It is good news that the government has finally produced a draft law designed to keep the territory off the looming European Union blacklist, but with a deadline of Dec. 31 the move is coming too late to ensure success without a frantic scramble.
With such limited time left, the government, the House of Assembly, the financial services industry and other stakeholders will need to pull out all the stops in order to pass a sound law in time. Any mistakes could needlessly devastate the territory’s economy.
The EU has said that United Kingdom overseas territories and Crown dependencies must comply with certain criteria designed to ensure that the companies they register have sufficient “economic substance.” If they don’t come on board by the end of this year, they face blacklisting.
Although the EU designation appears arbitrary, unfair and unclear, the world doubtlessly will take notice of the forthcoming list, and the VI can ill afford the reputational damage that would come with inclusion.
But at this point it has less than a month to prepare. Premier Dr. Orlando Smith announced Tuesday of last week that the HOA will consider the bill at its sitting on Thursday of this week. But this timeline gives precious little opportunity for legislators to review the draft or for government to consult with financial services stakeholders, many of whom have complained that they had been left in the dark about the law until it was circulated to the industry last week. It still has not been made available to the wider public.
Meanwhile, other financial services jurisdictions are ahead. In the Cayman Islands, for example, a draft law was released in early October, and consultations followed. In Jersey, initial proposals were published in August, with subsequent consultations leading up to the legislature’s debate on the law last week.
The VI government has moved much more slowly. The blacklist has been in the works for more than a year, but not until Sept. 12 did the Cabinet approve a payment to a United Kingdom lawyer to draft the legislation. VI officials have blamed the EU for failing to provide needed information in a timely manner, but given that other jurisdictions are so far ahead the government ultimately must accept responsibility for the delay.
Nor does it bode well that this issue is surfacing at a time when the HOA can’t seem to get its act together. The most recent sitting was cancelled amid allegations that it was illegal because of a lack of proper advance notice. And any law could be difficult to get through the current HOA after three members defected from the ruling National Democratic Party, leaving the government with a narrow majority of seven to five.
It will take a monumental effort to overcome such challenges in the time remaining, and leaders, industry insiders and other stakeholders must put any differences aside and roll up their sleeves to get the job done properly.
As the territory recovers from Hurricane Irma, it cannot afford to be added to a blacklist that would further endanger a financial services sector facing other impending challenges.