Commerce House in Road Town is home to multiple financial services firms, which would be required to disclose their clients’ beneficial ownership information if the Virgin Islands adopts public company registers in 2023 as required by the United Kingdom. (Photo: CLAIRE SHEFCHIK)

The Virgin Islands government has “significant reservations” about a draft order in council on public registers of beneficial ownership, according to Premier Andrew Fahie.

The draft, which was published on Monday by the United Kingdom government, sets out the UK’s expectations for how its overseas territories will be required to adopt the registers by 2023, including the form the registers must take and the information that they must make available.

The UK announced that due to the recent cooperation of the OTs in the matter, it is not necessary to actually make the order yet. However, Mr. Fahie still objected to the draft, claiming that the requirements it outlines could breach the privacy of the owners of companies registered in the VI.

“In particular, the draft order mandates the creation of publicly accessible registers permitting general public access to a range of data of a personal and private nature,” the premier said in a  press release issued Monday.

“In so doing, the draft order may pose a threat to those privacy rights secured to individuals under the Constitution of the Virgin Islands.”

However, he also noted that the order is “subject to ongoing proceedings” before the VI High Court.

“This is a matter for the court to consider and decide in the usual way,” he said,
adding that he would not comment further until the matter is decided.

In September, the premier agreed to finally join the other overseas territories and crown dependencies in committing to working with the UK toward implementing public registers by 2023, as required under the Sanctions
and Anti-Money Laundering Act passed by the UK Parliament in 2018.

Concerns

Also in September, though, he expressed concerns about the implementation and the need to balance the access to the registers while preserving privacy and security.

In 2017, the VI established the Beneficial Ownership Secure Search system
in order to transmit ownership information to law enforcement agencies abroad on request.

“Any modification of the BOSS system could only be done taking into account the concerns raised by the government of the Virgin Islands, global best practice and obligations under the Constitution of the Virgin Islands,” the premier said.

UK statement

According to a statement released this week by Wendy Morton, UK minister for the European neighbourhood and the Americas, the draft order in council is “the next step in the process” of all the inhabited territories agreeing to set up the registers.

The draft order sets out a minimum definition of beneficial ownership that encompasses both direct and indirect control over companies, including shareholdings, voting rights, and the right to appoint or remove a majority
of directors.

Required information would include beneficial owners’ name, country of residence, nationality, birthdate, and the nature of their control over the company.

Territories’ registers should be a “proportionate reflection of the number of companies registered in their jurisdiction,” Ms. Morton stated.

‘Exchange of notes’

She added that the new measures build on the “exchange of notes” arrangement which required OTs to share company information with UK law enforcement agencies at short notice — and which led to the establishment of the BOSSs in the VI.

“A statutory review of these arrangements last year  found that they are working well and are providing our law enforcement with invaluable information to support ongoing investigations,” she said. “In the light of the firm commitments from all of the inhabited overseas territories to adopt publicly accessible registers, the UK government have decided that it is now not necessary to make the order under Section 51 [of the Sanctions and AntiMoney Laundering Act, which calls for OTs to set up public registers,] but will keep this under review.”

Global campaign

The draft order in councildoes not request that the ownership information be
verified either internally or externally, as is currently required in the VI

However, it does address some of the VI government’s concerns about safety and security.

It contains a provision that would allow information to be kept from the public “for so long and to the extent necessary for the protection of an individual who reasonably believes that the disclosure of that information would place himself or herself at serious risk of fraud, kidnapping, blackmail, extortion, harassment, violence, intimidation or other similar harm” or where that information relates to a child or vulnerable person.

The UK government is also spearheading an international campaign to encourage more countries to commit to publicly accessible registers by 2023, Ms. Morton added.


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