The United Kingdom Parliament’s decision to impose a public registry of beneficial ownership on its overseas territories is just another hurdle to jump over. We have jumped over a few hurdles to stay in this business and we will jump over this one too. Jumping over hurdles is the price we pay for being a small financial services territory attached to the UK, the largest mover of capital on the planet. This new hurdle looks bigger than previous ones because it is complicated by mixing political, governance and business issues into one bowl. All three of these issues have complications of their own and we can only clear the hurdle by attacking each individually. If we try to fight all three battles together we run the risk of inflicting damage on ourselves or on the wrong target. This will only make the hurdle higher and more difficult to clear. Let’s take a quick look at each of the issues.Political hurdle
A minority government in the UK or any place is always a target for political trading. Most times the issue traded is secondary to the political points gained from the trade. The VI has the backing of the current minority Conservative government as evidenced by the Exchange of Notes on the Beneficial Ownership System signed between the VI and UK. The UK government knows that a VI system that provides verified beneficial ownership information vetted by licences and regulated service providers is the only standard that will hold up in a court of law. Certainly a UK system of unverified information of beneficial owners not vetted cannot become a legal standard in this age of transparency. It is certainly unbecoming of the country whose legal system dominates global business and who are the champions of the rule of law.
The constitutional right to privacy, a principle upheld by the VI system, must be upheld in a court of law if challenged. So the minority Conservative government has opted to stand down and be vindicated in the court of law. This will clear the way for a post Brexit UK to pursue its global ambitions and for the VI to continue to provide its valued service of facilitating global commerce without this cloud hanging over our heads. We should therefore champion our systems and standards in any forum available.
Certainly the time has come to remedy the situation where the UK Parliament can legislate against the will of the people of a territory with its own democratically elected government. This is not the case in the Channel Islands and has been constitutionally remedied in Bermuda. Some may claim that the UK needs a mechanism to legislate for territories in cases where it must meet critical international obligations. However, bypassing the will of the people and their elected government is not the way, particularly in areas where responsibility has devolved or been entrusted to the democratically elected local government as is the case with financial services. This should be remedied in the constitutional review, which originally was slated for 2017. Devolved or entrusted powers, if responsibly handled, must come with some constitutional protection. We should negotiate to remedy this issue when the new constitutional review is scheduled.
The Capital Economics report, titled “Creating Value: The BVI’s Global Contribution,” provides proof that the VI supports jobs, prosperity and government revenues worldwide by facilitating cross-border business, including in the UK. A copy of the report is available at www.bviglobalimpact.com. The VI has met, and in some cases exceeded, every standard established by the globally sanctioned standard setting and regulatory bodies approved by the G20 economies, including the UK and US. As was established before, we are on the right side of the evolving beneficial ownership standard and have publicly stated numerous times that when public registries become the global standard on this issue, we will comply. Our customers have expressed confidence in how we do business by continuing to use VI services. We will continue to place our customers first and will continue to work together in the public and private sectors to create value for the global economy. We will continue to do what we do best: incorporate companies and provide the services to help them create value.
Considering that the law, international regulation and clients are on our side, the VI should keep calm and incorporate!
Mr. Malone formerly served as director of the BVI London Office and as the territory’s United Kingdom-European Union representative.