Author
Margot Mollat
Reading Time
7 minutes 10 seconds

Last week, the British Virgin Islands (BVI) unveiled its long-awaited plan for granting access on the ultimate owners of companies registered there – a vital tool to prevent tax abuse and financial crime. Unfortunately, rather than enhancing corporate transparency the BVI’s proposal would effectively block journalists and NGOs from uncovering the true owners of companies, maintaining the region’s long-standing culture of financial secrecy.  

Despite the UK Parliament mandating UK Overseas Territories like the BVI to reveal the true owner of companies registered on their shores, their proposed register is designed to hinder scrutiny, effectively undermining global efforts to combat money laundering and financial crime.  
 

A slow road to… a deadlock?  

In November 2024 the BVI and other Overseas Territories promised to provide access to their company ownership records and to do so with the ‘maximum possible degree of access and transparency’. This commitment was the latest in a series of promises made in response to the passage of the Sanctions and Anti-Money Laundering Act in 2018, which required Overseas Territories to introduce public registers and reveal who truly owned companies registered there.

Despite these assurances, the BVI has consistently dragged its feet in addressing the island’s role in facilitating financial crime. Just last week, The Guardian and the Bureau for Investigative Journalism revealed a network of companies owned by sanctioned Russian oligarch Roman Abramovich may have been used to avoid over £500m of UK tax. They further identified that he evaded tens of millions of pounds in VAT on his luxury yacht.

BVI-registered companies have long played a key role in facilitating tax evasion, money laundering and corruption -- fuelled by a lucrative industry of professional enablers offering ‘off-the-shelf’ companies that obscure the identity of owners. Our 2018 research uncovered that BVI companies had been implicated in over 213 cases of grand corruption and money laundering globally, resulting in hundreds of billions of economic damage. Interestingly, this money seldom remains in the BVI; we also found that £5.5 billion of suspicious funds were funnelled into UK property through BVI entities. 

Given the outsized role that these territories have played in global tax evasion, corruption and money laundering schemes, these registers were expected to allow the public to more easily find the ultimate owners of BVI companies.

However, in December of 2023, corporate transparency efforts suffered a major setback. Citing a European Court (CJEU) ruling on data privacy, the BVI and other Overseas Territories announced that they would limit access to their ownership records. Instead of full public access, they proposed sharing information on a ‘need to know’ basis, only to those who could prove they had ‘legitimate interest’ in accessing this information.  
 

Legitimate Interest Access as a way forward 

In response to the CJEU court ruling, the EU developed its 6th Anti-Money Laundering Directive (6AMLD), a set of global standards for how ‘legitimate interest’ should be defined. Widely regarded within the transparency movement as the best possible compromise in a difficult legal landscape, 6AMLD strikes a balance between a maximum level transparency and respecting privacy rights in line with the court’s ruling. 

Broadly, the EU’s de facto global standards make clear that beneficial ownership registers should allow journalists, civil society organisations, academics, and businesses undertaking anti-money laundering duties to have access to the entirety of the beneficial ownership register. It also makes provision to facilitate user experience, for instance by allowing those with a legitimate interest to retain access to the platform for up to three years and ensuring that processing times and costs stay at a minimum. Most importantly, the EU guarantees the anonymity of users who look up the ultimate owner of a company, ensuring that they don’t run the risk of being threatened legally or physically when investigating companies for money laundering and other crimes.  

After years of deadlock between the UK and its Overseas Territories, the newly elected Labour Government used its first Joint Ministerial Council to ‘reset’ the relationship with its counterparts, agreeing to ‘mutual respect’ and principles of ‘nothing about you without you’. It was during that same meeting that the Overseas Territories agreed to introduce legitimate interest registers ‘with the highest levels of transparency’.  
 

Failed promises?  

Although the BVI explicitly acknowledges 6AMLD as best practice in their proposal, its current proposal – still under consultation - falls far short of both EU standards and their own transparency commitments in five key ways.  

Highly restrictive access

The proposed register creates a significant barrier for UK law enforcement, businesses subject to anti-money laundering obligations, journalists and civil society organisations seeking to investigate potential financial misconduct. These groups will only be able to have direct access to the register if they are involved in criminal proceedings and when the court agrees it is relevant to the case being heard. This approach falls short of the EU’s 6AMLD, which grants access to a broad range of organisations and authorities working to detect and prevent money laundering and other financial crime.   

Needing to know the unknown

The proposals create a frustrating requirement where applicants would need to already know the beneficial owner whose information they’re requesting before being granted access to the register. In effect, this would make it virtually impossible to use the register to access new information, rendering it almost entirely useless to investigators. In contrast the EU’s 6AMLD approach allows organisations investigating potential financial crime access to this information without the need to demonstrate any prior knowledge of the company or its owner.  

The danger of tipping-off

In the very rare circumstances where an applicant might be able to proceed under these rules, the BVI Registrar will ‘tip-off’ the beneficial owners, providing them with the applicants’ identity, the purpose of the application and an opportunity to object to the application within 5 days of it being made. This mechanism could expose journalists or civil society organisations to physical or legal intimidation by those looking to hide their identity. It also provides the opportunity for those being investigated to liquidate or move illicitly obtained assets to avoid detection. By comparison, the EU’s 6AMLD specifically anonymises identity of applicants  and prevents beneficial owners from challenging their information being disclosed in this way - although it does give an option to apply for beneficial ownership information to be protected, in the event where disclosing it could lead to serious harm.  

A narrow definition of beneficial ownership

While the BVI legally defines beneficial owners relatively broadly (including parties to trust, or those exerting indirect influence over the company), applicants will only be granted access to a narrow bit of information. Under their proposed approach, the register will only provide information on those holding 25% or more of company shares or control.  This would effectively allow the ultimate beneficial owners to remain hidden behind a nominee or trust structures. Meanwhile, the EU’s 6AMLD approach is far broader, allowing access to information on those exerting significant control over the company and parties to trusts controlling the company.  

Oppressive gagging clauses

Access to the register is subject to overly restrictive confidentiality requirements. Information obtained can only be used exclusively for the purpose outlined in the application, and unauthorised use or dissemination - such as publication - will result in penalties, including fines and potential legal action. These clauses will have a chilling effect and undermine the important role civil society and journalists play in tackling corruption through public interest reporting. These restrictions go far beyond the EU’s 6AMLD rules, which imposes no equivalent limitations on the use of information accessed through legitimate interest requests. 
 

What next? 

The BVI’s proposed beneficial ownership register is not a tool for transparency, but instead a mechanism for maintaining the status quo of corporate secrecy. Thankfully these plans are not set in stone, and this consultation period presents a critical opportunity for the territory to change course. 

By reassessing their stance and aligning with EU standards, the BVI can meet its commitments to both the UK and fellow Overseas Territories, showcasing genuine progress toward transparency and global efforts to combat economic crimes.

As the UK looks to reset its relationship with the BVI, the Foreign Secretary should maintain a firm stance on fundamental principles of transparency, openness and accountability. This requires honest dialogue with the BVI leadership about how their current proposal falls short of the UK’s expectations. 

Getting legitimate interest registers right is just the first step in the UK Government's longer-term vision of fully public registers across its Overseas Territories, and as a global norm. Ministers should set clear expectations, prevent further delays, and be prepared to ensure that the BVI lives up to its own promises.