A year and a half after Premier Andrew Fahie promised to work with the United Kingdom toward establishing a public register of beneficial ownership by 2023, he has announced that progress toward the goal is under way amid a UK-led crackdown partially directed toward Russian oligarchs in the wake of Russia’s invasion of Ukraine.
“On 22nd of September 2020, I stood in the House of Assembly and gave a commitment to work in collaboration with the United Kingdom government towards a publicly accessible register of beneficial ownership for companies in line with international standards and best practices as they develop globally and at least as implemented by [European Union] member states by 2023, in furtherance of the EU Fifth Anti-Money Laundering Directive,” the premier said during a press conference last week. “The consultation process with the financial service industry will commence in short order.
“The policy lead will rest with my executive team in the Ministry of Finance, who will work closely with the BVI Financial Services Commission.”
UK bill
The announcement was followed by Tuesday’s early-morning Royal Assent for the UK’s new Economic Crime (Transparency and Enforcement) Act, which was rushed through the UK Parliament last week in response to the Ukraine invasion.
The bill is designed to allow the UK to move more quickly to impose new sanctions against oli garchs and intensify enforcement of sanctions already in place.
Amid the bill’s more important provisions is a new Register of Overseas Entities, requiring people behind foreign companies that own UK property — many of which are VI-registered — to reveal their identities.
UK Business Secretary Kwasi Kwarteng said, “There is absolutely no room for illicit finance in the UK, and by bringing forward this Economic Crime Act at unprecedented speed we’ve put [Russian President Vladimir] Putin, and the corrupt elites propping him up, on notice. Our new Register of Overseas Entities, the first of its kind in the world, will have an immediate dissuasive effect on oligarchs attempting to hide their ill-gotten gains, ensuring that the UK is a place for legitimate business only.”
Under the new act, entities that refuse to reveal a beneficial owner will face tough restrictions on selling their property, and those who break the rules could face a fine of up to £2,500 per day or up to five years in prison, according to the bill, which is expected to be a valuable tool for law enforcement agencies in investigating suspicious wealth.
According to the UK Parliament, Companies House will begin work to implement the register “as quickly as possible,” working closely with the UK’s three land registries. Any foreign company selling properties between Feb. 28 and the full implementation of the register will also be required to submit its details at the point of sale, Parliament stated.
UK Home Secretary Priti Patel said, “This government has moved quickly to strengthen our response to Putin’s cronies and ensure that corrupt elites have nowhere to hide their dirty money in the UK. We will continue to work with our international partners to take the strongest possible action against those who enable this unprovoked aggression towards Ukraine.”
VI commitment
Here in the Virgin Islands, Mr. Fahie said the commitment to a public company register, for which the VI was the final holdout among the British overseas territories, was one which he “did not give lightly, nor did I give it without reservation.”
“Whilst we continue to monitor developments on the subject of publicly accessible registers, as they feature in various international forums, and whilst we continue to make the case for a slightly different strategic approach, we must of course take the appropriate steps to honour our commitment if and when called upon,” he added.
The premier said he is confident that collaboration with the private sector will give the VI “the best framework that we can negotiate and with the legal protections, safeguards and security that I have insisted on all along, if publicly accessible registers for beneficial ownership indeed are to become operational by next year.”
He added, “I repeat my earlier caution that throughout these negotiations, prudence and balance must be the guiding mantra.”
Recently published decisions from a Jan. 19 Cabinet meeting provided some details on the rollout of the register.
In the meeting, Cabinet members decided that the FSC will be responsible for housing any public register and for “urgently” commencing “sourcing an estimate” for including such a register in its revamped Virtual Integrated Registry Regulatory General Information Network Platform, known as VIRRGIN LEAP, according to a summary of the Jan. 19 meeting released Monday by the Cabinet Office.
The new platform will incorporate functions for recording the “receipt, update, confirmation of accuracy, maintenance and [public] accessibility of beneficial ownership information,” the summary noted. It added that the financial secretary will be the designated decisionmaker “where approvals are required from the government.”