BVI publishes beneficial ownership details

British Virgin Islands - As has been reported in regional media, the British Virgin Islands has published the exchange of notes and technical protocols agreed with the United Kingdom government relating to beneficial ownership of companies ahead of the Cayman Islands.

While details of the Cayman Islands agreement have yet to be published, it is likely that it will be similar in nature given that both territories were given the same parameters from which to establish their respective platforms.

Under the agreement, the BVI and the UK have mutually recognised the need to share beneficial ownership information for preventing and detecting illegal activity in both jurisdictions as well as the importance of sharing the information expeditiously.

It is intended for the information in BVI to be held through an electronic portal, similar to what has been proposed in the Cayman Islands under what is called the Centralised Platform for Beneficial Ownership, with the information being accessed by BVI competent authorities only. That information, in turn, will be shared with UK law enforcement agencies on request.

According to the Exchange of Notes and Technical Protocols – the Government of the British Virgin Islands will establish and maintain an electronic platform that will allow it to immediately access adequate, accurate and current beneficial ownership information on corporate and legal entities incorporated in the British Virgin Islands.

The British Virgin Islands platform will be held electronically and we be searchable by both name of corporate and legal entity and the name of the individual. Acting only on the furtherance of their functions, United Kingdom law enforcement authorities will be able to request and access this information.

The most significant aspect of these technical protocols is contained in the response time relevant to any specific request. Under the agreement, which was signed on 8 April 2016, UK Law enforcement agencies will be provided with the information being sought with 24-hours of the submission of a request for information unless it is notified that the request for information is urgent, in which case provisions have been made to provide this information within as little as one hour.

Similar to what is expected in the Cayman Islands Centralised Platform, harsh penalties will be levied against those who would disclose to the parties being investigated any notice or details of what is released. The protocols also criminalise any disclosures of information in order to reinforce the severity of the offence.  Under the agreement, law enforcement authorities will be given unrestricted access to information being sought which may be used in criminal and/or civil proceedings and may be disclosed by law enforcement authorities in accordance with the applicable legal provisions, including data protection and freedom of information requests.

It is expected that while the commitments outlined on the Exchange of Notes will take effect upon the signature of the participants, namely 8 April, the Technical Protocols which will underpin the Notes, will come into effect no later than 30 June 2017, together with the necessary legislative regulatory changes that will be required to affect full implementation.

BVI Premier Dr Orlando Smith said, “The new agreement will further enhance the BVI regime which already surpasses that of many other jurisdictions in the world. It will also ensure that in order to protect our business and the interests of BVI, when it comes to transparency and information exchange, BVI’s rules and regulations are totally fit for purpose. As the UK Prime Minister said recently, the commitments we and our colleagues in other Overseas Territories and Crown Dependencies have made will be far in advance of many other countries, including the United States.”

He added, “The BVI has worked for over 30 years to carefully and legitimately build an industry that is well regarded and trusted by clients, global regulators and other international authorities. This agreement will play its part in ensuring that this continues to be the case.”

The idea for publicly accessible registries of beneficial ownership was one of the main points agreed by the G8 at the Lough Erne Summit in Northern Ireland, in June 2013, at which the issue of tax avoidance by companies and wealthy individuals was placed at the top of the agenda by the United Kingdom.

Included in the “Lough Erne Declaration” endorsed by the Summit’s participants was a recommendation that “companies should know who really owns them and tax collectors and law enforcers should be able to obtain this information easily.” The G8 also adopted an Action Plan, which sets out “core principles that are fundamental to the transparency of ownership and control of companies and legal arrangements.” It argues that companies should obtain and hold information on their beneficial ownership, and that central registries containing these details should be set up at national or state levels.

While much debate has surrounded a UK demand that registries should be open to the public, Overseas Territories including the BVI and the Cayman Islands have successfully negotiated the establishment of these platforms, without the need to make them open to the general public. According to the agreements reached with the Cayman Islands, information on beneficial ownership will remain with the specific service provider but shared electronically on the Centralised Platform which will be accessed only by competent persons and will be available exclusively for law enforcement agencies, including the UK.