News 07th Oct 2020

The British Virgin Islands grudgingly joins the fight against money laundering

The British Virgin Islands (BVI) has just announced that it would join the rest of the British Overseas Territories, as well as the Crown Dependencies of Jersey, Guernsey and the Isle of Man, in committing to publish the names of those who own companies registered there. For a jurisdiction that has for so long used secretive company ownership to attract investment, this was a major step. Yet the statement was not as positive as it could have been.

The announcement suggested the BVI still have major reservations about corporate transparency. Andrew Fahie, the Premier of the territory, called public company ownership registers ‘disproportionate’ and suggested they could do more harm than good, citing concerns over privacy and kidnapping. That certainly hasn’t been the experience in Britain since the UK Government introduced its own public register.

Whilst he provided no evidence to warrant these concerns, the Premier also ignored that they are solvable in statute. Indeed, UK company law, which requires the beneficiaries of companies to be named publicly, allows for owners to be kept anonymous if there is a genuine threat to their security. As EU member states start opening-up their corporate registries, this argument looks more and more like a red herring to distract from the real issue.

Research by Transparency International UK has shown that the opacity of companies in the BVI is a major draw to international criminals and money launderers. In 2018, we found 1,107 BVI companies involved in 213 corruption cases amounting to hundreds of billions of pounds worth of funds diverted by rigged procurement, bribery, embezzlement and the unlawful acquisition of state assets. The more the BVI drags its feet in implementing new global standards of corporate transparency, the more it looks like it has something serious to hide. This is why it is vitally important that the UK Government sets out a timetable for all of its overseas jurisdictions to ensure transparency measures are brought in, no later than the 2023 deadline.

The information on these public company registers should be accurate, free to access and easy to analyse, as is the case here in the UK. Such features will ensure global law enforcement, the private sector as well as civil society can make full use of them in detecting and stopping financial crime, ending the suffering which financial secrecy plays a key role in facilitating

The BVI should also learn from those who have implemented public registers, too. The UK’s own beneficial ownership regime has its own share of problems, an issue which the UK Government has now committed to addressing. It nevertheless plays a vital role in tracing suspicious assets. The UK’s first unexplained wealth order case was assisted by the respondent publicly identifying herself as the person of significant control behind a UK company which owned a £11 million golf course.

Secrecy jurisdictions like the British Virgin Islands should not use misplaced fears of public company ownership registers as an excuse to drag their heels implementing them.

With the British Virgin Islands - albeit reluctantly - on board, all of the UK’s overseas jurisdictions have now declared their intent to implement public beneficial ownership registers. If these are fully implemented without further delay, money launderers and the corrupt will soon find it more difficult to hide and then enjoy their dirty money.