A straightforward revamp of Virgin Islands business law would help combat financial crime and boost the territory’s reputation while potentially putting tens of millions of dollars in the government’s coffers, according to a leading anti-fraud attorney.
Martin Kenney, a member of the global ICC FraudNet organisation, is calling for a new civil asset forfeiture law as well as tweaks to the territory’s existing business legislation.
Mr. Kenney said civil asset forfeiture — through which law enforcers can seize property from people suspected of criminal activity without necessarily securing a conviction against them — could be used to target bad actors who misuse VI companies from abroad.
“Pass a law that allows [the government] to get in the game of forfeiting — taking the proceeds of corruption — to the extent that some small number of BVI companies are being used for these kinds of grandly illicit purposes,” advised the attorney, who heads the VI-based asset-recovery law firm Martin Kenney & Co.
Mr. Kenney said the recommended reform originated with a proposed bill his firm helped draft about 12 years ago at the request of the then-governor. Since then, such legislation has been promised occasionally in successive governments’ annual Speeches from the Throne, including in January 2023.
The new law, Mr. Kenney said, should include provisions similar to sections of the United Kingdom’s Proceeds of Crime Act dealing with unexplained wealth orders.
“All this is is a way in which a statute could be enacted, called the Civil Asset Forfeiture Act, coupled with an unexplained wealth order jurisdiction, to allow our courts and our attorney general to move forward and seek the forfeiture of the proceeds of crime, corruption and fraud happening abroad but using BVI companies either to take money illicitly or hiding it,” he explained.
He added that the proposed law could bring a significant boost to the government’s treasury.
“Even in a small case, $40 million recovery would be 10 percent of our public budget,” he said. “And why not? What does it cost to pass the statute?”
Fraud exception
A related reform recommendation would tweak existing legislation.
“We just want [the government] to create a fraud exception to the notion that a company after a certain period of time can never be resurrected or restored,” he said. “It’s a problem for older cases where you need to sue directors for dishonest breach of trust. If you can’t resurrect the company, then the victims have no legal standing to sue the bad director.”
Mr. Kenney, who was a key organiser of a recent conference of anti-fraud attorneys in the territory, said such moves would boost the VI’s image on the world stage.
“It would help to burnish our reputation — that we are not here as a pirate’s cove or that we are not here to help ne’er-do-wells and miscreants to steal money and hide it,” he said. “We are here with a legal system that’s rational, robust and provides access to justice.”
The BVI Financial Services Commission is currently seeking input on proposed changes to the BVI Business Companies Act as part of extensive reforms recommended recently by the Caribbean Financial Action Task Force, which found in a February report that the VI was performing poorly in seven of the 11 key areas of combating money crime that the CFATF monitors.
Mr. Kenney said his proposed reforms would go further and help demonstrate that the VI has moved on from a controversial period in its history.
“To bring accountability to dishonest people who steal money from honest people — that’s what we are saying in terms of identifying flaws in the law that need a simple correction,” he said. “In the 1980s and 1990s, it was more of the Wild West — substantially unregulated, allowing for problems to develop in this area of fraud and corruption, with less accountability. The tools available to us on the side of the victims were few and far between.”
Now, times have changed, he said.
“Today, it’s a different scene,” he added. “We have well-regulated trust companies.”
Civil asset forfeiture legislation has already benefited the coffers of countries including Switzerland, according to Mr. Kenney.
“It is particularly useful in the cases in the public interest where you are dealing with captured states and grand corruption, because there is no victim; there is no complainant party that can move forward,” he explained, adding, “The state could move in and fill the vacuum … and do what’s called a sharing agreement, where in some cases with the Swiss, the Swiss would insist on getting half of what’s there. … So the BVI government might get 40 percent, but if it’s $1 billion, that’s $400 million. Our whole annual budget is $425 million.”