Measures originally aimed at shining a light on the owners of Virgin Islands-registered companies will be carefully tailored to “balance privacy,” Premier Natalio “Sowande” Wheatley said Monday in an apparent bid to reassure financial services businesses.
His plan, however, could put the VI on a collision course with the United Kingdom’s new Labour government, which has demanded greater transparency from overseas territories in financial matters.
Mr. Wheatley has said before that there will be no full public access to an expanded register of beneficial ownership that has been promised by next June, and on Monday he used his budget address to further qualify the reform plan.
“The government, through the Financial Services Commission, is developing a set of measures that will balance the privacy interests of clients with regulatory needs, maintaining the confidence of all concerned while securing our competitiveness,” said Mr. Wheatley, who is also the minister of finance and financial services.
New system
Under the new system, he said, certain beneficial ownership information will be “collected, maintained and secured” by a registrar.
“This information is necessary for the territory to comply with international standards which require such information to be held by a public authority,” he said. “We aim to ensure that the registrar knows who owns and controls BVI companies to understand and mitigate any risks, and to facilitate cooperation with competent authorities, law enforcement agencies and persons who can demonstrate a legitimate interest in having such information.”
Currently, the government is working to define the criteria for establishing such a “legitimate interest,” according to the premier.
Such safeguards, he said, should reassure investors that their information will be protected against illicit use.
“To facilitate this process, the Financial Services Commission is heavily investing in the ongoing revamping of its VIRRGIN electronic platform,” the premier explained.
“With the FSC’s investment in technology, we can deliver not only compliance, but cost savings for the industry along with improved business efficiency.” He added that access questions will also be part of the “second phase” of reform expected to “crystallise” next year as officials decide who will be permitted to inspect the register on a “legitimate-interest” basis.
“This phase will be carried out in full consultation with practitioners within the financial services industry to ensure appropriate understanding to better protect clients’ interests,” he said.
July remarks
The Monday update doubles down on comments Mr. Wheatley made in July, when he said “uninhibited” access to the company register would not be allowed.
“We have until 2025 to put some kind of register in place,” he told the House of Assembly at the time. “Uninhibited access to the register is unacceptable. Uninhibited access: That’s a no. And therefore we must consider legitimate interest tests for our register.”
However, the premier has also stressed that law enforcers will still be able to access information in the register on request, as is currently the case under the existing Beneficial Ownership Secure Search System, which is closed to the public.
UK tension
The company register has been a source of tension with London for years. Under UK pressure, the VI government grudgingly agreed in September 2020 to sign on to a plan for the OTs and crown dependencies to implement public registers by the end of 2023.
The VI government subsequently began laying the groundwork for the move, but progress stalled after November 2022, when the European Union Court of Justice issued a ruling that threw the plan into question.
In a case involving Luxembourg’s then-public registry, the court ruled that a key provision of the EU’s own anti-money laundering directive — which required beneficial ownership information to be available to the public — was invalid.
In response, Luxembourg and other countries quickly restricted access to their registers.
However, London has continued to push for public registers, and the UK Labour Party stressed in its election-winning manifesto in July that it wants greater financial transparency in Britain and the OTs alike.