Due to the territory’s Beneficial Ownership Secure Search system, the Virgin Islands is better prepared than most other jurisdictions to respond to the types of suspicious activity reports leaked in the recent cross-border journalistic investigation dubbed the “FinCEN Files,” BVI Finance CEO Elise Donovan told the Beacon last week.
She was responding to the cache of reports filed by global banks to the United States Financial Crimes Enforcement Network (FinCEN) that was leaked in 2018 to BuzzFeed News and subsequently shared with more than 85 journalists in 30 countries who were part of the International Consortium of Investigative Journalists.
In the files, the VI was linked to at least 20 percent of more than 2,100 leaked reports on $2 trillion worth of transactions that banks reported as “suspicious” to the US Treasury Department agency between 1999 and 2017.
However, through the BOSSs, Ms. Donovan argued, those reports are far more likely to be responded to and acted upon by law enforcement.
“The BVI’s autonomous law enforcement agency, the Financial Investigation Agency, can provide rapid access, usually within one to two hours, to verified beneficial ownership information on any BVI company,” Ms. Donovan said. “Currently the BVI FIA shares information with more than 200 countries around the world.”
In practice, she continued, “This means that the BVI is better placed than most jurisdictions to provide beneficial ownership information to competent authorities and global law enforcement agencies when suspicious activity reports are filed, including in examples raised by the re- cent FinCEN files.”
The ICIJ journalists collaborated to extract data on more than 200,000 transactions and more than 6,900 correspondent connections. The ICIJ is also responsible for investigations into other leaked documents, including the 2016 Panama Papers. Suspicious activity reports — known as SARs — reflect concerns expressed by banks and are not proof of any wrongdoing by any of the parties involved, the ICIJ noted in an article on its website explaining the leak.
When US banks spot suspicious transactions, they are required to send a SAR to FinCEN. More than 620 of the reports included what the ICIJ described as “high risk” jurisdictions. Besides the 20 percent linked to the VI, other transactions were linked to addresses in the United Kingdom, the US, Cyprus, Hong Kong, the United Arab Emirates, Russia and Switzerland.
Ms. Donovan pointed out that in contrast to registers in some of those countries, including the UK, the VI’s system ensures that ownership information that is transmitted via BOSSs is verified.
“The [VI] is a leading provider of global offshore financial services with a best-in-class regulatory regime that meets the highest international standards,” she said. “The BVI’s register of beneficial ownership is private but it is by no means secret, and the BVI remains committed to working with international institutions and authorities to combat financial crime including money laundering.”
The FinCEN Files leak comes amid a reversal from Premier Andrew Fahie in response to the UK’s push for the overseas territories to enact public registers of beneficial ownership by 2023.
Until recently, the VI had been the sole holdout among OTs and crown dependencies, stating that it would not comply until such registers become a global standard. However, in a statement to the House of Assembly late last month, the premier appeared to relax this position.
His government, he said, “commits to work in collaboration with [the UK government] towards a publicly accessible register of beneficial ownership for companies in line with international standards and best practices as they develop globally and, at least, as implemented by the [European Union] member states, by 2023, in furtherance of the EU Fifth Anti-Money Laundering Directive.”
The UK government praised the announcement.
As the territory advances the commitment, the premier added, “We will be informed at all times by global best practice at the time within a timeframe that we consider deliverable.”