C.M. ADDRESSES ASSOCIATION
OF REGISTERED AGENTS

C.M. Addresses Association Of Registered Agents 1999 was the territory's best financial services year, with significant growth in excess of 20% being recorded in all sectors, it has been reported. Chief Minister and Minister of Finance the Honourable Ralph T. O'Neal, in addressing the Association of Registered Agents at their luncheon meeting Tuesday, challenged them to work with government to ensure that the BVI remains well regarded as a centre for the conduct of legitimate business activities.

He noted that the financial services industry continues to be a major contributor to government revenue and economic development here in these islands. He said the indicators pointed to a good year, 1999, notwithstanding the tremendous pressures facing the industry from competition from other jurisdictions, harmful tax initiatives from the major countries of the world and adverse comments in the international media.

Turning specifically to the activities of Registered Agents, the Chief Minister reported that over 57, 000 new International Business Companies (IBC's) were registered in 1999. "While we should all be proud of this performance, I must caution the industry however, that whilst the numbers are good, we should never lose sight of the fact that our goal has always been that of being a quality jurisdiction," he said. The territory's leader said in that regard, the new millennium provides an opportunity to review our progress, examine what changes will be necessary in the way we do business and re-invent ourselves to capitalize on new opportunities. "Together, we can ensure the international competitiveness of our financial sector programmes...minimize abuse of BVI financial institutions and structures by the international money launderer, fraudster and con-man," Chief Minister O'Neal said.

He spoke to the several threats to offshore financial centres which he said need to be taken seriously and which require a coherent strategic response. "Firstly, there are internal threats that, if not appropriately handled, could lead to loss of competitiveness and reputation, thereby opening the way to other competitors onshore and offshore," the Finance Minister stated. He referred to a recent situation at the Registry of Companies where they experienced difficulties in meeting the expected turnaround time for documents. "I am sure that all in this room are happy that the Registry has been able to overcome these problems." Mr. O'Neal noted that ARA organizations, as a result of their exposure to cross border business, are also vulnerable to threats. He said: "these demand robust due diligence and compliance systems to minimize your exposure to white collar crime". By far the most serious threat to offshore financial centres is an external one, according to Chief Minister O'Neal, and that is the threat of punitive action against all offshore financial centres by the major developed countries of the world. Acting through the OECD, the G7, the EU, the Financial Stability Forum (FSF) and the Financial Action Task Force (FATF), the major countries of the world have demonstrated that they are willing to act together against non-cooperating countries. These are offshore centres that decline to cooperate in the pursuance of criminals, crime and the proceeds of crime; centres that fail to regulate to internationally acceptable standards, financial institutions and professionals engaged in the conduct of cross border financial services-related activities within or from these jurisdictions; and centres that pursue aggressive tax policies which not only deprive the major centres of business and revenue, but which also refuse to cooperate with the tax authorities of the developed world.

The BVI leader reported that the territory has either already satisfied or is well on the way to satisfying the first two concerns, by enacting all crimes money laundering legislation and the Anti-Money Laundering Code of Practice and Guidance Notes for the prevention of money laundering, provide guidance notes on how the new anti-money laundering regime will operate. "I am aware that a number of concerns have been expressed about the new regulatory regime," the Chief Minister told the ARA. He said these concerns are being analyzed by government, with a view to seeing how they could be accommodated within the ambit of the new regulatory regime. The new code is expected to be operational before mid-year and the Bill to give legal status to the ARA's voluntary Code of Conduct will also become law around that time. "These, together with the Bill for Information Assistance, are intended as mechanisms for ensuring that our industry programmes, policies and procedures meet international standards," said Mr. O'Neal. He reaffirmed the government's commitment to applying international benchmarked standards for the regulation and supervision of all financial services-related activities. "In this regard, an independent review of all financial services-related programmes will be conducted to assess compliance with international best practice," the Minister of Finance announced.

The review is being jointly commissioned by Her Majesty's Government together with Bermuda and the Caribbean Overseas Territories, as part of an overall examination of the financial services activities in each territory. The Chief Minister urged all practitioners and industry organizations and associates to cooperate fully with the KMPG team of auditors when they visit the territory starting April 3rd. Turning to the tax and international cooperation concerns, he noted that the BVI has always cooperated with international law enforcement and regulatory agencies on criminal and regulatory matters. "Those of you who had relationships with companies subject to investigations under the Mutual Legal Assistance Treaty or the Criminal Justice (International Cooperation) Act, will be aware that since the demise of the double taxation agreement with the USA, the BVI has resisted attempts to embrace pure tax matters within the ambit of its international cooperation programmes," he said. According to Mr. O'Neal, the sheer numbers of IBCs incorporated here in the BVI has been both a blessing and a curse. He said it has been a blessing because of the jobs, revenue and commercial activities it has brought to the territory, but this success has also placed the BVI well in the spotlight - the target for a number of the initiatives. "We now must do our utmost to prevent abuse of our IBC's and by so doing, protect and enhance our Financial Services Industry," the Chief urged. He said government is prepared and poised to enact the requisite legislation to safeguard the BVI's reputation, but the Association of Registered Agents must play a vital role. "We look forward to your views on how we can safeguard the issue of bearer shares; on whether, in the interest of greater transparency, a mandatory Register of Directors should be kept at the Registry; and on whether the Fit and Proper criteria should not be applied to such Directors," Hon. O'Neal stated.