Organisation for Economic Co-operation and Development’s principles of transparency, accountability and information exchange as they relate to tax matters.

As a member of the OECD Global Forum, the jurisdiction has signed 22 tax information exchange agreements and continues to negotiate with more than 10 other countries. The first TIEA the BVI signed was in 2002 with the US. In addition, the BVI shares information when legitimate requests are made by the relevant treaty partners.

Perhaps most significantly, the BVI is currently engaged in progressive discussions around the Foreign Account Tax Compliance Act: we have announced a commitment to concluding FATCA negotiations with the US Treasury and entering into a similar arrangement with the UK government.

The BVI was also one of the first jurisdictions to introduce AML legislation back in 1999, and has implemented comprehensive AML laws and adopts stringent rules on KYC due diligence consistent with the Financial Action Task Force’s 40 + 9 recommendations.

Confidentiality – not the same as secrecy

It is important to emphasise two further facts about the BVI.  Firstly, in the debate about “secrecy”, it should be highlighted that 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. There is a difference between secrecy (especially one entrenched in law or Constitution) and confidentiality. Just as a client would expect a bank to keep his or her account information confidential, so also would a person with a business interest for competitive, security or other legitimate reason. This is a principle that is globally recognised and generally respected. In this regard, the BVI is no different from other Common Law jurisdictions.

Unlike with secrecy, the maintaining of confidential information does not keep such information from the reach of lawful competent governmental authorities in the discharge of their lawful duties – whether for domestic reasons or by virtue of treaty or international standards obligations. That is a principle of international cooperation which the BVI recognises and adheres to.

In addition, BVI law requires the maintaining of beneficial ownership information and, whenever a request is received from a lawful competent authority, the request is honoured and appropriately executed once it complies with the established rules and, in a majority of cases, the rules are complied with. As unfortunate as it is, the names of individuals publicly paraded by a team of journalists and their media associates would not have been if such beneficial ownership information was not being kept and maintained.

Secondly, the BVI is not a banking centre.  It is a misconception that there are “billions of dollars tucked away in the BVI”; the territory is not and never has been a global centre for banking business.

In contrast, the jurisdiction is primarily a centre for the incorporation of business companies, with the BVI becoming now the corporate domicile of choice for close to 500,000 active companies.  Such structures, which have found significant use for those investing in emerging markets, act as highly-efficient conduits for global trade and cross-border capital flows thanks largely to the jurisdictional neutrality of the BVI.

In addition to being a top corporate domicile, the BVI provides a sophisticated array of wealth management solutions in trust and estate planning, funds and investment business, captive insurance, and ship and aircraft registration services. Offering these financial services in the BVI is a pool of highly-qualified expert professionals from the world’s leading trust companies, law firms and accounting firms.

A viable, sustainable and compliant financial services industry

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 to the legitimate private sector which operates within the BVI. Where the BVI regulator has found evidence of unacceptable practices, or in the very rare instances where BVI has been implicated in illegal activity by association or otherwise, we have responded swiftly and decisively.

We have always been, and remain so, in constant dialogue with international regulators and organisations to ensure that our standards consistently meet with the highest possible set. The BVI strives to adhere and adapt to best-practice standards at all times – it is our view that the BVI now rivals, and in many cases exceeds the regulatory standards of many onshore jurisdictions, particularly in the fight against financial crime.

This proactive mind-set has ensured that the BVI is recognised as a compliant “white list” jurisdiction by the OECD. On top of this, this compliance to international standards has been recognised by the governments of several G8 and G20 countries;,and by international organisations like the International Monetary Fund, FATF, and the Caribbean Financial Action Task Force.

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

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