Change within global commerce and the financial services that support it is accelerating. In an increasingly interconnected and digital-first world, how businesses and individuals operate and invest across borders is evolving.
As a trusted, innovative international finance and business centre, the British Virgin Islands (BVI) and its financial services industry has responded to global innovation, building its infrastructure, legal system, legislation and regulatory regimes to match the evolving demands of globalisaton.
But such change brings with it challenges and pressures as well as opportunities. Global standards and best practice on key issues such as tax transparency, beneficial ownership, privacy and data rights, financial reporting, AML and CFT are moving at pace, and in several cases, there is no single uniform or defined global standard to adopt. The globalistion of financial services has also brought increased scrutiny on the role and approach of Overseas Territories and Crown Dependencies.
As a territory, the BVI must respond, as it has always prided itself on doing, to these pressures to ensure it is playing its role on the global stage, adhering to global standards where they exist, and implementing best practice to combat illicit finance. This must be achieved while maintaining the flexibility and innovation that has enabled it to meet the needs of global business.
Through the National Action Plan, which implements the recommendations of the CFATF Mutual Evaluation Report, the BVI has taken, and continues to take, significant steps forward. Whether through a range of legislative amendments passed to align with international standards, the dissemination of new guidance, or the establishment of new policies and units, including a new Sanctions Unit, we are enhancing our ability to tackle financial crime.
Enhancing our data quality to combat illicit finance
Central to the BVI’s progress is its commitment to enhance the quality of the information we collect and hold on beneficial ownership, underpinned by investment in enhancing its secure digital register, VIRRGIN in place of the existing BOSS system, which has been used to collect beneficial ownership information since 2017. The transition to VIRRGIN, which is currently used to collect other corporate information, will enable better monitoring, and faster, more efficient information sharing with law enforcement agencies and competent authorities, with the process managed through the Financial Services Commission (FSC).
Following legislative change, and new regulations, the BVI’s new beneficial ownership regime came into force from January 2nd 2025. Governed by the BVI Business Companies Act and the Limited Partnership Act, companies and limited partnerships will need to keep, collect and maintain beneficial more comprehensive ownership data on the register, including nominator information. For new companies and limited partnerships, this must be filed within 30 days of incorporation, registration or continuation. Existing companies and limited partnerships must do so by the end of a transition period. Full detail can be found here.
These changes bring welcome clarity for our members, along with pragmatic timelines for delivery. We are engaging with the financial services industry and different government and regulatory bodies to implement these changes, and welcome the greater detail on non-legislative steps and engagement provided by the FSC, including its recent Meet The Regulator session.
Defining legitimate interest access
Where there are clear global standards to observe, the BVI is committed to doing so. It is more complicated when it is not the case – such as in relation to access to company ownership information.
The BVI seeks to balance maintaining a business-friendly environment that protects privacy rights for individuals with its complete commitment to complying with international best practice to combat illicit finance. Unfettered access to individual personal data does not achieve this balance, as has been recognised in high profile court decisions in the EU and US.
Therefore, the Government is committed to legislating to facilitate access to select beneficial ownership information to those who pass a legitimate interest test, under specific circumstances. In doing so, it aims to protect the safety and security of vulnerable individuals and sensitive personal data, while demonstrating the jurisdiction’s commitment to transparency and tackling illicit finance.
While a legitimate interest-based approach has been taken in the EU’s Sixth Directive on AML/CFT, no global standard has yet emerged and the implementation of legitimate interest registers (where they exist) has varied considerably between jurisdictions. And while the BVI has reviewed the models being used in other British Crown Dependencies, Overseas Territories (CDOTs) and jurisdictions to adopt emerging best practice and inform its proposed approach, it is clear that one size does not fit all.
In the absence of applicable global standards, it is critical then that we take a collaborative approach to define this legitimate interest access, and how best to implement it, to ensure best practice. For instance, what constitutes legitimate interest? What should be the categories eligible to access the Register? What reasonable circumstances should be considered for an exemption by a beneficial owner to mitigate the risk of harm? What is practical to implement?
Given the critical role financial services plays in the BVI’s economy, any approach needs to be well-informed, data-led and robust enough to enable the territory to understand the risks and opportunities any fundamental changes to legislation will bring.
For this reason, the Government has launched a consultation into the proposed legitimate interest access policy on January 17th, and it is expected to close on February 28th 2025. We invite and encourage all of our members to put forward their views to help shape the way forwards.
As a territory, we have historically balanced building a business-friendly environment that embraces and supports innovation in the global economy and protects privacy rights, with a robust and trusted legal and regulatory framework, and our commitment to international co-operation. We must ensure that we continue to do so through the appropriate implementation of legitimate interest access.
Elise Donovan
CEO, BVI Finance