In a scathing attack on the Virgin Islands, two British politicians have called for London to take charge of implementing the territory’s new company ownership register to speed progress and boost transparency.
In an article for The House magazine, which is considered the journal of the United Kingdom parliament, Tory former deputy foreign secretary Sir Andrew Mitchell and senior Labour parliamentarian Lloyd Hatton joined forces to denounce the VI as “one of the world’s most notorious secrecy jurisdictions.”
Their July 1 article was the latest salvo from UK members of parliament who have demanded repeatedly in recent months that the VI grant full public access to the company register despite the VI government’s insistence on protecting owners’ privacy by restricting access to people deemed to have a “legitimate interest” in viewing it.
“We cannot credibly aspire to be the anti-corruption capital of the world while the British Virgin Islands continues to avoid proper transparency,” wrote Mr. Hatton, who is a member of the influential House of Commons Public Accounts Committee, and Sir Andrew.
“Every day, the BVI’s secrecy regime protects kleptocrats and tax-dodging elites who siphon off much-needed public resources from their fellow citizens.”
Smith fires back
This week, Financial Services and Economic Development Junior Minister Lorna Smith hit back at the criticism, insisting that the VI and UK share the same goals in the “key priority” of combating money crime.
“As a government, we believe our newly announced legitimate-interest policy represents a balanced and measured approach through which to continue progressing this mission,” Ms. Smith told the Beacon.
“It upholds the transparency needed to tackle illicit finance, while also safeguarding the privacy and security of individuals who do business in the BVI.”
Years of delays
Under UK pressure, the VI government grudgingly agreed in September 2020 to sign on to a UK 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 in November 2022 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.
After that, European countries including Luxembourg, Austria and the Netherlands restricted access to their previously public registers.
The VI subsequently announced its “legitimate-interest” access plan and eventually shifted the implementation target to last month — which it missed.
‘Notorious tax havens’
In their letter last week, the MPs took aim at last month’s missed deadline and other delays — which they called a “deliberate flouting of the will of parliament” by multiple OTs they branded “notorious tax havens.”
“With June behind us, the BVI is once again dragging its feet,” the MPs wrote. “This repeated rule-breaking undermines Britain’s national security, facilitates the flow of ill-gotten gains out of developing economies, and enables aggressive tax avoidance and evasion.”
The pair also criticised the “legitimate-interest” access policy the VI government published last month, which gives company owners a chance to oppose any request to review their information.
“The BVI government had, as recently as November, committed to providing the ‘maximum possible degree of access and transparency,” the MPs wrote. “Yet their proposal would allow officials to block access at will and, extraordinarily, notify company owners when they are being scrutinised, allowing bad actors to move funds before investigations can even begin.”
They added that the VI system is designed “not to expose wrongdoing, but to further shield it.”
Order in council
They also demanded action from British Prime Minister Sir Keir Starmer on the issue.
“Parliament holds clear powers to make laws for the British overseas territories using orders in council — a tool it has used before,” they wrote. “In fact, a draft order already exists, setting out exactly how these public registers should work. This step has long been seen as a last resort. But after years of missed deadlines, stalling tactics, and broken promises, how much longer can we afford to wait?”
The pair also accused the VI of acting in bad faith.
“Parliament was clear back in 2018,” they wrote. “The BVI then made a series of promises. All have been roundly ignored. It is time for Britain to act and put an end to decades of secrecy.”
No ‘global standard’
Ms. Smith, however, rejected the accusations.
“In the absence of a uniform global standard, we engaged closely with a broad range of international partners and stakeholders to ensure that our policy is both clear and transparent,” she said.
Ms. Smith added that preserving the integrity of the financial services sector is a prime objective of the VI government.
“We will always act to protect the values and interests of our people and our economy,” she said.
CFATF review
The MPs’ pressure came as the Caribbean Financial Action Task Force warned it will be closely scrutinising beneficial ownership regimes in the region during its next round of Mutual Evaluation Reports.
During a Monday webinar hosted by the Washington DC-based think-tank Global Financial Integrity, CFATF legal adviser Deena-Marie Lord addressed the issue.
“There is an additional component in the fifth round of mutual evaluations to assess the risk of foreign legal persons and arrangements,” she said, adding, “That will be more closely assessed in the fifth round.”
Leading up to the coming reviews, Ms. Lord called for closer scrutiny of beneficial ownership details.
“In terms of opportunities to strengthen systems, there should be enhanced verification measures moving beyond purely self-reporting and towards cross-checking … data sources, including other databases,” she said.
“For example, if there is a tax registry, licensing registry, registries of procurement, there should be some kind of cross-checking between those systems. It can be very expensive to maintain registries.”
The CFATF’s fourth Mutual Evaluation Report on the VI, released in February 2024, was one of the main reasons the Paris-based Financial Action Task Force placed the VI on its grey list of jurisdictions that require extra scrutiny last month.
Privacy
Despite the recent pushback from UK MPs and others, the VI government has shown no signs of reversing course on its plans for the register.
Unveiling the new access policy last month, Premier Natalio “Sowande” Wheatley reiterated that the government must protect owners’ privacy by restricting access to people with a “legitimate interest” in viewing information.
Transparency International UK, however, attacked the policy as “too restrictive,” warning that the proposals would see “kleptocrats and oligarchs” alerted when journalists or non-government organisations request data about them.
“Most alarmingly, the policy of notifying company owners when their information is accessed puts journalists and civil society actors at serious risk of retaliation and legal intimidation,” said Margot Mollat, Transparency International UK’s senior policy manager.
The premier, who was in Jamaica this week at a Caribbean Community meeting, did not respond to requests for comment. Neither did BVI Finance.
