Details of the government’s long-awaited reform of its beneficial ownership register — the list of who owns Virgin Islands-registered companies — have finally been revealed.
The move comes after prominent critics in the British parliament accused the territory of “dragging its feet” on the controversial issue.
They have demanded that the VI grant unrestricted public access to the register, but Premier Natalio “Sowande” Wheatley has insisted that the government must protect owners’ privacy by restricting access to people with a “legitimate interest” in viewing it.
A new policy released Monday outlines the process for accessing the register and explains how “legitimate interest” will be determined.
In launching the “Policy on Rights of Access to the Register of Beneficial Ownership for BVI Business Companies and Limited Partnerships,” the premier said the move marks a “milestone” in the VI’s commitment to transparency and combating money crime.
But transparency campaigners thought differently.
Transparency International UK criticised the plans as “too restrictive,” warning that the proposals would see “kleptocrats and oligarchs” alerted when journalists or non-governmental organisations request information about them.
“Most alarmingly, the policy of notifying company owners when their information is accessed puts journalists and civil society actors at serious risk of retaliation and legal intimidation,” said Margot Mollat, Transparency International UK’s senior policy manager. “This isn’t transparency. It’s a system that will frustrate scrutiny and protect dirty money.”
Access process
The policy outlines a complex process for information requests, which can be made only regarding “individuals holding 25 percent or more of a company’s ownership or control.”
Information seekers will be charged a non-refundable fee of $75 per company, and the registrar will have 12 days to rule on each request.
Under the policy, requests must “demonstrate legitimate interest” in obtaining information about a VI company for one of three specific purposes:
• “investigating, preventing or detecting suspected money laundering, terrorist financing or proliferation financing;”
• establishing links between a legal entity and a person convicted of, or facing criminal proceedings for, such illegal activities; and
• conducting due diligence under applicable VI laws.
“The interest must be based on credible information or objective indicators and must be specific to the legal entity concerned,” the policy states. “Requests that are speculative, overly broad, or not clearly connected to the purposes defined in this policy will not be considered to meet the threshold of legitimate interest.”
Entity warned
After a request is made, the entity it involves will be told the name of the person seeking data and their stated reason for doing so. The entity will then have five days to object.
The information request can then be refused if “the beneficial owner reasonably considers that disclosure would expose them, or any individual, to a disproportionate or serious risk (such as political, religious or sexual persecution or discrimination, fraud, kidnapping, blackmail, extortion, harassment, violence or intimidation),” according to the policy.
Premier’s view
When launching the policy on Monday, the premier defended the tight access restrictions.
“The application of legitimate-interest filters marks the next significant milestone in our journey to implement best practice, and caps three years of significant investment, legislative and regulatory reform,” he said.
Mr. Wheatley also described the measures as a good compromise.
“We fundamentally believe that legitimate-interest access to beneficial ownership information strikes an appropriate and proportionate balance between the transparency required to investigate and tackle illicit finance, protecting the privacy and security of individuals, and maintaining a business-friendly environment to support our economy,” he stated.
Setting boundaries
Without an international consensus on the matter, he added, the VI is right to set its own boundaries.
“Given the lack of a single global standard, we have taken a considered and collaborative approach to build a clear and transparent policy, and undertaken a robust stakeholder consultation to define what constitutes legitimate access and the processes that govern it within the BVI,” Mr. Wheatley said.
Lorna Smith, junior minister for financial services and economic development, said the territory has taken an “innovative” path.
“This policy reflects a thoughtful and balanced approach to legitimate access to beneficial ownership information,” she said.
Call for intervention
Transparency International UK, however, called for London to intervene.
“If the BVI remains unable or unwilling to implement meaningful access, the UK government should consider all its options to ensure that it does,” Ms. Mollat said.
The organisation alleged that the territory has a poor record on combating corruption.
“Corporate secrecy provided by the BVI’s financial services sectors has long provided cover for high-level corruption, money laundering and sanctions evasion, and experts warn the islands’ proposals do little to improve transparency,” Ms. Mollat added.
‘Meet the regulator’
The Financial Services Commission has launched a series of “Meet-the-Regulator” sessions to discuss the new policy with stakeholders.
The government said the new policy will be implemented following a transitional period to allow for “system enhancements, user testing, dissemination of guidance and processing of exemption application.”
